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BSNL: Strategies to Tackle Competition - Voice&Data

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BSNL: Strategies to Tackle Competition


News | By Pravin Prashant , 9 October, 2001 0 comments
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It is said that the year 2002 will see two large players, Bharti and Reliance, launching their domestic long distance service in the country, along with the basic services in multiple state circles. Presently, the two telecom majors are building state-of-the-art broadband network in 250 cities (the target is two years), by laying infrastructure in different state circles. Both the companies are moving at a fast pace to launch a competitive basic service in the country. To start with, the companies are targeting those state circles where there are no private basic service providers or circles that are more lucrative in terms of business. The two future telecom giants will be the tough competitors for BSNL in the future, as the two will have an advantage of having the best of technologies at a cheaper price. The packetized network that they will create will help them in handling both voice and data needs of their customers. The incumbent will always have the disadvantage of keeping up with the old exchanges based on circuit switching for voice telephony, and create a new network for packet switching, thereby doubling the cost and perhaps decrease efficiency. Worldwide, it is a known fact that the incumbents have been given time to adjust to the corporate and competitive scenario, as facing competition is not easy for an incumbent who has worked in a monopoly environment for a good number of years. Indias BSNL has been deprived of such privileges and it was just the opposite. The deregulation of the Indian telecom started in 1994, and after seven years of deregulation BSNL was corporatized on Ist October, 2001. Though BSNL has been corporatized, it still has the influence of bureaucrats and politicians. This makes matter worse for BSNL as it has to fight the competition head on with the efficient private players. Though BSNL has been corporatized, the process of privatization is yet to start. And this despite the fact that BSNL is the largest incumbent in the country, with a turnover of Rs 23,034 crore in 2000-01. It seems it will take another two years before the government divests its equity from BSNL. Having inherited all this, BSNL has to fight competitorsBharti, Reliance, Tata, and others, so that the erosion of the customer
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base is not fast. BSNL has to work like one of the best-run corporate in the country, and not like a public sector organization with a strong focus on protecting the customer base, brand building, reducing cost base, and strengthening new businesses. Protecting Customer Base It is not easy to keep up with the customer expectation in a deregulated market. Hughes Tele.com has already taken a large number of highvalue corporate customers from MTNL, Mumbai, and the process is still continuing. BSNL has to take a cue from this example and try to protect its customer base from aggressive competitors like Bharti and Reliance. They are planning to provide complete solutions to the corporate in terms of voice telephony, broadband, and Internet services, from a single window. This solves the headache of the corporates, as they now have to talk to a single party for all their voice and data needs rather than multiple parties in the past. The corporates will now have the privilege of getting a better service-level agreement with the entry of private players. BSNL will have to ensure that they will also do the same and provide a high network uptime which is backed by prompt field support so that the network is up and running. For this, BSNL has to upgrade its network and bring it at par with the new private operators. Since the network is old, BSNL has to provide multiple redundancy to take care of any eventualities and provide the best of services to its customers.

The fault rates of BSNL are alarmingly on the very high side and BSNL should ensure that it be brought down to catch up with competitors. The key to retain customers will be the effectiveness of customer care in providing services, such as a single window for all queries and personalized services. This will only happen when BSNL has a world class call center facility with a trained and dedicated team who can solve customer queries not only through voice but also fax and e-mail. Much needs to be done on the billing front and here the focus should be on how to customize billing solutions for different corporates. BSNL should also take the initiative of providing convergent billing solutions, so that a corporate gets a single bill for different type of services subscribed and gets a cross-billing discount owing to its use of multiple services. The billing process has to be error-free, and the billing cycle needs to be reduced so that one can collect money at a faster rate and thereby, decrease bad debts. All this will help corporate customers to increase their efficiency and they would like to stay with the incumbent due to its vast network deployed across India. Aggressive Branding Exercise No road is complete without a large number of hoardings of Bharti and Essar in New Delhi, and Hughes Tele.com, BPL and Orange in Mumbai. But it would be very difficult to find even one hoarding of BSNL Chennai, Calcutta, and other state circles. Before starting the branding exercise, BSNL has to transform itself and become more customer-centric, so that it can reap the benefits of branding in the long run. The perception about BSNLs quality of service has to be first practiced by the employees of the company before it can be branded. One can see tender-related or notification-related advertisements in almost all the newspapers but no brand building exercise by the company in any of the newspapers. On the other hand, its competitors spend a good amount of money in brand awareness and brand building. In most of the countries, telecom companies are spending more on brand building than leading FMCGs, but in India, BSNL is hardly spending any money on brand building. BSNL should start brand-building exercise focussing on service qualities, price competitiveness (the Dolphin advertisement from MTNL focusses on price competitiveness of cellular services) and geographical coverage. Change in pricing structure or launch of new services will be the key differentiator in the future, and corporate customers should be intimated through the branding exercise,
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as telecom business is as much about effective consumer marketing as about building and operating networks. Reducing Cost Base BSNL has started the process of increasing the efficiency and bandwidth of the network by deploying more optical fiber cables than jelly-filled cables, but this process has to be continued in future. The company is even augmenting its long distance network by connecting more metros and large cities with high capacity Dense Wave Division Multiplexing (DWDM ) systems. This process of network upgradation will help in pruning the cost base of the company as maintenance cost will be reduced and there will be an increase in bandwidth. But BSNL has a large workforce of around 362,400 employees, which contributes around 20-25 percent of the companys turnover which is on a very higher side. VRS schemes should be introduced and people should be encouraged to join p-telcos, so that there is no shortage of manpower for private players as they can utilize the available trained resource in the best possible way. The other step would be to increase the productivity of the BSNL employees by freezing recruitment and jumping into new services where employees can be redeployed. Strengthening New Services With telecom majors orienting towards business, customer or function, BSNL should also move from the existing structure which is based on geography (see figure 1, page 71). As from figure 1: Building commercially oriented organisations, we see that companies like Telefonica and Sonera has moved from centralized unit, organized around customer groups, to decentralized, business units based around product groups. On the other hand, Swisscom and BT have moved from centralized unit organized around customer groups to centralized business model based around functions. BSNL was also thinking of moving away from the geography-based model to business organized around functions, so that the company can pay more attention on new services and it can be strengthened, but things are moving at a very slow pace in BSNL on this front. For instance, it seems the cellular services that BSNL is planning to deploy in 650 cities will be launched not before June 2002, as most of the turnkey providers have recently bagged the tender and they have to deploy it in eight months time. But it seems both the third and the fourth operators will start at the same time, thereby, losing the third cellular operators advantage. Being the third operator, BSNL should focus on providing world class coverage by building state-of-the-art network and targeting its services more towards lower and middle income groups. BSNL has to increase the retail presence of cellular services, so that it can reach out to a large segment of the targeted group and even the pricing is attractive for those users. The p-telcos will launch Intelligent (IN) services at a later stage, however, BSNL has the advantage that they can launch IN and value-added services thereby, providing more value in comparison to p-telcos. It will not be an easy task for BSNL to execute all the above strategies. But they will have to do it if they want to stay competitive in the race to share the biggest pie of telecom. Pravin Prashant Follow V&D on 0 comments
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