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Marketing of Services

In line with the global trends where services form a major chunk of the economies, India, too has witnessed a phenomenal growth in the services sector in the last few years. Till very recently, most of the large services organizations in the country had been operating in a monopolistic environment. With the privatization of a large number of services, the behemoths are encountering the streaks of competition and are waking up to the new market order

The customers are experiencing the joys of transformation of the services sector with important segments like Banking and financial services, Travel and Transport, Health, Entertainment, Telecom and IT services dramatically enhancing the customer value. We have seen the emergence of Convenience Banking, Tele-medicine and web based health care, aggressively priced high profile telecom services and attractive financing schemes which have changed our lives. The Indian marketing whiz kids are grappling with the new market dynamics that services have brought forth and this sector, due to its sheer growth rates, has assumed tremendous importance in the last few years. Though a number of steps have been initiated in this direction, yet there is a lot, which is left to be desired.

Human element is the single most important factor in the services business because of the continuous customer interface. With the explosion of the services companies, the concept of customer care has taken roots in our country but there is still a lot of ground to be covered. There is an urgent need to bring about a customer orientation across the entire spectrum of functions. The companies have to build an effective human resource strategy capable of driving the entire organization towards a common customer oriented corporate vision and only devising catchy slogans and forming customers care cells may not be the right answer. During a recent informal chat, a senior banker working for one of the country’s top banks admitted that his bank had implemented strong centralized systems which had, in fact made banking more tedious for the customers. Interestingly, this bank claims to be the industry leader but what remains to be seen is whether they are the leaders in just systems or the real thing i.e. customer satisfaction. The services companies need to work on strategies revolving around the customers and should set impeccable standards of customer relationship management.

A sudden spurt in the services sector has led to an inadequate availability of trained manpower. Most of the high profile banks have employed young smart looking executives who generally have shallow knowledge and are always seen turning to each other for help which often makes the customers jittery. Most of the services are packaged in the form of a dish, which is extremely well garnished but with a flat taste. The organizations, therefore, need to focus a lot on training to ensure the delivery of high quality of service.

Most of the services also comprise a product, which is an integral part of the service, and it is, therefore, imperative for the companies to focus on the product as much as on the service. A large number of services companies go an extra mile to improve the service quality but often relegate the product to the background. This results in the sub optimal customer value, which ultimately leads to the customer churn. A case in point is that of telecom companies where the service delivery is actually through a device and a small compromise on this front can result in customers shying away from the service provider despite his putting up the best network technologically.

Unlike most of the consumer product categories, where there is no track of the customers buying a particular brand or a product, a mega opportunity for the service companies is the availability of the database of the customers. This acts as an enabler for them to hold on to their valued customer bases and the instant access to these also facilitates the planning and the execution of the brand loyalty programmes. In order to cater to the specific segments of the market, the services companies should do a comprehensive customer profiling on the basis of which a range of such programmes can be planned

Another area where services companies can leverage their expertise is to offer customized solutions to meet the requirements of the varied customer segments. This shall go a long way in building up of a large base of loyal and happy customers. Another edge, which the services companies have, is in the form of the immediate customer feed back. The companies, therefore, need to be more responsive to initiate corrective measures and this factor alone can make them highly successful in their areas of business.

To gain both mind share and the market share, the services companies should devise a coherent strategy, which revolves around the service quality, service content, product offering and the customer relationship management

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3G – The Third Generation Wireless Technology

What is 3G?

The term 3G is short form for Third-Generation wireless technology, a technology that has helped bring together two of the world’s fastest-growing industries—mobile communications and the “wireless” Internet. Advanced 3G handsets allow users to access music, photos and videos, while on the move. 3G is a generic term covering a range of future wireless network technologies, including WCDMA, CDMA2000, UMTS and EDGE.

3G combines high-speed mobile access with Internet Protocol (IP) based services. This doesn’t just mean fast mobile connection to the World Wide Web – by liberating us from slow connections, cumbersome equipment and immovable access points. 3G has resulted in new ways to communicate, access information, conduct business and learn.

How have the wireless technologies evolved?

The first generation of cellular phones was based on Frequency Modulated (FM) analog technology. Most countries developed their own systems, but while these phones allowed for roaming within one region, they could not be used across different countries.

This was especially problematic in Europe, where each country had its own standard. To address this problem, the European Telecommunications Standards Institute (ETSI) created the first Second-Generation (2G) digital technology called Global System for Mobile Communications (GSM). GSM was mandated in the early 1990s as the digital technology for all of Europe. GSM has become the most widely deployed digital cellular technology.

Japan deployed a different technology—Personal Digital Cellular (PDC). The systems were designed to increase the voice capacity of the original analog systems, as the First-Generation analog were becoming capacity limited due to the explosive growth of the wireless industry. PDC is a TDMA-based technology, operating in the 800 MHz and 1500 MHz frequency bands. While Europe and Japan worked to standardize on one digital technology, the US allowed for multiple technologies.

To get the world on track for the deployment of 3G standards, the International Telecommunications Union (ITU) started the IMT-2000 project—the technical framework for 3G. The goal of this project was to establish one worldwide global standard for the next-generation of mobile communications. System definitions required the support of voice and data communications, with data rates of 144 Kbps for high-speed mobility, 384 Kbps for low-speed mobility, and 2 Mbps for fixed-location terminals. The frequency bands 1885-2025 MHz and 2110-2220 MHz were set-aside for the IMT-2000 project.

Thus, the ultimate goal was to give a new focus to the development of mobile systems that would offer voice and mobile multimedia to the mass market. 3G technologies have opened up a whole new world of possibilities for wireless operators, now that wireless networks are not restricted to voice-only systems. The data capabilities of 3G systems allow operators to take advantage of the explosive growth potential the Internet has provided to traditional wire line operators over the last five years.

What are the capabilities of 3G systems?

The following are some of the key service attributes and capabilities of 3G systems:
• Capability to support circuit and packet data at high bit rates:
• 144 kilobits/second or higher in high mobility (vehicular) traffic
• 384 kilobits/second for pedestrian traffic
• 2 Megabits/second or higher for indoor traffic
• Interoperability and roaming
• Common billing/user profiles:
• Sharing of usage/rate information between service providers
• Standardized call detail recording
• Standardized user profiles
• Capability to determine geographic position of mobiles and report it to both the network and the mobile terminal
• Support of multimedia services/capabilities:
• Fixed and variable rate bit traffic
• Bandwidth on demand
• Asymmetric data rates in the forward and reverse links
• Multimedia mail store and forward
• Broadband access up to 2 Megabits/second

What are the 3G Applications and Services?

Due to availability of dual mode multimedia mobile phones, users are able to use the following applications and services:
Always on—for example, e-mail, personal organizer, traffic management, automation, sales, and so on.
Information—for example, Web surfing, corporate Intranet, net games, music, news services, location, events and transportation services.
Purchasing—for example, on-line shopping, banking, gambling, ticketing.

It is projected that by 2004, outside North America, forty percent of e-commerce transactions with consumers will be initiated from a portable cellular-enabled service.

What is the next emerging standard?

After 3G, it is now time to think about the future of mobile technology called 4G i.e. the 4th Generation Wireless.
The cellular industry began developing 2G systems in the early 1980s. As experience shows, the lead-time for mobile phone systems development is about 10 years. Primary thinking on 3G took place in 1991 as 2G (GSM) systems just started to roll out. Therefore, it is felt that 4G should be operational from around 2011, and would build on the second phase of 3G when all networks are expected to embrace Internet protocol (IP) technology. In recent times, companies such as Ericsson, Motorola, Lucent, Nortel and Qualcomm have come up with “3G-plus” concepts that would push performance of approved, though still emerging, standards beyond current ones.

4G speeds could be as high as 100 Mbps. Thus, 4G will represent another quantum leap in mobile Internet speeds and picture quality. 4G could bring connection speeds of up to 50 times faster than 3G networks and three-dimensional visual experiences for the first time. 4G could be built on 3G-telephony spectrum, but higher capacity demand would create a need for even more spectrum.

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CDMA

What is CDMA?

One of the most important concepts in any cellular telephone system is that of “multiple access”, meaning that multiple, simultaneous users can be supported. In other words, a large number of users share a common pool of radio channels and any user can gain access to any channel (each user is not always assigned to the same channel). A channel can be thought of as merely a portion of the limited radio resource, which is temporarily allocated for a specific purpose, such as someone’s phone call. A multiple access method is a definition of how the radio spectrum is divided into channels and how channels are allocated to the many users of the system

Code Division Multiple Access (CDMA) is a digital wireless technology that was pioneered and commercially developed by QUALCOMM.

Though CDMA’s application in cellular telephony is relatively new, it is not a new technology. CDMA has been used in many military applications, such as anti-jamming (because of the spread signal, it is difficult to jam or interfere with a CDMA signal), ranging (measuring the distance of the transmission to know when it will be received), and secure communications (the spread spectrum signal is very hard to detect).

Commercially introduced in 1995, CDMA quickly became one of the world’s fastest-growing wireless technologies. In 1999, the International Telecommunications Union selected CDMA as the industry standard for new “third-generation” (3G) wireless systems. Many leading wireless carriers are now building or upgrading to 3G CDMA networks in order to provide more capacity for voice traffic, along with high-speed data capabilities.

Today, over 100 million consumers worldwide rely on CDMA for clear, reliable voice communications and leading-edge data services.

How does CDMA technology work?

CDMA works by converting speech into digital information, which is then transmitted as a radio signal over a wireless network. Using a unique code to distinguish each different call, CDMA enables many more people to share the airwaves at the same time – without static, cross-talk or interference.

How has CDMA developed over the years?

The world’s first cellular networks were introduced in the early 1980s, using analog radio transmission technologies such as AMPS (Advanced Mobile Phone System). Within a few years, cellular systems began to hit a capacity ceiling as millions of new subscribers signed up for service, demanding more and more airtime. Dropped calls and network busy signals became common in many areas.

To accommodate more traffic within a limited amount of radio spectrum, the industry developed a new set of digital wireless technologies called TDMA (Time Division Multiple Access) and GSM (Global System for Mobile). TDMA and GSM used a time-sharing protocol to provide three to four times more capacity than analog systems. But just as TDMA was being standardized, an even better solution was found in CDMA.

The founders of QUALCOMM realized that CDMA technology could be used in commercial cellular communications to make even better use of the radio spectrum than other technologies. They developed the key advances that made CDMA suitable for cellular, then demonstrated a working prototype and began to license the technology to telecom equipment manufacturers.

The first CDMA networks were commercially launched in 1995, and provided roughly 10 times more capacity than analog networks – far more than TDMA or GSM. Since then, CDMA has become the fastest-growing of all wireless technologies, with over 100 million subscribers worldwide. In addition to supporting more traffic, CDMA brings many other benefits to carriers and consumers, including better voice quality, broader coverage and stronger security.

What are the benefits of CDMA?

When implemented in a cellular telephone system, CDMA technology offers numerous benefits to the cellular operators and their subscribers. The following is an overview of the benefits of CDMA.
1. Capacity increases of 8 to 10 times that of an AMPS analog system and 4 to 5 times that of a GSM system
2. Improved call quality, with better and more consistent sound as compared to AMPS systems
3. Simplified system planning through the use of the same frequency in every sector of every cell
4. Enhanced privacy
5. Improved coverage characteristics, allowing for the possibility of fewer cell sites
6. Increased talk time for portables
7. Bandwidth on demand

How does CDMA technology compare with earlier technologies?

Different types of cellular systems employ various methods of multiple access. The traditional first generation (1G) analog cellular systems, such as those based on the Advanced Mobile Phone Service (AMPS) and Total Access Communications System (TACS) standards, use Frequency Division Multiple Access (FDMA). FDMA channels are defined by a range of radio frequencies, usually expressed in a number of kilohertz (kHz), out of the radio spectrum.

A common multiple access method employed in second generation (2G) digital cellular systems is the Time Division Multiple Access (TDMA). TDMA digital standards include North American Digital Cellular (know by its standard number IS-54), Global System for Mobile Communications (GSM), and Personal Digital Cellular (PDC).

TDMA systems commonly start with a slice of spectrum, referred to as one “carrier”. Each carrier is then divided into time slots. Only one subscriber at a time is assigned to each time slot, or channel. No other conversations can access this channel until the subscriber’s call is finished, or until that original call is handed off to a different channel by the system.

With CDMA, unique digital codes, rather than separate RF frequencies or channels, are used to differentiate subscribers. The codes are shared by both the mobile station (cellular phone) and the base station, and are called “pseudo-Random Code Sequences.” All users share the same range of radio spectrum.

One of the unique aspects of CDMA is that while there are certainly limits to the number of phone calls that can be handled by a carrier, this is not a fixed number. Rather, the capacity of the system will be dependent on a number of different factors.
Just as the second generation of wireless technology improved upon earlier systems, the industry looked to a third generation of technology for more advances. Although wireless was used almost exclusively for voice communication, the ability to deliver data over the air was also very promising, especially as Internet users and content proliferated.

In 1999, the International Telecommunication Union adopted an industry standard for third-generation (3G) wireless systems that can deliver high-speed data and other new features. The 3G standard includes three operating modes based on CDMA technology, and over 50 leading manufacturers have already licensed 3G CDMA from QUALCOMM

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Mobile Virtual Network Operator (MVNO)

Telecom operators are struggling in today’s market environment. Competition is fierce and the operators are struggling for retention and average revenue per user. Mobile Virtual Network Operators (MVNO) are the new players in the mobile communications market. With the coming in of MVNOs, the markets are becoming fiercer.

What is the concept of Mobile Virtual Network Operator (MVNO)?

A Mobile Virtual Network Operator (MVNO) is a mobile operator that does not own its own spectrum and usually does not have its own network infrastructure. Instead, MVNOs have business arrangements with traditional mobile operators to buy minutes of use (MOU) for sale to their own customers.

The concept behind having the MVNO is to allow companies to participate in the business of supplying mobile services without having to hold a full MNO licence. MVNOs can focus on services and application levels, providing a vast variety of products to users.

There are different types of MVNOs, with different degrees of sophistication when it comes to the equipment owned and the services provided. Overall the MVNOs are expected to become drivers of differentiation among operators, by providing tailored mobile services to identified target users.

Till date, MVNOs are mostly a European, GSM phenomenon. With many simple resellers in the United States gaining popularity, it is likely that the MVNO concept will catch on in the US and other parts of the world as well.

What are distinguishing characteristics of the MVNO?

We have heard about resellers of telecom services such as long distance, local exchange, and mobile network services. In contrast, MVNOs typically add value such as brand appeal, distribution channels etc. to the resale of mobile services.

Successful MVNOs are those who position their operations so that customers do not find any significant differences in service or network performance yet they offer some special affinity to their customers. Unlike simple resellers, who often have little or no brand recognition, MVNOs are typically well known, well positioned companies, with a good deal of marketing clout. For example, Virgin Atlantic Airlines is a MVNO in the UK that uses its market recognition to position itself for selling directly to its airline customers and others.

Successful MVNOs will also be those who have ample financial resources and sufficient agreements with existing operators to provide a good service coverage area. Additionally, well-diversified independent MVNOs can offer a product mix that incumbent mobile operators can not match. For example, grocery store MVNOs could offer a package of MOUs and groceries.

The MVNOs specialise not in infrastructure assets but in market assets and they rent capacity from existing operators and resell it to audiences whom they understand intimately. These new players specialise in customer knowledge and brand management, and we know that branding is for share of customer base, and companies with significant brand equity expand their relationship through a trust-based proposition, and add more and more services to the mix.

What customers really want is a personalised service: the best network for what they are doing at that moment, regardless of who owns the infrastructure.

Mobile operators can lease the excess capacities in their networks on a wholesale basis to Mobile Virtual Network Operators (MVNOs) who manage customer relationships and partner for everything else. Established, well-recognized companies are leading the MVNO market by extending their formidable brand equity into the mobile data arena, and they will play an increasing role in popularizing mobile data services among consumers.

What are the Operational Issues involved?

While MVNOs typically do not have their own infrastructure, some leading providers are actually deploying their own Mobile Switching Centers (MSC) and even Service Control Points (SCP) in some cases. Leading MVNOs deploy their own mobile IN infrastructure in order to facilitate the means to offer value-added services. In this way, MNVOs can treat incumbent infrastructure such as radio equipment as a commodity, while they offer their own advanced and differentiated services based on exploitation of their own intelligent network infrastructure. The goal of offering value-added services is to differentiate the product/service offering compared to the incumbent mobile operator, allowing for customer acquisition and preventing the MVNOs from competing on the basis of price alone.

MVNOs have full control over the SIM card, branding, marketing, billing, and customer care operations. While sometimes offering operational support systems (OSS) and business support systems (BSS) to support the MVNO, the incumbent mobile operators mostly keep their own OSS/BSS processes and procedures separate and distinct from those of the MVNO.

The selection of network infrastructure today will separate successful MVNOs in the future. Advanced network visibility and control are essential so that MVNOs can offer value-based services today that can set the tone for future billing models thus ensuring long-term profitability.

What are the Business Issues for operators?

The major benefit to traditional mobile operators cooperating with MVNOs is to broaden the customer base, which means selling additional MOUs at a zero cost of acquisition. It is likely that incumbent mobile operators will continue to embrace MVNOs as a means of deriving revenue to offset the enormous cost of building 3G networks.
As more MNVOs expand in the marketplace, they are likely to first target prepaid customers as a means of low cost market entry themselves.

Most regulating bodies are in favor of MVNOs as a means of encouraging competition, which would ultimately lead to greater choice and lower prices.

With the advent of the MVNOs, many incumbent mobile operators will evaluate the opportunity to offer supplementary MVNO services of their own. To do so, existing mobile operators will use their established branding, service knowledge, and supplier relationships to compete against independent MVNOs.

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Wireless application protocol (WAP)

People on the move need services, information and entertainment that can keep up with them. With access to mobile services, decisions and interactions happen here and now. The value of mobile services to end-users is boosted by three separate elements: personalization, time-sensitivity and location awareness. Combining these three effectively adds even more value.

Wireless application protocol (WAP) is a protocol that has successfully established a de facto standard for the way in which wireless technology is used for Internet access. WAP technology has been optimized for information delivery to mobile phones.

What is Wireless application protocol (WAP)?

Wireless application protocol (WAP) is an application environment and set of communication protocols for wireless devices designed to enable manufacturer, vendor, and technology-independent access to the Internet and advanced telephony services.

WAP bridges the gap between the mobile world and the Internet as well as corporate intranets and offers the ability to deliver an unlimited range of mobile value-added services to subscribers—independent of their network and terminal. Mobile subscribers can access the same wealth of information from a pocket-sized device as they can from the desktop.

WAP is a global standard and is not controlled by any single company. Ericsson, Nokia, Motorola, and Unwired Planet founded the WAP Forum in 1997 with the initial purpose of defining an industry-wide specification for developing applications over wireless communications networks. The WAP specifications define a set of protocols in application, session, transaction, security, and transport layers, which enable operators, manufacturers, and applications providers to meet the challenges in advanced wireless service differentiation and fast/flexible service creation. There are now over one hundred members representing terminal and infrastructure manufacturers, operators, carriers, service providers, software houses, content providers, and companies developing services and applications for mobile devices.

WAP also defines a wireless application environment (WAE) aimed at enabling operators, manufacturers, and content developers to develop advanced differentiating services and applications.

What are the benefits of WAP?

The benefits can be categorized separately for the operators, content providers and the end users.

Operators
For wireless network operators, WAP promises to decrease churn, cut costs, and increase the subscriber base both by improving existing services, such as interfaces to voice-mail and prepaid systems, and facilitating an unlimited range of new value-added services and applications, such as account management and billing inquiries. New applications can be introduced quickly and easily without the need for additional infrastructure or modifications to the phone. This will allow operators to differentiate themselves from their competitors with new, customized information services. WAP is an interoperable framework, enabling the provision of end-to-end turnkey solutions that will create a lasting competitive advantage, build consumer loyalty, and increase revenues.

Content Providers
Mobile consumers are becoming hungrier to receive increased functionality and value-added services from their mobile devices, and WAP opens the door to this huge market. This presents developers with significant revenue opportunities. As WAP is a global and interoperable open standard, content providers have immediate access to the customers who seek such applications to enhance the service offerings given to their own existing and potential subscriber base.

End Users
End users of WAP will benefit from easy, secure access to relevant Internet information and services such as unified messaging, banking, and entertainment through their mobile devices. Intranet information such as corporate databases can also be accessed via WAP technology. Because a wide range of handset manufacturers already supports the WAP initiative, users will have significant freedom of choice when selecting mobile terminals and the applications they support. Users will be able to receive and request information in a controlled, fast, and low-cost environment, a fact that renders WAP services more attractive to consumers who demand more value and functionality from their mobile terminals.

Why is WAP being chosen?
In the past, wireless Internet access had been limited by the capabilities of handheld devices and wireless networks.
WAP utilizes Internet standards that have been optimized for the unique constraints of the wireless environment i.e. low bandwidth, high latency, and less connection stability.
WAP utilizes binary transmission for greater compression of data and is optimized for long latency and low bandwidth. WAP sessions cope with intermittent coverage and can operate over a wide variety of wireless transports.

The advantages that WAP can offer over these other methods are the following:
• open standard, vendor independent
• network-standard independent
• transport mechanism–optimised for wireless data bearers
• application downloaded from the server, enabling fast service creation and introduction, as opposed to embedded software

What is the Future of WAP?

The tremendous surge of interest and development in the area of wireless data in recent times has caused worldwide operators, infrastructure and terminal manufacturers, and content developers to collaborate on an unprecedented scale, in an area notorious for the diversity of standards and protocols. The collaborative efforts of the WAP Forum have devised and continue to develop a set of protocols that provide a common environment for the development of advanced telephony services and Internet access for the wireless market. Industry players from content developers to operators can explore the vast opportunity that WAP presents. As a fixed-line technology, the Internet has proved highly successful in reaching the homes of millions worldwide. However, mobile users until now have been forced to accept relatively basic levels of functionality, over and above voice communications and are beginning to demand the industry to move from a fixed to a mobile environment, carrying the functionality of a fixed environment with it.

With the advent of GPRS, which aims at increasing the data rate to 115 kbps, as well as other emerging high-bandwidth bearers, the access speeds equivalent or higher to that of a fixed-line scenario have become a reality.