Mapping the South Asian telecommunication industry using Porter’s Five Forces Analysis Telecommunication industry, which is an oligopolistic market, is growing rapidly almost everywhere in South Asia. Along with the “Voice” Business moving in to a saturated state, the operators are focusing on growing revenues through data business. However, data being a low margin business many operators are shifting from simply providing data to becoming a life style requirement provider. In terms of access technologies, DSL is turning out to be the most popular access medium, while cable networks are developing a strong presence. Together with the Wireless technologies have taken over the position of wired technologies.
Further, Government initiatives in some parts of the region have already been taken to accelerate the rollout of broadband to where it is today, and the regulatory bodies help ensure that South Asia maintains the quality of the service and fair competition. In order to survive in the industry, the industry players require shifting gears to providing human needs beyond traditional Telco. Thereby, we conclude Telecommunication industry ROCE is marginally above or equal to the cost of capital making it a moderately attractive investment. Threat of new entrants – Low
The telecommunication industry claims to be a business with an expensive start up where the cost of active equipment is estimated to be 40 percent of the telecom operator’s total capital expenditure (CAPEX) and the balance are accounted for time to set footprint and to acquire spectrum. Therefore, the contenders require producing sufficient cash flow to absorb the cost of expanding the network coverage that become obsolete seemingly overnight. The well established companies own extensive networks that stretch directly to their customer destinations.
The Essay on Telecommunications Technology Can Provide A Firm With A Competitive Advantage
Describe in detail the ways that telecommunications technology can provide a firm with a competitive advantage. A competitive advantage can be achieved by enhancing the firms ability to deal with customers, suppliers, substitute products and services, and new entrance into its market. A firm may find it difficult to keep informed of all changes taking place within its industry, but with the proper ...
In order to cover up their initial capital expenditure for the tangibles, they facilitate their competitors including the small players in the market to use their towers to establish their network for a monthly rental. Resultantly, this makes the telecommunication industry attractive for the new entrants and also allows the existing players to penetrate into new markets. However, the retaliation by the established players signifies that the incumbents grow with the support of an established network presence, a brand that consumers are aware of and sheer economies of scale which make it harder for a new entrant to achieve
feasibility in long run.
With the technological advancement, the dynamic nature of the telecommunication industry stimulate product differentiation, challenging the position of the traditional telephone calls as the industry’s biggest revenue generator, as a consequence of the main broadband telecom technology – Digital Subscriber Line (DSL) – ushers in the new era. At present, the established service providers have redefined their objectives to focus less about voices and concern more about texts and images, high-speed internet access, broadband information services, interactive entertainment and value added service to their loyal customers. Consequently, this factor exerts an excessive pressure on incumbents to aggressively invest multiple service offerings, advertising and promotions focused on improving brand loyalty, acquiring the market share and ensuring the survival in long run.
Rivalry among competitors- High
Industry deregulation together with the receptive capital markets of the late 1990s paved the path for a flash of new entrants. Most of the emerged telecom operators are now well stabilized and so they penetrate the market by resource Sharing (E.g.: Active Infrastructure Sharing, Spectrum Sharing, Fiber Sharing, Tower sharing etc).By virtue of the growing competition, the operators are looking at forming BPO’s sharing Telco resources by way of which they engross the profits in the industry.
The Term Paper on Koreas Development Of Mobile Phone Industry part 1
Koreas Development of Mobile Phone Industry Proposal letter for the research concerning the topic of mobile telephone development in Korea. A. objective: The purpose of this research is to show how successful is the mobile phone industry in Korea. Also, to show what is on the horizon for the countrys mobile phone industry. What sparked his success and what hardships were endured to this point? ...
In addition, there is a massive sum of fixed cost to be incurred as maintenance cost and also the transmission systems need to be replaced as frequently as every two years to ensure smooth functioning of the process. As a result, most of the companies like Dialog, Bharti Airtel, Reliance, and IDEA seek out to cover up their cost by providing services to their competitors.
Most incumbents in the telecommunication industry experience high competition due to the highly powerful players of essentially the similar size like Airtel and etisalat trying to capture the market share locally and internationally. The new technology is prompting a raft of substitute services where almost everyone is a part of a mobile network. As a result, the competitors are forced to have to redefine their competitors, as the
traditional Telco competition is too competitive to survive. Further, the ARPU (Average Revenue per User) declines due to competition. Hence, the telecom Operators are in the verge of Digitizing the Earth by way of entering in to Mobile Money, Mobile Commerce, Mobile Advertising, Mobile Health, and Mobile Education is the latest trend. Thereby they compete with Global Players such as Google, E-Bay, Amazon, Groupon etc
Power of Buyers – Moderate
Generally, there are two types of buyers; individual and corporate. As there is ample number of services providers who delivers a similar package to the customers, the buyers are able to have a choice with an elevated bargaining leverage. Since the switching cost is also relatively insignificant, the buyers, especially the corporate customers, can demand for an exclusive packages with lower rates and customized value adding services.
Of all the customer markets, individual or the residential market is considered to be the toughest with literally hundreds of players in the market whose purchasing power depends on their monthly household income. Thus, the capability to retain the market share depends on the brand name strength and heavy investment in efficient billing systems since the buyer allocates considerably a large fraction of their income for satellite TV, mobile bill, fixed line charges, internet charges etc. In virtue of the fact the buyers are highly price sensitive, this leads to high bargaining power of buyers.
The Business plan on Econet Wireless International and the African Telecommunications Industry
... few suppliers. Industry rivals – High because: Customer base grew rapidly between year 2000 and 2005 Intense competition among players in the mobile industry. Substitutes – Low ... rating is high because rivalry is high, threat of new entrants is high, bargaining power of suppliers is high and bargaining power of buyers is high. Competitor Analysis ...
On the other hand, the corporate customers are concerned mostly about the quality and the reliability of the service rather than the price paid to acquire and so they remain industry’s favorite. Further, some corporate customers are happy to pay a premium to get high security private networks and value added services neutralizing the effect of the bargaining power of the individual customers.
Power of Suppliers- Moderate
Knowledge workers, such as talented manager and engineers, with the required expertise in the telecommunication industry and those who well versed in
latest technologies are considered to be scarce supplies. Therefore, this places companies in a weak position in terms of hiring and deciding salaries where the suppliers of knowledge have a high bargaining power.
In addition to the human resources, this industry requires sophisticated equipments and software such as high-tech broadband switching equipment, fiber-optic cables, mobile handsets and billing software, telecom operators to perform the operation of transmitting voice and data from place to place. Even though this grants the suppliers a high bargaining power, there is considerable number of large equipment producers and assemblers are available. Arguably, this dilutes the bargaining power.
Availability of substitutes – Moderate to High
With the emergence of social networks and other communication media, access to information has become trouble-free. Thereby, the buyers have got the opportunity to make informed decisions on cheaper ways to communicate with a greater choice of applications like Google talk, we-chat, whatsapp, viber and Skype delivered by ISPs – not telecom operators. Resultantly, “Internet telephony” could take a big bite out of telecom companies’ core voice revenues exposing them to serious substitution threats.
The Essay on High Court Powers Constitution Federal
ESSAY. The Constitutional system in Australia determines how the law is made. Some issues addressed by this are; The Federal government, division of powers, the separation of powers, amending the constitution, the high court and the constitution and transfer of powers. The federal System of government has one central government deal with matters involving the whole nation. This system was adopted ...
However, the only factor which has slowed the growth of disruptive services is the relatively lower SMART phone penetration due to brand loyalty of the customers and customer intolerance to the technical complications. The day the smart phone penetration becomes high there will not be any traditional methods of communication like SMS, IDD or Local Call. Moreover, the revenue from the foreign operators when making IDD incoming for using the local network, which is considered to be a fairly significant proportion, is at risk with the emergence of the modern applications like Skype, viber and etc.
Government action – Moderate
Over the past decade, the telecommunication industry experienced numerous favorable changes including de-regulation, privatization and innovations in the sector which led to growth in South Asian telecommunication industry.
With these dynamic changes, the industry faces a plethora of new competitors captivating the industry to a higher level. However, the removal of a mobile tariff floor in many regions could lead to a return to price wars in the market, boosting inactive subscribers and falling ARPUs.
On the other hand, there are significant barriers of entry created through Government regulations. These regulations mainly include licensure, an agreement to meet the stringent regulatory requirements of the regulatory bodies and a hefty initial deposit. These criteria prevent the entry of many new potential entrants to the industry. In addition, the Telecommunication regulatory bodies auction the spectrum rights where well established companies can get a competitive advantage over the peers by acquiring the rights.
