For the past many days, the attendant at a BSNL-managed PCO at Mumbai airport
has been busy answering inquiries about BSNL’s Cell One mobile services. A
large number of people standing at the counter want to know if Cell One service
is available in Mumbai. Some of them are even looking for an application form
for the Cell One connection.
What is surprising is that most of the people seeking information on Cell One
are residents of Mumbai, a city that does not fall under BSNL’s mobile service
network.
That’s just an anecdote reflecting BSNL’s spectacular success in cellular
services since the behemoth rolled out its nationwide network as a fourth
operator six months ago.
"We have created a new market wherever we have gone. As much as 90
percent of our subscribers are first-time mobile phone users," a beaming
Prithipal Singh, chairman and managing director, BSNL says. Singh may not be off
the mark as our analysis of the February—March 2003 cellular subscriber data
shows (see table). More than 95 percent of customers that BSNL added to its
kitty during these two months were new users. If we look at the February—March
period, there were only nine instances where there was a decline in the
subscriber base of an operator where BSNL had its service, excluding Chennai and
Kolkata. The total decline was to the tune of just 37,823 subscribers, while
BSNL added a total of 985,197 subscribers during the period. If we presume that
the private operators’ loss was BSNL’s gain, then only around 4 per cent of
BSNL’s new subscribers in the two months came from other operators.
Giant Act–BSNL Mops up Four Times More than the Rest Put Together |
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A circle-by-circle comparison of the number of subscribers added by BSNL and other operators during February—March 23 (the four metros and the Northeast region have not been included) |
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Circles | Aircel Digilink |
Bharti Cellular |
Bharti Telenet |
BPL Cellular |
BSNL | Escotel | Fascel | Hexacom | Hutch | Idea Cellular |
Reliance | Spice |
AP | – | 3541 | – | – | 101636 | – | – | – | -4,645 | 5,360 | – | – |
Bihar | – | – | – | – | 38913 | – | – | – | – | – | 11,845 | – |
Gujarat | – | 3549 | – | – | 123033 | – | 29,940 | – | – | -971 | – | – |
Haryana | 1,794 | 9618 | – | – | 26232 | -1,204 | – | – | – | – | – | – |
HP | – | – | 2,304 | – | 6468 | – | – | – | – | – | 1,636 | – |
Karnataka | – | 26758 | – | – | 94284 | – | – | – | 6,272 | – | – | -2,551 |
Kerala | – | -11385 | – | 138 | 92419 | 3,808 | – | – | – | – | – | – |
Maharashtra | – | 8478 | – | 2409 | 115460 | – | – | – | – | 4,372 | – | – |
MP | – | 11988 | – | – | 44112 | – | – | – | – | 27,992 | 7,287 | – |
Orissa | – | – | – | – | 42947 | – | – | – | – | – | -3,063 | – |
Punjab | – | 63611 | – | – | 60527 | – | – | – | – | – | – | 11,341 |
Rajasthan | -1,088 | – | – | – | 28,185 | – | – | 11,826 | – | – | – | – |
Tamil Nadu |
– | -12313 | – | 1834 | 86078 | – | – | – | – | – | – | – |
UP (E) |
22,738 | – | – | – | 34920 | – | – | – | – | – | – | – |
UP (W) |
– | 4,845 | – | – | 51,775 | 13,688 | – | – | – | – | – | – |
WB | – | – | – | – | 38,208 | – | – | – | – | – | -603 | – |
Total Additions |
23,444 | 108,690 | 2,304 | 4,381 | 985,197 | 16,292 | 29,940 | 11,826 | 1,627 | 36,753 | 17,102 | 8,790 |
BSNL has changed India’s mobile landscape in another respect. While
majority of the cellular subscribers prefer prepaid connections, BSNL has got
more of the postpaid variety. According to one estimate, 55 percent of its
subscribers have postpaid connections. Contrast this with the market leader
Bharti which had just 24 percent postpaid subscribers at the end the financial
year 2002—03.
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Today, BSNL is being lauded everywhere for its success. But things were not
the same in the months preceding the launch of Cell One. Not only was it being
criticized for delaying the roll out of the service time and again, many were
asking why BSNL was getting into a business where there was already so much of
competition. Many, including the private operators, thought it would go the MTNL
way whose cellular service Dolphin failed to take off despite cheaper tariffs.
They thought that BSNL would be lucky even if it crossed the one-lakh mark.
No doubt, all this created a lot of pressure on BSNL to prove its critics
wrong. "It was a sort of challenge. And it was necessary to show it to the
people that BSNL can get into a new service and compete with the best in that
space," Singh recalls. He adds, "However, it was more enthusiasm then
pressure that drove us."
So what made so many people prefer a state operator that was getting into an
uncharted territory? And that too in a market well entrenched with private
operators considered more market savvy and customer friendly? It is true that in
most areas, private operators committed the mistake of dismissing BSNL as just
another state operator that was getting into the business just for the sake of
it. However, attributing BSNL’s success only to complacency of its rivals
would mean undermining the other ingredients behind its success. The tariff
plans designed by BSNL that lowered the entry costs for new subscribers
(especially those who owned a BSNL landline) have surely been a major factor
behind its success. But more than low tariffs, it was the simplicity of tariff
plans with no hidden costs that endeared BSNL to such a huge number of
subscribers. Perhaps BSNL was smart enough to realize the fact that customers
get confused and overawed by too many tariff plans. Some private operators offer
some 80 tariff plans, each more complex then the other. Given all this, BSNL
tariffs appeared attractive to the lower middle and middle-income group
subscribers, the group that is supposed to represent India’s huge potential
subscriber base.
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BSNL’s thrust on network design and coverage also paid off. Spread across
the length and breadth of the country, BSNL cellular service was taken to some
1,100 towns and cities in just six months. Most of the BSNL customers recited
their happy experience of using their mobile phones seamlessly on highways and
railway tracks. BSNL officials were sure from the very beginning that network
coverage of areas where there was a lot of people movement but which were beyond
normal city or town limits would be their USPs. Of course, rolling out network
in places where there was either no service or the private operator was not
active enough also helped in notching up numbers.
The physical distance from Sanchar Bhawan, BSNL’s earlier abode, to its
Statesman House headquarters at New Delhi’s busy Barakhamba Road is not even
two kilometers. But there are many reasons to believe that BSNL has travelled a
long way since it moved out of Sanchar Bhawan. That movement signified more than
a mere symbolic assertion of a new corporate identity.
Gone are the days when work on Saturdays and Sundays was an absolute no.
Today, many important strategy meetings take place on these days. And there is a
more professional approach to business. A small group called the Strategic
Planning Group that reports directly to the CMD quietly brainstorms on all
rollout and business plans before presenting the strategy to him.
BSNL Action Plan |
|
n | n Up to 3 million more cellular lines to be added by August-September. |
n | n Cellular Network to be upgraded to GPRS another two-three months. |
n | n It has a target for 6.1 million lines for the year 2003-04, of which it expects 4 million from its GSM service. |
n | n Up to 70 cities to be covered by limited mobility services in two months |
n | n V5.2 to be upgraded to CDMA 20001x once the controversy settles down |
n | n Broadband Services in 84 cities by the end of this fiscal year. |
n | n To provide a range of IP and new value added services in the next two years through the National Internet Backbone Phase-II (NIB-II) Project. |
n | n ILD Services by March 2004 |
n | n Bill processing and collection to be outsourced |
n | n BSNL is looking at a top marketing-advertising agency and has earmarked |
n | Rs 250-300 crore to spend on marketing and branding efforts in 2003-04. |
n | n Planning to provide high bandwidth wireless access through fixed wireless technologies such as LMDS & Free Space Optics (FSO). |
More Aces up the Sleeve… Broadband Is One
BSNL’s new-found success in the cellular business could be the first in a
row of potential new accomplishments.
The operator that reinvented itself in just six months to
become India’s second largest cellular operator (and which is well on its way
to become the No. 1 within a couple of months) has its eyes set on a nationwide
rollout of broadband services. Broadband services, it believes, would be the key
to neutralizing the decline in earnings from plain voice services and help it
boost its bottom line. However, while the operator exudes confidence that there
is a market for broadband services, as of now it is not ready to hazard a guess
on what kind of revenues it is expecting from this segment in the next one year.
Using ADSL as the technology, BSNL would be targeting its
fixed line subscribers with broadband connections. Apart from working out
affordable tariffs (which it believes would be key to for its broadband services
to be successful), the company is also looking at stimulating local content
industry. Acknowledging the success of broadband in Korea as a source of
inspiration, BSNL has been closely consulting Korean broadband service providers
on finer aspects of the service and business.
On the drawing board for more than a year now, BSNL’s
broadband plans took flight with the successful run of its pilot project in
Kolkata. The pilot is now being commissioned at Bangalore and Pune in June and
would be extended to Chennai Hyderabad, Ahmedabad and Chandigarh by the end of
August. By the end of the current financial year, BSNL officials say, the
broadband offering would be extended to 84 cities.
What is unique about BSNL’s broadband plan is that it is
experimenting with a service model that has not been tried anywhere in the world
by an incumbent. All over the world, in countries where broadband has achieved
some degree of success, incumbents have taken two routes. One, they have
unbundled their local loops, which have been used by private service providers
to offer ADSL services. Two, incumbents themselves have aggressively offered
broadband services on competitive terms. BSNL, apart from making efforts on its
own, is also experimenting with the franchisee model to offer services.
Franchisees are being offered a share in the revenue that would be earned from
the broadband service. "We want people to exploit our network," Singh
announces.
It is noteworthy that when BSNL invited expression of
interest from parties interested in using BSNL’s network to offer broadband
service, the proposal generated lukewarm response. It is argued that the terms
and conditions of the proposal were not considered attractive enough. However,
that has not deterred BSNL from going ahead with its broadband plans. It is now
in the process of evaluating proposals received in response to another
expression of interest. "We are open to the idea of tying up with anybody
who has got a good proposal," Singh is forthright in his approach.
Then why have ISPs been barred from participating in the
initiative? Is that largely because at this stage they are seen as competitors?
"We are not against a relationship with them. However, as of now the idea
has not been thought over," he adds.
Enterprise Focus
BSNL is targeting corporate customers with a two-fold strategy centered on
technology and network upgradation, and marketing and customer care.
While BSNL exchanges have already been connected with fiber,
it is now taking fiber to important commercial buildings. All the towns and
cities with more than 150,000 lines will be covered under this. BSNL is
extensively using digital loop carrier (DLC) and wireless in local loop (WiLL)
system for improving reliability of external plant. Remote line units (RLUs) and
remote subscriber units (RSUs) are being provided extensively to reduce the long
lengths of copper cables. A countrywide network management and surveillance
system (NMSS) has been deployed to ensure uninterrupted and efficient flow of
telecom traffic. NMSS is being managed from network management centers at Delhi,
Mumbai and Kolkata.
BSNL is also reorienting its corporate marketing by not only
appointing corporate account managers but also tying up the network integrators
like Wipro and HCL for offering what it says would be total networking solutions
to corporate customers. A business development group is working with the CMD to
make strategies for targeting corporate customers.
One of the steps that BSNL has taken in this direction is the
identification of what it calls ‘commercially important customers’ or CICs.
Organizations that have 10 or more telephone connections, and those that have
less than 10 connections but total bimonthly telephone bill of more than Rs
10,000, have been defined as CICs.
"We have appointed account managers in every circle and
they have been directed to personally take charge of the corporate
customers," Prithipal Singh informs.
Another major initiative that BSNL has taken is the setting
up of 3,200 customer service centers to help customers, primarily corporates.
The existing customer interfaces of BSNL are getting a facelift and employees
are being put through special training sessions. BSNL is also trying to match
the flexible pricing options offered by some of the private operators. In simple
terms, a corporate customer can now bargain on prices of various services,
including calling rates. The newly designated account managers have been
empowered to offer volume discounts and match tariffs offered by private
competitors.
Another initiative taken by BSNL, which is likely to benefit
the corporate customers, is the ‘Corporate Group Billing Scheme’. Under this
scheme, all phones of a company as well as phones in the names of subsidiary
companies and sister concerns can be included in a single bill. A consolidated
monthly bill for all telephone lines (PSTN/ISDN) will then be issued on the
allotted group number. Discounts are being offered to group billing customers.
At present, this is available for rent, call charges, trunk calls, phonogram at
5 percent for the amount exceeding Rs 1 lakh and at 10 percent for the amount
exceeding Rs 2 lakh.
BSNL is also looking at exploiting business opportunities
available with the state governments. "We are also in talks with the state
governments like AP and Karnataka for providing them with total networking
solutions for their e-governance and other needs," Prithipal Singh says.
Going Slow on CDMA?
While BSNL has been aggressively pursuing the goal of becoming India’s
largest GSM operator, it has been relatively slow with its CDMA rollout. Unlike
GSM wherein it covered around 1,100 cities in six months, it is looking at going
to only 70 cities with its limited mobility services in the next two months.
According to analysts, the progress has been slow on this
front largely because of the controversy surrounding the limited mobility
services. While Reliance Infocomm and Tata Teleservices have gone for a CDMA1X
2000 based network, BSNL’s CDMA network is V5.2 based. It does want to upgrade
its network to CDMA 1X 2000 but only after the controversy settles down.
All this has resulted in BSNL taking a piecemeal approach
towards CDMA services. The company believes that in the existing environment,
growth would come form GSM at least for the next one year. That is because, it
says, it would be using CDMA only for limited mobility services in urban areas
and pockets in rural areas. "We will continue with this approach for two
years. By then we expect the limited mobility controversy to be over,"
Singh opines. He does not feel that going slow on this front would mean losing
out to currently aggressive players like Reliance Infocomm and Tata Teleservices.
"We entered late in the GSM business and look at the impact we made,"
he reminds those trying to find fault with BSNL’s go-slow approach on CDMA.
He also adds that ultimately BSNL is looking at only one
wireless standard. Interestingly, Singh considers CDMA to be a superior
technology as compared to GSM and sees it as the wireless standard of the
future.
Upcoming, International Long Distance
Another segment where BSNL is looking at making an impact is the
international long distance. BSNL’s
strategy in this space is likely to be in place by the end of this month. It is
expected to focus more on the outgoing calls market. "Like in the cellular
business, we would like to create a new market here," Singh says. BSNL
expects the outgoing traffic to increase after it gets in. It is likely that
BSNL would enter the market using lower tariffs as a tool.
It is be too early to say what kind of impact BSNL will make
on the ILD market. As of now, it believes that its unmatched fixed and cellular
customer base is a ready market for its ILD services. However, that advantage
could last only till BSNL abides by the TRAI order on Carrier Access Code (CAC)
that aims at enabling the subscribers to select the international long distance
carrier of its choice. A lot after that would depend on how innovative BSNL is
with its marketing.
The infrastructure for outgoing traffic is to be in place by
April 2004, though incoming calls would start much earlier. BSNL is presently
considering all types of tie-ups and proposals in order to effectively tap the
market.
BSNL’s success in the mobile business has brought it
applaud from all directions. More than that it has proved that public sector
companies can give competitors a run for their money. The success, however, also
means that BSNL would now be under increasing pressure to repeat its success in
services like broadband.