06 Chapter

BUILDING CUSTOMER LOYALTY
THROUGH VALUE ADDED SERVICES:

A CASE OF TELECOM SECTOR
THESIS
SUBMITTED TO THE UNIVERSITY OF IAMMU
FOR THE AWARD OF DEGREE OF
DOCTOR OF PHITOSOPHY
IN
MANAGEMENT
BY
MANDEEP SINGH
UNDER THE SUPERVISION OF
DR. ALI(A SHARMA

ASSOCIATE PROFESSOR, THE BUSINESS SCHOOL
UNIVERSITY OF JAMMU
FACULTY OFBUSINESS STI]DIES

UNIVERSITY OF IAMMU
IAMMU
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CERTIFICATE
Mandeep Singh, who was registered for the Degree of Ph.D. under my supervision, has
completed his work. The exact title of his thesis is "BUILDING CUSTOMER LOYATTY
THROUGH VALUE ADDED SERVICES: A CASE OF TELECOM SECTOR'.
I certify that he has worked under my supervision and the work done by him is original
and worthy of consideration for the award of Degree of DOCTOR OF PHILOSOPHY in
Management.
I further certify that:
t. The thesis embodies the work of the candidate himself;
2. The candidate worked under my supervision for the period required under
Statutes;
3. The candidate has put in the required attendance in the Department during the
period; '
4. The candidate has fulfilled the Statutory conditions as laid down in Section 18 of
Statutes Governing Doctor of Philosophy in Management; and
5. The conduct of the scholar remained satisfactory during the period of research.
Dated:
Associate Professor
The Business School
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University of
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fammu
fammu .'\u"1JP
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- Prof. Neelu Rohmetra
\g,r'q^^ Director
The Business School
No; b s l,tlzzz University of f ammu
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d?r 0? -oV *Zon

DECLARATION
I, Mandeep Singh, hereby declare that the thesis entitled "BUILDING CUSTOMER
TOYALTY THROUGH VALUE ADDED SERVICES: A CASE OF TETECOM SECTOR,,

submitted to the University of f ammu for the award of Degree of Doctor of
Philosophy in Management, is an original research work carried out by me in The
Business School at the University of Jammu during the peri od 2009-2011 under the
supervision of Dr. Alka Sharma, Associate Professor, The Business School, University of
fammu. Any extract of this research in part or as a whole has not been included,
incorporated or added to any other work or similar title by any scholar in any other
University.
Dated: J"iU.7\ )ott Mandeep Singh

ACKNOWLEDGEMENT
Venturing into new areas and reaching to some new constructive conclusion has been
the basis of my education and study so far. This aptitude encouraged and motivated me
to go for further studies in 'Building Customer Loyalty Through Value Added Services: A
Case of Telecom Sector'. lt is an area of interest that kept tickling my imagination. This
work of mine is not an individual effort. Many learned personalities contributed and
supported me in bringing out this research work. I feel greatly humbled for their
valuable help, support and motivation.
First and foremost, I would like to express my gratitude and thank my supervisor,
Dr. Alka Sharma, Associate Professor at The Business School, University of Jammu" But for
her kind, enlightening and productive guidance, this work could not have taken its
present shape and form. It would not have been possible to put my research labour in
proper order without her able guidance. We used to sit together in the department since
morning till late evenings, almost every day discussing various issues relateJl to my
research work. I think she has put in lot more efforts than me, in order to bring out this
piece of research work in proper time and manner. Whenever she used to go for any
conferences or seminars anywhere, she always used to bring a lot oFreference material
for me so that my time and efforts were saved. In nutshell, she provided me with
encouragement and support in various ways.
I express my deepest gratitude to respected Prof. Neelu Rohmetra, Director of The

Business School, University of Jammu, for her encouragement, never-ending support and
guidance. During the last two years, I got many opportunities to work under her
dynamic supervision. As a result, I was able to learn many tit-bits of event management
and organising my work.
No work can be an outcome of individual effort, until and unless it is supported, helped,
encouraged and systematically put in order by other tertiary help. In this regard, I
express my heartfelt gratitude and thanks to all my revered teachers who have always
been very kind and ready with their help and advice throughout. I got associated with
The Business School in the year 2006 and ever since, Prof. Ashok Aima, Prof. M.R,
Rana, Prof. l. R. Dhotra, Prof. Versha Mehta, Prof. B. C. Sharma, Dr. Raiindra
Mishra, Dr. Parikshat S. Manhas, Dr. Sameer Gupta and Dr. Amisha Gupta have
always provided with me all the support and encouragement.
My special thanks to Prof. Keshav Sharma for his unconditional support and guidance
ever since I got associated with The Business School. He has extended his invaluable
support and contribution for the current research work that cannot be expressed in
words. He not only guided and helped me in collecting data from Chandigarh and Shimla
but also helped me with my boarding and lodging arrangements at both the places. I also
owe a special thanks to Dr. Vinay Chauhan, Dr. Komal Nagar and Dr. Rachna
Mahaian for helping me in compiling all scattered thoughts in a well knit and proper
woven piece of research.
I don't want to value the invaluable help of Dr. Anil Gupta by saying a little word of
thanks. His help is far above than these customary words. Be it the summer internship
during my MBA at The Business School or campus placements and above all this Ph. D
work, he has always been there as a teacher; an elder brother and a friend. But for his
kind and generous help and guidance, I would have never been able to finish this
mammoth task. He is one of the key persons who motivated and encouraged me to take
up this research work.
t
I would also like to thank Dr. |aya Bhasin, Ms. Saloni and my friend and now a faculty
member Ms. Farah Choudhary.
Collecting data, compiling it and some written work are not the only things that help a
scholar's work to reach its logical end but straight discussions among fellow scholars,
and some other peripheral discussions with the people in the department and the
University have also played a great role in bringing out my research work in its present
shape. In this regard, I express my heartfelt thanks to all my co-researchers: Ms. Pallavi
Arora, Mr. Bhanu Pratap Singh, Mr. Teieshwar Singh, Ms. Ankita Dewan, Ms.
Shellika Gupta, Ms. Ridhi Sharma, Mr. Dinesh Gupta, Ms. Shivani Rana, Ms. Neha
Saraf, Mr. Deepak Manhas, Ms. Naveeda Sehar, Mr. Anish Yousa{, Ms. Aniu Thapa,
Ms. Farhat Bano Beg, Mr. Ramiit, Mr. feet Dogra, Ms. Shivani Vaid, Mr. Amit
Sharma, Mr. Zubair, Mr. Manieet Singh, Mr. Ravinder Dogra, Mr. Vinod Kumar and
Ms. Raniu Katoch.
The man, who acted as a centralized axis for my compilation of all the data and helped
me in giving it a presentable shape, is Mr. Shafqat Aiaz. Without his unconditional help
and support, the tedious task of data compilation would not have been possible. Thank
you Shafqat!
I have been lucky enough to have the support of people not only in my department at
Jammu University but also, people in other departments, University Business School,
Punjab University, Shri Mata Vaishno Devi University and University of Himachal
Pradesh. My special thanks to Mr. Ashish Saihihpal [UBS- Regional Centre, Ludhiana)
Ms. Rashi Taggar [SMVDU), Mr. Deepak Sharma ISMVDUJ, Mr. Suresh Sadhotra
(SPMR College of Commerce, Jammu) and Dr. Ranta [Himachal UniversityJ for their
invaluable help in data collection for my research work. I would also like to thank the
staff members of Department of Computer Sciences, University of Jammu, especially to
Mr. Saniay Manhas, Mr. Amit Mahaian and Mr. Rakesh for their kind help and
support. My very special thanks to Ms. Saranpreet Kour Broca, Dr. Neelika Arora, Dr.
Suvidha Khanna, Dr. Anuradha Sharma, Mrs. Poonam Sharma and Dr. Bharti
Gupta, for their kind support and encouragement.
I would also like to thank Directorate of Distance Education, University of fammu

especially Dr. Sandeep Tandon for giving me an opportunity to teach the students
there. Interactions with the students there helped me a lot in better understanding of
management concepts. I express my gratitude to the staff of Central Library and
University administration for their support.
I don't want to forget to thank my friendsl Ms. Keshni Sharma fDoctoral Fellow at IIT-
KanpurJ and Ms. Neha Sadhotra fResearch Fellow at IIM-LucknowJ for their help in
getting a number reference material. Thank you for your support! I would also like to
thank Mr. Rohit Bhagat fReliance CommunicationsJ for his invaluable inputs that
helped me in better understanding of Value Added Services in telecom sector.
Thanks are also due to the non teaching staff of The Business School for extending their
help and support during the process. Therefore, I would like to express my heartfelt
thanks to Mr. Raineesh Baru, Mr. A. K. Ambardar, Mrs. Sheetal Kohli, Mrs. Aniu
Gupta, Mr. Sanieev Gupta, Mrs. Rupali Abrol, Mr. Sharif, Mr. Balwan Singh, Mr.
Dileep Bhat, Ms. Sakshi Gupta, Mr. Gurcharan Singh, Mr. Duni Rai, Mr. Parshotam
Sharma, Mr. Ravi Kumar, Mr. Rai Kumar, Mr. Tilak, Mr. Ariun, Mr. Moti and Mr.
Saniay. A very special thanks to Mr. Kuldeep Rai and Mr. Atul, who always helped me
in administrative and paper work related to my research.
I humbly express my gratitude to the editorial team of lournal of Services Research

and fims-8M Research fournal for accepting my research papers for publications in
their esteemed journals. I am also grateful to Mr. Ankit Magotra and Mr. Aaditya
Sharma fboth students of MBA at The Business School) and all those who directly or
indirectly helped me in the data collection and to those who freely gave their time in
completing my questionnaires.
I also owe a humble thanks to Mr. Manish Pathania fCare College & Punjab Technical
University Study Centre), my friends from fammu and Kashmir Entrepreneurship
Development Institute, Mr. Vishal Ruy, Ms. Priyanka Mahaian, Mr. Gourav
Khaiuria, Mr. Dheerai, Mr. Vishavieet Singh [now a KAS officer], Mr. Kunal Anand
and Ms. travika Raina IWLC College, India- Jammu Campus) for inviting me as guest
faculty in their respective organisations from time to time. All these teaching
opportunities gave me an excellent platform to enhance my research and teaching skills.
Last but not least, I would like to express my special thanks and gra'titude to my uncle,
Dr. Balieet Singh fchacha ji), who is a teacher by profession, for his support and
guidance. He has also been my teacher since my childhood and one of those persons who
encouraged me to take up this research work.
It may appear formal and customary to thank my parents for all their support, still I feel
it to my duty to say, "Mumm!, Papa, I simply wrote the thesis, but you are always a
beacon light for me and shall encourage me for many more such works,"
For any errors or inadequacies that remain in this work, of course, the responsibility is
entirely my own
I may have forgotten some of the worthy valuable support who contributed to this thesis
in any way. My heartfelt thanks to them all!
, ,w,:_>_^E-Wt/o\l
t40,"
Mandeep Singh
TABLE OF CONTENTS
Acknowledgement
List of Tables
List of Figures
List of Acronyms Used
Chapter 1: Introduction 1-47

1.1 Relevance of Services Sector in Economy 1-3
1.2 Telecommunication Services: Importance and Evolution 3-9
1.3 Evolution of Telecom Services in India 10-11
1.4 Value Added Services (VAS): Concept and Evolution 12-14
1.5 Categories of Mobile Value Added Services 14-16
1.5.1 Entertainment VAS
1.5.2 Information VAS
1.5.3 mCommerce VAS
1.5.4 Mobile Applications
1.6 Key Value Added Services 16-20
1.6.1 Short Message Service (SMS) or Text Messaging
1.6.2 Instant Messaging
1.6.3 Multimedia Messaging Service (MMS)
1.6.4 Mobile E-mail
1.6.5 Video Service and Mobile TV
1.6.6 Caller Ring Back Tones (CRBT)
1.6.7 Wireless Internet
1.7 Market Size of Indian Mobile Value Added Services (VAS) Sector 20-22
1.8 Marketing of Telecom Services 22-33
1.8.1 Service Quality
1.8.2 Perceived Value
1.8.3 Customer Satisfaction
1.8.4 Customer Loyalty
1.9 Need For Study 34-35
1.10 Outline of the Study 36-38
References 39-47
Chapter 2: Review of Literature 48-97
2.1 Research Papers and Articles in Journals 48-78
2.2 Published Books 79
2.3 Industry Reports 80
2.4 Thesis and Dissertations 81-82
2.5 Other Miscellaneous Papers/Articles 82-85
2.6 Research Gap 85
References 86-97
Chapter 3: Profile of Companies 98-144

3.1 Introduction to Indian Cellular Market 98-103
3.2 Bharti Airtel Limited 103-115
3.2.1 Company Background
3.2.2 History
3.2.3 Recent Initiatives
3.2.4 Corporate Vision and Promise
3.2.5 Management Team
3.2.6 Milestones
3.3 Vodafone Essar Limited 115-123

3.3.2 History
3.3.2.1 Vodafone Group Plc
3.3.2.2 Vodafone Essar Limited
3.3.3 Recent Developments
3.3.4 Corporate Vision and Strategy
3.3.5 Milestones
3.4 Reliance Communications Limited 123-135

3.4.2 History
3.4.4 Corporate Vision and Mission
3.4.5 Board of Directors
3.4.6 Milestones
3.5 Bharat Sanchar Nigam Limited (BSNL) 136-140

3.5.1 Company Background and History
3.5.4 Milestones
References 141-144
Chapter 4: Research Methodology 145-167

4.1 Research Purpose 145-147
4.2 Research Hypotheses 147-149
4.3 Research Objectives 149-150
4.4 Questionnaire Design and Development 150-156
4.4.1 Quality of Value Added Services
4.4.3 Perceived Value of Services
4.5 Pretesting and Final Instrument 156-159

4.5.1 Value Added Services
4.5.2 Perceived value of Services
4.5.3 Overall Service Quality
4.6 Sampling 159-161
4.7 Data Tabulation, Statistical Tools and Techniques Used for Processing 161-163
4.7.1 Measure of Central Tendency (Mean)
4.7.2 Measure of Dispersion (Standard Deviation)
4.7.3 Regression Analysis
4.7.4 Percentage Analysis
4.7.5 Analysis of Variance (ANOVA)
4.7.6 Factor Analysis
4.7.7 Reliability Analysis of Measurement Scales
References 164-167
Chapter 5: Data Analysis and Findings 168-212

5.1 Demographic Profile 168-172
5.2 Factor Analysis 172-175
5.3 Descriptive Statistics for Various Measurement Items 175-183
5.4 Regression Analysis 183-199
5.4.1 Impact of Value Added Services (VAS) offered on
Perceived Service Quality
5.4.2 Relationship between Perceived Service Quality and

Perceived Value of Services
5.4.3 Relationship between Perceived Value of Services and

Customer Satisfaction
5.4.4 Relationship between Customer Satisfaction and Customer Loyalty

5.4.4.1 Relationship between Customer Satisfaction and
Customers’ Intention to Use Services in Future
5.4.4.2 Relationship between Customer Satisfaction and Customers’

Intention to Recommend Services to Others
5.4.5 Relationship between Value Added Services (VAS) offered and

Perceived Value of Services
Customers’ Intention to Recommend Services to Others
5.4.12 Relationship between Perceived Value of Services and
5.4.13 Relationship between Perceived value of Services and
5.5 Hypotheses Testing 200-201
5.6 Analysis of Variance (ANOVA) 201-211

5.6.1 ANOVA for Value Added Services
5.6.2 ANOVA for Perceived Service Quality, Perceived Value of Services and
5.6.3 ANOVA for Customer Loyalty
References 212
Chapter 6: Summary, Conclusion and Suggestions 213-233

6.1 Synoptic View 213-216
6.2 Objectives of the Study and Their Achievement 217-222
6.3 Validity of Hypotheses Tested 223-224
6.4 Analysis of Variance of Means 224-226
6.5 Conclusions and Suggestions 226-229
6.6 Limitations of the Study 229
6.7 Research Contribution, Managerial Implications and Direction for Future Research 230-233
Bibliography 234-257
Annexure
LIST OF TABLES
Table Number Table Title Page
Table 1.1 Performance in Services Growth of Top 12 Countries 2
Table 1.2 Revenue Structure of Indian Cellular Operators 21
Table 5.1 Respondents in Select Cities 168
Table 5.2 Gender Profile of Respondents 169
Table 5.3 Age-wise Representation of Respondents 169
Table 5.4 Type of Connection of Respondents 170
Table 5.5 KMO and Bartlett’s Test 172
Table 5.6 Total Variance Explained 173
Table 5.7 Constructs and Composite Reliability 174
Table 5.8 Features of Value Added Services 176
Table 5.9 Reliability of Value Added Services 177
Table 5.10 Comfort in Usage of Value Added Services 178
Table 5.11 Personal Attention Given by Operator 179
Table 5.12 Mean Values of Various Factors of VAS 179
Table 5.13 Perceived Value of Services 180
Table 5.14 Overall Service Quality 181
Table 5.15 Customer Satisfaction Level 182
Table 5.16 Intention to Use Services in Future 182
Table 5.17 Intention to Recommend Services to Others 183
Table 5.18a Regression Analysis: VAS and Perceived SQ 183
Table 5.18b Regression Coefficients: VAS and Perceived SQ 184
Table 5.19a Regression Analysis: Perceived SQ and PV of Services 185
Table 5.19b Regression Coefficients: Perceived SQ and PV of Services 185
Table 5.20a Regression Analysis: PV of Services and CS 186
Table 5.20b Regression Coefficients: PV of Services and CS 186
Table 5.21a Regression Analysis: CS and Intention to Use Services in Future 187
Table 5.21b Regression Coefficients: CS and Intention to Use Services in Future 188
Table 5.22a Regression Analysis: CS and Intention to Recommend Services to
Others 188
Table 5.22b Regression Coefficients: CS and Intention to Recommend Services
to Others 189
Table 5.23a Regression Analysis: VAS and PV of Services 190
Table 5.23b Regression Coefficients: VAS and PV of Services 190
Table 5.24a Regression Analysis: VAS and CS 191
Table 5.24b Regression Coefficients: VAS and CS 192
Table 5.25a Regression Analysis: VAS and Intention to Use Services in Future 193
Table Number Table Title Page
Table 5.25b Regression Coefficients: VAS and Intention to Use Services in
Future 193
Table 5.26a Regression Analysis: VAS and Intention to Recommend Services to
Others 194
Table 5.26b Regression Coefficients: VAS and Intention to Recommend Services
to Others 194
Table 5.27a Regression Analysis: SQ and CS 195
Table 5.27b Regression Coefficients: SQ and CS 195
Table 5.28a Regression Analysis: SQ and Intention to Use Services in Future 196
Table 5.28b Regression Coefficients: SQ and Intention to Use Services in Future 196
Table 5.29a Regression Analysis: SQ and Intention to Recommend Services to
Others 197
Table 5.29b Regression Coefficients: SQ and Intention to Recommend Services
to Others 197
Table 5.30a Regression Analysis: PV of Services and Intention to Use Services in
Future 198
Table 5.30b Regression Coefficients: PV of Services and Intention to Use
Services in Future 198
Table 5.31a Regression Analysis: PV of Services and Intention to Recommend
Services to Others 199
Table 5.31b Regression Coefficients: PV of Services and Intention to
Recommend Services to Others 199
Table 5.32a ANOVA: VAS with respect to the Operators 204
Table 5.32b Tukey’s HSD Homogeneous Subsets for Features of VAS 204
Table 5.32c Tukey’s HSD Homogeneous Subsets for Reliability of VAS 205
Table 5.32d Tukey’s HSD Homogeneous Subsets for Comfort in Usage of VAS 205
Table 5.32e Tukey’s HSD Homogeneous Subsets for Personal Attention Given
by Operator 206
Table 5.33a ANOVA: SQ, PV of Services and CS with respect to Operators 207
Table 5.33b Tukey’s HSD Homogeneous Subsets for Service Quality 208
Table 5.33c Tukey’s Homogeneous Subsets for Perceived Value of Services 208
Table 5.33d Tukey’s Homogeneous Subsets for Customer Satisfaction 209
Table 5.34a ANOVA: Customers’ Intention to Use Services in Future and
Intention to Recommend Services to Others with respect to
Operators 210
Table 5.34b Tukey’s HSD Homogeneous Subsets for Customers’ Intention
to Use Services in Future 211
Table 5.34c Tukey’s HSD Homogeneous Subsets for Customers’ Intention
to Recommend Services to Others 211
LIST OF FIGURES
Figure Number Figure Title Page
Figure 1.1 Mobile Network 6
Figure 1.2 Evolution of Value Added Services in India 13
Figure 1.3 Categories of Value Added Services 14
Figure 3.1 Composition of Indian Telecom Subscribers 99
Figure 3.2 Composition of Indian Cellular Subscribers 101
Figure 3.3 Group-wise market share (in terms of subscribers) of Indian

GSM Operators 101
Figure 3.4 Proportion of Pre-Paid & Post-Paid Subscribers in Indian

GSM Market 102
Figure 3.5 Global Presence of Airtel 104
Figure 3.6 Global Presence of Vodafone 116
Figure 5.1 Respondents of Select Operators 170
Figure 5.2 Respondents Using Different Types of Value Added Services 171
LIST OF ACRONYMS USED
1G First Generation cellular networks
2.5G 2.5 Generation cellular networks
2G Second Generation cellular networks
3G Third Generation cellular networks
3GPP Third Generation Partnership Project
3GPP2 Third Generation Partnership Project 2
4G Fourth Generation cellular networks
AMPS Advanced Mobile Phone Service
ANOVA Analysis of Variance
ANSI American National Standard Institute
ARPU Average Revenue Per User per Month
BSNL Bharat Sanchar Nigam Limited
CAGR Compound Annual Growth Rate
CDG CDMA Development Group
CDMA Cellular Digital Packet Data
CMTS Cellular Mobile Telephone Service
CRBT/RBT Caller Ring Back Tone/ Ring Back Tone
CRM Customer Relationship Management
CSO Central Statistics Office
DoT Department of Telecom
EDGE Enhanced Data rates for GSM Evolution
ETSI European Telecommunications Standard Institute
FDI Foreign Direct Investment
FMCG Fast Moving Consumer Goods
GDP Gross Domestic Product

GPRS General Packet Radio Service
GPS Global Positioning System
GSM Global System for Mobile Communication
IAMAI Internet And Mobile Association of India
ICT Information and Communication Technology
IM Instant Message
IMRB IMRB International
IMT-2000 International Mobile Telecommunications 2000
IN Intelligent Network
IP Internet Protocol
ISP Internet Service Provider
ITU International Telecommunications Union
IVR Interactive Voice Response
LAN Local Area Network
LTE Long Term Evolution
MNO Mobile Network Operator
MNP Mobile Number Portability
MPLS- Multiprotocol Label Switching-Virtual Private Networks
VPN
MTN Mobile Telephone Network and MTS Group of Africa
MTNL Mahanagar Telephone Nigam Limited
MTS Mobile Telephone Service
NMT Nordic Mobile Telephone
P2P Person-to-Person / Point-to-Point
PDC Personal Digital Cellular
QoS Quality of Service

RCOM Reliance Communications Limited
SBI State Bank of India
SIP Session Initiation Protocol
SMS Short Message Service
STK Sim Application Toolkit
TIA Telecommunications Industry Association
TRAI Telecom Regulatory Authority of India
UASL Unified Access Service Licence
UMTS Universal Mobile Telecommunication System
URL Universal Resource Locator
USAL Unified Service Access Licence
USSD Unstructured Supplementary Services Data
VAS / Value Added Services / Mobile Value Added Services
MVAS
VoIP Voice over IP
VSAT Very Small Aperture Terminal
WAN Wide Area Network
WAP Wireless Application Protocol
W-CDMA Wideband CDMA
Wi-MAX Worldwide Interoperability for Microwave Access

CHAPTER 1
INTRODUCTION
“It is high time that the ideal of success should be replaced by ideal of service.”
----- Albert Einstein
1.1 RELEVANCE OF SERVICES SECTOR IN ECONOMY
Services constitute the tertiary sector in an economy, including all activities that are neither
related to agriculture nor manufacturing. The emergence of services sector can be traced back
to post World War-II era, when it started assuming greater significance in rebuilding the
world economies that were devastated due to the collapse of manufacturing sector.
Eventually, this phenomenon led to a change in the basic structure of economies with services
becoming the dominant component. However, with the passage of time, newer services were
developed leading to their simultaneous commercialization and professionalization. As a
result, the services sector became the back-bone of every economy. According to the Indian
Economic Survey 2010-11, UN National Accounts Statistics in its report published on 4th
February 2011, has also mentioned that the services sector with an overall share of 64.2
percent in world GDP in 2009 (Table 1.1), has been playing a dominant role in the world
order, especially in high-income countries which have transited to services-led growth.
From education to entertainment, finance, fast-food, travel, telephone, advertisement to
market research, maintenance services, retailing etc. services are widely used by people and
1
organizations today. More so with the advancements in new technologies
technologies like
telecommunication, information based technologies and continuous innovations in performing
business functions; a radical change has taken place in the living-habits,

living habits, tastes, preferences,
needs and requirements of people.
Table 1.1:: Performance in Services Growth of Top 12 Countries
Rank* Share of Services Estimated CAGR

Services Growth
Country Overall Services (% of GDP) (%)
Rate (%) 2009
GDP GDP 2009 (2000
(2000-09)
USA 1 1 76.5 -3.1 2.0
JAPAN 2 2 71.0 -5.6 0.5
CHINA 3 3 39.1 9.4 10.5
GERMANY 4 4 66.6 -1.4 1.4
FRANCE 5 5 71.1 -1.1 1.5
UK 6 6 70.5 -3.3 2.3
ITALY 7 7 66.6 -2.0 0.9
BRAZIL 8 8 57.3 2.6 3.6
SPAIN 9 9 63.6 -1.0 3.1
CANADA 10 10 65.5 -0.2 2.8
INDIA 11 12 52.0 6.8 8.9
55.2**
RUSSIA 12 11 54.0 -5.1 5.6
WORLD 64.2 -1.6 2.5
Source: Indian Economic Survey 2010-11

11
* Ranks are based on GDP at current prices ** In 2009-10 as per CSO, India.
In response to this, the corporate sector has been developing multi-faceted

multi faceted services to deliver
the best to the society leading to a phenomenal growth of services sector. This fact holds truth
in Indian context also, where GDP of 7,87,7947 crores (at current

rent market prices, 2010-11)
2010
2
with a growth rate of 8.6% gets a contribution of around 55.2% from a very dynamic and
substantial services sector that had an expected growth rate of around 10% for the year 2010-
11 (Indian Economic Survey, 2010-11). While referring to Table1.1, India with a services
sector share of 52% in national GDP in 2009 and 55.2% in 2009-10 has been compared with
the other 11 countries, which have recorded the highest overall GDP. The comparison clearly
indicates that China’s share of services in its national GDP at 39.2 per cent has been lowest
among all. However, in terms of services growth rate, China (CAGR: 10.5 per cent) followed
by India (CAGR: 8.9 per cent) have emerged as the two fastest growing economies among the
top 12 countries. Further, in the global crisis year of 2009, when most of the countries have
recorded negative growth in services, only China(9.4 per cent), India (6.8 per cent), and Brazil
(2.6 per cent) registered positive growth. Further analyzing the services sector, it has been
seen that telecommunication, as a service, has emerged as the sunrise sector in almost all the
economies. It is so because globally, the focus is shifting towards the telecom sector,
especially in recent years, due to the enormous growth of Information Technology and its
significant impact on the rest of the economy.
1.2 TELECOMMUNICATION SERVICES: IMPORTANCE AND
EVOLUTION
Telecommunication refers to the transmission of information, over significant distances, for
the purpose of communication. In earlier times, telecommunication involved the use of visual
signals, such as beacons, smoke, semaphore telegraphs, signal flags, and optical heliographs,
or audio messages via coded drumbeats, lung-blown horns, or sent by loud whistles. In the
modern age of electricity and electronics, telecommunication now also includes the use of
electrical devices such as telegraphs, telephones, and teletypes, the use of radio and
3
microwave communications, as well as fiber optics and their associated electronics, plus the
use of the orbiting satellites and the internet.
Due to such a wide spectrum of mediums being used for telecommunications globally, the
industry has been estimated to be about US$4 trillion sector in 2010. It is one of the major
employment providers in the world, with nearly 1 million employees in the United States of
America alone (Plunkett, 2010). Besides being the major employment provider, the cellular
industry has impacted the economies at both structural as well as economic level so much so
that it has emerged as the complex new industry with advanced technologies, organizational
and human capabilities to deliver the services to final user on the one hand and on the other
with large multiplier effects in terms of investments, income and employment. Even, it is to
further mention that many aspects of production and distribution systems have changed since
the advent of mobiles contributing towards the enhanced productivity. It has shrunk
boundaries of the world. Moreover, roaming the world with an access to information and
communication has been possible due to mobile telephony, developments in its technology
and the global standards. Various agencies have estimated the global wireless subscriber base
in 2010 to be around 5.3 billion users (The World Fact Book, 2011). Without such
developments, globalization as a phenomenon would not have taken place as fast as it has
over the recent years.
From this, it can be inferred that the mobile communication has been a key factor for
economic growth and social change. Hence, it can be said that in the present scenario where
every economy depends heavily upon communication technologies and the internet based
industries, telecommunication has emerged as one of the important services. A similar trend
has been observed in Indian services sector, where telecommunication services have recorded
a phenomenal growth, which is evident from the fact that the Indian telecom sector has grown
4
from a level of 22.8 million telephone subscribers in 1999 to 54.6 million in 2003 and 764.77
million at the end of November 2010. Wireless telephone connections have

hav been a major
contributor to this growth as the number of wireless connections rose from 3.57 million in
March 2001 to 729.58 million by the end of November 2010. Further, this
t sector has attracted
FDI inflows of around 46,727 crores during April 2000 too December 2010, which
accounted for 8% of total inflows during the same period (Indian Economic Survey,
Survey 2010-11).
As far as, the emergence of mobile telephony as a service is concerned, the

t story of digital
wireless and cellular communication started in 1940’s when commercial mobile telephony
began. The first service named Mobile Telephone Service (MTS) was launched by AT&T in
America on 17th June, 1946. The next four decades saw a rather sluggish growth and
development in mobile telephony primarily due to

to slow technological innovations,
cautiousness of businesses and most importantly the government regulations. By mid 80’s
many innovations took place and by early 90’s low cost microprocessors and digital switching
technology became easily available paving the way for wireless revolution which resulted into
a spectacular growth in global telecom industry that was never seen before.
While referring to the wireless revolution, cellular telephony has been one of the key
contributors in the growth of such services. Cellular telephony derives its name from the
partition of a geographic area into small “cells”. Each cell is covered by a ‘cell site’ which is a
site where antennas, radio transmitters and receivers are placed to create a radio coverage area
in the mobile network.. They are powerful enough to enable connectivity with cellular phones
(mobile terminals),, within its area. The set of cells forms the radio access network, and the
radio frequencies are used for the transmission of calls and data. Voice and data that is
exchanged between a mobile terminal and regular phone networks, or the internet, are
5
transmitted via the mobile network which consists of the cellular operator’s radio access
network and core network (Pashtan, 2006).
Figure 1.1: Mobile Network
Source: Wireless Terrestrial Communications: Cellular Telephony (Pashtan, 2006)
The maiden commercial launch of first generation (1G) cellular services took place in
Scandinavian countries with the name of Nordic Mobile Telephone (NMT) service in 1981,
which was the starting point in the mobile revolution. While in USA, the Advanced Mobile
Phone Service (AMPS) cellular system was launched in 1983. During early 1980s another
analog system was developed by Motorola which was known as Total Access
Communications System (TACS). These analog-technology based mobile systems are
referred to as first generation or 1G services. The technological development that
distinguished the First Generation mobile phones from the previous generation was the use of
6
multiple cell sites, and the ability to transfer calls from one site to the next as the user
travelled between cells during a conversation.
With the passage of time, the number of cellular subscribers grew that led to the need for
increased network capacity to accommodate a growing subscriber base. This was answered by
the invention of systems that used digital transmission technique instead of analog technique
used in first generation. In the 1990s, the 'second generation' (2G) mobile phone systems
emerged, in which NMT was replaced by Global System for Mobile Communication (GSM)
services. It was developed by European Telecommunications Standard Institute (ETSI) in the
late 1980’s under a joint European project. In 1991 the first GSM network named Radiolinja
(now Elisa) was launched in Finland. In United States, Telecommunications Industry
Association (TIA) developed Code Division Multiple Access (CDMA) platform referred to as
cdmaOne in 1993 and Time Division Multiple Access (TDMA) used mainly in the American
continents. Personal Digital Cellular (PDC), introduced in Japan, was one of the other small-
scale 2G systems rolled out during this time.
The second generation also introduced a new method of communication called Short Message
Service (SMS) or text messaging. It was initially available only on GSM networks but
eventually became available on all digital networks. The first machine-generated SMS
message was sent in the United Kingdom on 3 December 1992, followed by the first person-
to-person SMS sent in Finland in 1993. The advent of prepaid services in the late 1990s soon
made SMS the most preferred method of communication amongst the young people, a trend
that later on spread across all ages. 2G also introduced the ability to access media content on
mobile phones. In 1998, the first downloadable content sold to mobile phones was the ring
tone, launched by Finland's Radiolinja. Later on, advertising on the mobile phone also
appeared in Finland when a free daily SMS news headline service was launched in 2000,
7
sponsored by some advertisers. Trials of mobile payments were also introduced in Finland
and Sweden in 1998 where a mobile phone was used to pay for a Coca Cola vending machine
and car parking. The first commercial payment system to supplement banks and credit cards
was launched in the Philippines in 1999 simultaneously by mobile operators Globe and Smart.
The 2G systems supported only basic data services with limited capacity. So in order to
provide better support for data services, ETSI developed the General Packet Radio Service
(GPRS), which is a 2.5 Generation (2.5G) wireless communication system. It is a packet
transmission system that overlays GSM and inter-works with external packet data networks
such as the internet. The first full internet service on mobile phones was introduced by NTT
DoCoMo in Japan in 1999.
As the use of 2G phones became more widespread, consumers began to utilize mobile phones
in their daily lives with the demand for higher capacity, faster data transmission rates, and
better quality-of-service. This was the limitation of 2G technology. Another limitation was the
various incompatibilities between the different standards, mainly GSM and cdmaOne. So the
industry began to work on the next generation of technology known as 3G, which was
spearheaded by the International Telecommunications Union (ITU) and referred to as
International Mobile Telecommunications 2000 (IMT-2000). These efforts didn’t lead to an
agreement on one common standard and as a result, there were a number of standards to
handle the evolution of GSM and cdmaOne platforms. Some of the standards were based on
Wideband-CDMA (W-CDMA), also referred to as universal mobile telecommunications
systems (UMTS); which were developed by original GSM proponents and handled by the
Third Generation Partnership Project (3GPP) established in 1998. The stated objectives of
3GPP were to develop a 3G mobile system based on evolved GSM core networks and the
radio access technologies that they supported.
8
On the other hand evolution of the cdmaOne standard, referred to as cdma2000, has been
managed by another standards body, 3GPP2, established in 1999. 3GPP2 is a collaborative
3G telecommunications specifications project that comprises North American and Asian
interests developing global specifications for ANSI/TIA/EIA-41 cellular networks. Another
organization that has been actively involved in the progression of CDMA networks is the
CDMA Development Group (CDG), an international consortium of companies who have
joined together to lead the adoption and evolution of CDMA wireless systems around the
world. The main technological point of difference between 3G and 2G technologies has been
the use of packet switching rather than circuit switching for data transmission. During the
development of 3G systems, 2.5G systems such as CDMA2000 1x and GPRS were developed
as extensions to existing 2G networks. These provided some of the features of 3G without
fulfilling the promised high data rates or full range of multimedia services.
By 2009, industry realized that, at some point, 3G networks would be overwhelmed by the
growth of bandwidth-intensive applications like streaming media (Saeed 2006).
Consequently, the industry began looking to data-optimized 4th-generation (4G) technologies,
with the promise of speed improvements up to ten folds over existing 3G technologies. The
first two commercially available technologies labelled as 4G were the WiMAX standard
(offered in the United States of America by Sprint) and the LTE standard, first offered in
Scandinavia by TeliaSonera. One of the main ways in which 4G differs technologically from
3G is that it employs an all-IP (Internet Protocol) network instead of circuit switching. Thus,
4G has introduced a treatment of voice calls just like any other type of streaming audio media,
utilizing packet switching over internet, LAN or WAN networks via Voice over Internet
Protocol (VoIP).
9
1.3 EVOLUTION OF TELECOM SERVICES IN INDIA
In Indian context, the history of telecommunication industry can be traced back to the year
1851, when the first operational landlines were laid by the government near erstwhile
Calcutta, the seat of British Empire. The commercial telecom services were introduced in
India in the year 1881 (BSNL knowledge base). Since then the Indian telecom sector has
come a long way from being a premium service towards providing affordable and effective
communication facilities to the Indian masses.
Around sixteen years ago in 1995, when government announced the launch of mobile services
and simultaneously threw the business open to private players, as many as eighteen Indian
companies ventured into the business. These were big industrial groups like Tatas, Birlas,
Ambanis, Nandas and Modis. Second league of players comprised of BPL, Jhawars of Usha
Martin, Thapars of Ballarpur Industries and Analjit Singh of Max India. Lastly there were a
string of small telecom equipment makers like Rajiv Mehrotra of Syam Telecom,
C.Sivasankaran of Dishnet, Mahendra Nahata of HFCL and Sunil Mittal of Bharti Telecom.
During the past sixteen years the industry has seen an erratic growth due to the regulatory
uncertainties, policy upheavals, technology disruptions and accompanying regulatory
wranglers. From a few thousand subscribers in 1995 to less than a million in 1998, the
industry now serves more than 729 million subscribers (Economic Survey 2010-11) and India,
today holds the position of having second largest network in the world after China. All the
cellular operators jointly add up to some 8.5 million to 10 million new subscribers to the
network every month making India one of the fastest growing telecom markets in the world.
This is because in the beginning, cell phones were not about mobility in India but just an
access to a phone service.
10
In 1995, mobile phones in India were priced at not less than 20,000. However, today these
phones are available for as low as 1,500 On the other hand, airtime
rtime charges have come
down from 14.5 per minute in 1995 to 10-40 paisa per minute presently,
presently indicating a fierce
competition among the Indian telecom players. Thus, with the competition becoming intense,
the Government felt an urgent need to not only regulate but also give a direction to the
telecom sector. Therefore,

Therefore an important development took place in the form of establishment
of Telecom Regulatory Authority of India (TRAI) in 1997.
The turning point in telecom

lecom sector came in the year 2002, when Reliance Infocomm entered
the mobile business by offering limited mobility using CDMA technology at phenomenally
low prices that ultimately led the government to make licenses ‘technology neutral’ by
introducing a Unified Service Access

Ac License (USAL) resulting in an all round tariff
reduction and explosion of subscriber base. These developments not only led to a rapid
growth but also helped a great deal towards maximization of consumer benefits as tariffs
decreased considerably across

acro the board.
Besides reduction in tariffs,

tariffs the information revolution also had a deep penetrating effect on
the cellular industry. In the beginning, mobile phones which were just simple phones with
mobility feature,, in the late 1990’s,

1990’s transformed into a hand held computer when Nokia
introduced the ‘Communicator’, a GSM mobile phone. This event earmarked

ear a paradigm shift
in cellular services, i.e. from emphasis on voice to concentrating on data. Then came in the
all-in-one
one camera phones in the year 2000 that
th enabled the users to take, send and receive
images by e-mail. This rapid evolution of mobile phones, from just a phone to a multimedia
device, and advancements in the cellular operating technology has paved way for mobile
Value Added Services (VAS).
11
1.4 VALUE ADDED SERVICES (VAS): CONCEPT AND EVOLUTION
Value Added Services (VAS) in telecommunication industry refers to non-core services,
which are added to the core or basic services, i.e., standard voice calls and fax transmission
including bearer services. The value added services add value in total services offering. They
stimulate incremental demand for the core or basic services besides enhancing profitability.
However, these can sometimes be provided as standalone services but the essential feature is
that they do not cannibalize the core or basic service. Moreover when such services are added
to the core or basic service, these can be sold at a premium price and therefore, they lead to
provision of operational synergy with core or basic services. Besides, they are also used as a
tool for differentiation and allow mobile operators to develop another stream of revenue.
Indian mobile industry when started was primarily seen as a substitute to conventional
landline phones. It was high premium service, affordable to only few. By early 2000, Person
to Person (P2P) SMS was the only value added service being offered to as well as used by
mobile subscribers. Slowly other value added services such as wallpaper and graphic
downloads entered the market and value added services started gaining momentum. However,
Value Added Services (VAS) offerings till mid 2003-04, were primarily basic applications
and focused on entertainment. These were followed by high order value added services such
as ringtones, voting /contest participation. By the year 2005-06, Indian wireless industry
crossed the level of 50 million subscribers and famous TV shows such as KBC (Kaun Banega
Crorepati) and Indian Idol were introduced on Indian television that resulted in large number
of viewers participating in SMS contests.
With the arrival of year 2007-08, SMS started becoming a commodity among urban users.
High end value added services such as Caller Ring Back Tone (CRBT), mobile internet and
mCommerce slowly started being adopted by the subscribers in urban circles. On the other
12
side, rural subscribers were getting added in large numbers who were new entrants; for them
entertainment VAS (SMS and downloads) continued to be the main services. Today, in year
2011, a number of new offerings such as Mobile TV, social networking, etc. entering the
Mobile value added services domain are being witnessed. Similarly Mobile Applications
(Mobile Apps), potentially the next big thing in value added services is already witnessing
large push from supply side. Figure 1.2 below, graphically depicts the evolution of value
added services in India.
Figure 1.2: Evolution of Value Added Services in India
Source: Report on Mobile VAS in India: 2010 by IAMAI & eTechnology Group @ IMRB,
July 2010
13
Presently, the mobile value added services market in India is characterised by entertainment,
music and sports. It is generally the younger segment of the consumers who take maximum
advantage of such Value Added Services. Hence, there is a need to focus on the other Value
Added Services such as Informational, Transactional etc. so that all segments of consumers
get benefits of the growth of Value Added Services sector (IAMAI & eTechnology Group @
IMRB, 2008).
1.5 CATEGORIES OF MOBILE VALUE ADDED SERVICES
Internet And Mobile Association of India (IAMAI) has classified the Value Added Services
offered by mobile operators into four broad categories namely: Entertainment, Information,
mCommerce and Mobile Applications (IAMAI & eTechnology Group @ IMRB, 2010).
Graphical presentation is given in Figure 1.3 below.
Figure 1.3: Categories of Value Added Services
Source: Report on Mobile VAS in India: 2010 by IAMAI & eTechnology Group @ IMRB,
July 2010.
14
1.5.1 Entertainment VAS
This category of services is the key revenue generators for Indian mobile value added services
market as these services aim at providing means of entertainment to the consumers during
their leisure time and also stimulates mass appeal leading to high volume business, both in
terms of subscribers and usage. Major services of this category include Jokes, Ring-tones
download, Caller Ring Back Tone (CRBT), Games, Music/Songs download and various
contests/voting services, dating and chatting services. Moreover, Bollywood and Cricket have
traditionally been the main contents in Indian entertainment VAS. However it is to mention
that with the further evolution of cellular services, entertainment VAS will continue to have a
high perceived value among the users both in urban as well as rural areas.
1.5.2 Information VAS
These services target the information needs of the end users by providing relevant content. It
is not a mass appeal offering like Entertainment VAS, but a specific segment target tool.
Information VAS includes services like information on movie tickets, news, banking account,
other products like real-estate, education, stock updates, weather etc. Its usage has been low
among urban users due to a number of alternatives available for accessing the required
information. On the other hand, rural users, who require information services like weather
updates, crop prices, farming related information, do not have much access to alternate
sources of information. This fact hence puts forth a wide potential for such services to be
accepted by rural mobile users.
1.5.3 mCommerce VAS
These are most complex value added services and require high involvement of users and
service providers. These are also known as transactional services as they involve some
15
transaction like buying movie tickets or transfer of money from one bank account to the other
or simply the payment of utility bills using a mobile phone. Traditionally, Mobile Banking
and Mobile Payments have been the two types of mCommerce value added services being
offered by the cellular operators. Until last year, only highly evolved and matured mobile
users availed these services and that too mainly in urban markets. However, with the issuance
of guidelines for mCommerce and mBanking by Reserve Bank of India, many Indian banks
like SBI and ICICI Bank etc. have launched mobile banking service for their customers using
GPRS and SMS platforms. On the other hand, almost all the operators have been working to
develop mCommerce services using different access modes like GPRS, Unstructured
Supplementary Services Data (USSD), Sim Application Toolkit (STK), etc. these services
have started gaining popularity with each passing day.
1.5.4 Mobile Applications
This is a relatively new category in which mobile service providers, device manufacturers and
content aggregators have come together to offer mobile applications to the subscribers. These
applications can be used for various purposes like entertainment, informational access or for
initiating transactions.
1.6 KEY VALUE ADDED SERVICES
The cellular operators in Indian market provide a number of value added services to the
customers. Some of the key value added services being offered are:
1.6.1 Short Message Service (SMS) or Text messaging
This is the most widely used value added service globally that enables the cell-phone user to
send and receive short text messages on any cellular phone number, across mobile operators
16
whether local, national or even international. These messages are referred to as Short Message
Service (SMS) messages because the length of a message is generally limited to 160
characters. Users can also send longer messages but they are sent in parts of 160 characters
and the mobile subscriber is billed separately for each part. The best utility feature in this
service is that if the mobile phone of intended receiver is turned off or even out of the network
coverage area, the text messages are stored in the network and delivery is retried until its
successful delivery, though for a limited number of hours (for example, 72 hours). This
service in which SMSs are exchanged between mobile subscribers is also referred to as Point-
to-Point or Person-to-Person or simply P2P SMS.
Another advanced variant of this service is Premium SMS. It allows users to send SMS to
automated systems to access services offered by the mobile value added services providers.
This is called a premium service because the user is charged at higher rate for sending this
message as compared to normal P2P SMS. Examples of premium SMS-based services include
participation in contests and games and polls, information downloads like scores, stock
updates, weather etc.
1.6.2 Instant Messaging (IM)
Instant messages (IM) are short text messages exchanged between users who are interested to
chat in real-time. After a user signs on to IM service from a mobile device, a list of friends
(referred to as a buddy list) appears on the mobile subscriber’s screen using familiar screen
names or IDs. Each user is identified by a text identifier referred to as “short code” or “screen
name”, and messages are sent to these identifiers, not to phone numbers as in SMS. Most
mobile IM systems have been designed as extensions of traditional internet services like AOL
Instant Messenger (AIM) and Yahoo! Messenger that extend the reach of IM to mobile users.
There are often two ways to access the IM services. Either by downloading an IM application
17
to the mobile terminal or with the help of a mobile browser interface. In recent times, IM
service in the form of Black Berry (BB) Messenger service is gaining popularity among
young college going people and working professionals.
1.6.3 Multimedia Messaging Service (MMS)
It allows the user to exchange pictures, video, and voice messages to another mobile terminal
or e-mail address. Mobile subscribers can take a photo or video using their mobile terminal's
embedded camera or a camera attachment, and send it to a mobile number or e-mail address.
Similarly, they can record a voice message on their mobile terminal and send it as a MMS
message.
1.6.4 Mobile E-mail
Mobile e-mail allows users to check conventional e-mail on their mobile terminal. The mobile
subscribers can either download a dedicated mobile application that can connect to the
subscribers’ mail inbox or visit the mobile website through web browser in their phone. Some
e-mail services provide “e-mail alerts” that are sent to a subscriber’s mobile phone to inform
the mobile subscriber that there are new e-mails in his inbox.
1.6.5 Video service and mobile TV
Video-on-demand service allows mobile subscribers to get TV clips from their favourite
programs, music videos, breaking news stories, weather information, and sports clips, which
are typically of few seconds of length.
Mobile TV is a relatively recent live broadcasting service that is also offered in 3G networks
for a monthly subscription fee. Mobile users can subscribe to live broadcasting packages from
TV networks of their choice.
18
1.6.6 Caller Ring Back Tones (CRBT)
Operators are looking out for fresh applications and services to generate extra revenues.
CRBT presents an exclusive possibility to derive revenues during the idle time when a mobile
phone is ringing. This service enables the subscriber to specify a predefined Ring Back Tone
(RBT) to be played back to specific caller or a set of callers or all callers instead of the
traditional RBT. Hence anyone who calls the subscriber of this service gets to listen to a
popular melody or sound or some personalized greeting message instead of the regular tone,
regardless of their operator, location or phone model used. This service like SMS is one of the
most popular value added services among cell phone users in India.
CRBT leads to frequent use of provisioning channels like GPRS/WAP, SMS, and IVR etc for
selecting and changing RBTs, which directly drives the network usage revenue of the
operator. Moreover, this service doesn't require much advertising efforts because the callers of
a subscriber are unlimited and hence the service gets advertised virtually free of cost.
1.6.7 Wireless Internet
Access to the wireless Internet is provided through a micro-browser on the mobile terminal
using General Packet Radio Services (GPRS)/ Wireless Application Protocol (WAP). The
types of content that can be accessed include news related to entertainment, sports, economy,
business, general issues, any relevant information for their use, read articles from channels
such as CNN and major newspapers, receive movie times and reviews, dining
recommendations, check the weather forecast, get flight times and traffic reports, etc. Besides
these, wireless internet also serves as a medium for accessing other value added services.
A special category of Internet content services that are of primary interest to mobile
subscribers is Location-Based Services. These services are designed to provide information
19
evant to the subscriber’s local area.
that is relevant area. In some services the subscriber types in the
location, for example, a postal code, and specifies a maximum distance

distance that bounds the area
of interest for the requested information like name and address of restaurants,
s, coffee shops,
movie theatre,, doctors and other establishments of interest, nearby their location. They allow
subscribers to receive on their mobile terminals real-time

time location information on the
whereabouts of co-workers
workers or of vehicles of a fleet. Use of Global Positioning System (GPS)
and Navigational Services guide the subscriber to a specified destination using visual and
audible turn-by-turn driving

ving directions. Moreover, the mobile subscriber can access any web
site by entering its Uniform Resource Locator (URL) internet address.
1.7 MARKET SIZE OF INDIAN

INDIA MOBILE VALUE ADDED SERVICES
(VAS) SECTOR
As per TRAI report,, the annual revenue for the wireless industry was 1,07,110
07,110 Crores in
financial year 2009-2010 (Telecom

elecom Regulatory Authority of India: Annual Report,
Report 2009-10).
The importance of value added services can be explained with the help of table 1.2 below,
which gives the breakup of revenue structures of Indian cellular operators offering GSM and
CDMA services as per the performance report of Telecom Regulatory Authority of India
(TRAI) that was released on 12th January, 2011.

2011 The contribution of value added services in
revenue
enue stream of cellular operators is up to the tune of 17.6% (Table 1.2). Moreover, as per
the report of IAMAI, Indian mobile value added services industry has grown from 2,850
crores in December 2006 to 11,860 crores in June 2010, representing a growth

growth of more than
316 percent in less than four years time. Further, introduction of the next generation service
like 3G in the beginning of this year has significantly revolutionized the sector, as it has
experienced phenomenal growth in Value Added Services.

Service . Thereby, indicating the huge
20
potential for Value Added Services (VAS), as the main focus of 3G is also on provision of
such services.
These services are being developed with an understanding that the customers’ needs are
improving and they may graduate from basic voice to other network capable services which
offer greater flexibility, convenience and higher value to the users. Therefore, the service
providers, who shall upgrade their services in line with these changing needs, will be able to
provide an enriching service experience to customers thereby differentiating themselves from
others.
Table 1.2: Revenue structure of Indian Cellular Operators
Revenue Components GSM Operators CDMA Operators
(September, 2010)
Rental Revenue 19.1% 31.2%
Revenue from Calls 55.8% 49.8%
Revenue from Roaming 7.5% 1.4%
Revenue from SMS, VAS & installation 17.6% 17.6%
Source: Telecom Regulatory Authority of India (12th January, 2011): The Indian Telecom
Services Performance Indicators July-September 2010.
Thus, all these facts highlight the relevance of value added services in an ever growing
telecom market as a key strategic tool, not only for differentiation of services but also as a
factor responsible for developing satisfaction and loyalty among the customers. This is more
so true due to the intense competition being faced by the operators in this market on the one
hand and on the other very demanding customers. In such a scenario, the challenge for Indian
cellular operators is to understand the preferences of their customers better and then to
successfully offer the services that foster greater customer retention, as the entry of new
21
global players in telecom market has resulted in ever-increasing
increasing customer acquisition and
retention costs. Moreover, Average Revenue

Rev Per User (ARPU) per month has been decreasing
consistently over a period of time, which is also evident from the fact that the ARPU
decreased from 164 for GSM operators and 89 for CDMA operators in September 2009
to 110 for GSM operators and 73 for CDMA operators (Telecom

Telecom Regulatory Authority of
India, 12th January 2011:: The Indian Telecom Services Performance Indicators July-
July
September 2010). The tariffs for telecom services in India are one of the lowest in the world
right now and there is every

ery possibility of further reductions. The situation is even more
alarming, if analysis of teledensity figures of India is undertaken, which suggests that there is
a wide gap between rural teledensity (30.18 percent

cent in November 2010) and urban tele-
tele
densityy (143.95 percent in November 2010) pointing towards the fact that the market still has
a large untapped potential. However, the situation has further been complicated with the
invocation of number portability, as it is going to enhance the customer churn rate. This is
also a major reason for the cellular operators to look for value added offerings for their
customers in order to increase their ARPUs and survive in the coming tough times.
1.8 MARKETING OF TELECOM SERVICES
The reason behind the growing importance of value added services in telecom arena comes
from the important marketing concepts

concept of Customer Loyalty, Lifetime Value and Product
Differentiation. In telecom services,

services it is frequently pointed out that once customer
custo has been
acquired and connected to the network of a particular operator, their long term relations with
the operator are of greater importance for the success of the company in the competitive
markets than they are in any other industry (Grepott, 2001).

2001). This is due to the fact that cellular
22
service providers do not differentiate from each other. They all deliver more or less the same
service, leading to high competition.
The pre-requisite condition for gaining customers’ loyalty is to raise the quality of service in
their perceptions as high perceived quality of service leads to higher satisfaction among
customers and ultimately resulting into customers becoming loyal (Boulding et al. 1993;
Fornell 1996; Brady & Robertson, 2001). However, loyalty is dependent upon many other
factors like switching cost, type of industry and level of differentiation of products under a
given category (Fornell, 1992; Grepott et al. 2001; Sharma, 2003). As such, Value Added
Services serve as a tool in the hands of cellular operators to increase differentiation of their
services offerings from that of rivals through innovative content, thereby inducing loyalty
among the customers to continue to stay with the same service provider. Mobile operators are
now looking at different ways to expand beyond basic voice services in order to tap the
explosive growth in the subscriber base, especially in rural markets that are characterized by
low income levels and to prevent the churn of their existing customer base.
In an interview given to The Economic Times (17th June, 2009) Mr. Romal Shetty, Director
(Telecom) at KPMG said, “Initially everyone was going after subscriber numbers. Now, they
are looking at quality of subscribers. This explains the emphasis on value added services
(VAS), which bring in higher revenues.”
The above statement brings us back again to the fact that despite the tremendous growth
achieved by cellular operators in terms of number of subscribers, their Average Revenue Per
User (ARPU) per month has been decreasing and in order to improve the revenue streams, the
operators need to look for such alternatives that induce higher usage by consumers and
ultimately higher revenues. This concern is addressed by the effective use of innovative value
added services by the telecom operators as it provisions the operators with the ability to
23
charge premium price for the added offerings. Hence, Value Added Services are fast
becoming backbone of telecom service providers, as users look beyond voice therefore
leading to emergence of mobiles more as a personal computing device. The convergence of
technologies and emergence of new applications is another thrilling area, wherein the
broadcasting and entertainment industries are witnessing a revolution. The emergence of 3G
services, IPTV, Mobile TV and Mobile Number Portability (MNP) are further expected to
change the scenario in coming years.
The cellular industry, being a service segment, requires constant interaction and attention of
the service provider, unlike FMCG or furniture segments, where goods once sold demand no
further attention from the seller/supplier. This implies that the success and survival of an
operator hinges on the Quality of Service (QoS) it provides. The low call charges or upfront
costs of mobile are only a bait to lure customers and only the Quality of Service can ensure
the retention capability for a service provider. As per the Industry reports, more than 90% of
cell-phone users are prepaid customers, indicating a margin for higher customer churn rate
(Telecom Regulatory Authority of India, 12th January 2011: The Indian Telecom Services
Performance Indicators July-September 2010.). The thin profit margins to the mobile service
providers despite a phenomenal increase in subscriber base, have forced them to look beyond
voice based service. Be it a landline or mobile telephonic system, value added services act as
enablers to activate the falling revenue line of telecom service operators by providing bundle
of non-voice based data services. It is therefore true that due to new networks, high bandwidth
availability, transition from circuit-switched to packet networks, upgrades and rollouts of 3G
happening globally and mobile handset standards and technology supporting new formats
(3G, SIP, etc.), the concept of value added services has changed substantially. Soon, value
added services will not just be entertainment-oriented services like full song download or
selling caller-ring-back tones but a major tool for customer satisfaction and retention.
24
Service Quality refers to a global assessment, that is, the customers’ overall impression of the
relative inferiority/superiority of the organization and its services (Parasuraman et al., 1988
and Bolton and Drew, 1991; Zeithaml, 1988). It is form of an attitude, that results from the
comparison of expectations with performance but it is not equivalent to satisfaction.
Perception of service quality occurs at multiple levels in an organization- for example, with
the core service, physical environment, interaction with the service providers, etc. (Bitner and
Hubert, 1994). Customer expectations and perceived performance of services have been found
to be main antecedents of perceived service quality (Chadha and Kapoor, 2009).
Apart from the different conceptualizations, various ways of measurement have also been
proposed. One of the major concepts for measurement of service quality is ‘expectation –
perception’ gap method, propounded by researchers such as Parasuraman et al. (1985 & 1988)
and Rust and Zahorik (1995). But researchers such as Mazis et al. (1975), Bolton and Drew
(1991), Babakus and Boller (1992), Babakus and Mangold (1992), Cronin and Taylor (1992&
1994), Boulding et al. (1993), Brown et al. (1993), Teas (1993) and Patterson and Johnson
(1993) argue that the ‘expectation – perception’ gap is not appropriate for measuring service
quality. Furthermore, according to a number of researchers, the degree of usage of a service
influences the formation of customers’ expectations.
Customers’ expectations for continuously provided services (such as the telephone service) or
long-lasting durable goods are passive, and disconfirmation does not operate unless service
changes occur that are outside the range of experience-based norms (Oliver and Swan 1989).
This has been reinforced by Bolton and Drew (1991) who claimed that as telephone service is
a continuous service, customer responses should be affected only by performance evaluations.
25
Many researchers argue that there is a link between customers’ purchase intentions and
service quality. Among these are Headley and Miller (1993), who conducted research in a
primary clinic setting. The study is based on understanding the possibility of a link between
perceived service quality and its various dimensions and a patient’s future intent to complain,
compliment, repeat purchase, switch providers and/or not use the service at all. Their findings
revealed that perceived higher service quality will generate favourable intentions (for example
repurchase, complementing) and that perceived lower service quality will lead to
unfavourable intentions (for example complaining, switching and non-use of any services).
Further, Boulding et al. (1993) while conducting a laboratory experiment studied the
influence of service quality on behavioural intentions in two different settings. It involved two
simulated visits to a hotel and an educational institution. For behavioural intentions, they used
two measures which were, repeat business and willingness to provide favourable word of
mouth. Their findings indicate that service quality perceptions positively influenced
behavioural intentions and willingness to recommend.
Zeithaml et al. (1996) also developed a conceptual model that depicted the behavioural
consequences of service quality that incorporated a more extensive multiple-item behavioural
intentions measure distinguishing intentions into favourable and unfavourable. They also
examined the impact of service quality on the different types of behavioural intentions. The
model was empirically examined, and the customers of four companies (computer
manufacturer, retail chain, automobile insurer and life insurer) were surveyed by mail. They
claimed that the results indicated towards strong evidence that customer behavioural
intentions were strongly influenced by service quality.
Ennew and Binks (1996) tried to explore the relationships between service quality, customer
relationships and customer loyalty in the banking sector. They examined factors affecting
26
customer retention and defection, and the extent to which these were influenced by service
quality. The outcomes of the research point towards the fact that service quality is an
important factor, which contributes to an organization’s ability to retain loyal customers, and
thus contributes to improved organizational performance.
Kangis and Zhang (2000) studied the link between service quality and customer retention in
banking sector. Their findings show that service quality has an effect on customer retention
through being related to the stated intention to continue doing business with the bank.
Blery et al. (2009) conducted a research in order to identify the influence of service quality on
customer loyalty in Greek mobile telephony sector. For the purpose, they used SERVPERF
model which is a performance based model for measuring service quality and uses five
dimensions (i.e. Reliability, Assurance, Tangibles, Empathy and Responsiveness) and twenty
two items of SERVQUAL model given by Parasuraman et al. (1988). The main point of
difference between two techniques has been that the former ignores the importance weights.
The conclusions that they drew from their research was that service quality is an important
decision making criterion for service consumers and any effort to improve quality will be
beneficial for cellular operators.
Oyeniyi et al. (2008) concluded that there is a relationship between the level of perceived
service quality/value and customer satisfaction, i.e. customer will be satisfied, if perceived
value of service is high. Important point highlighted in this research is the changing focus of
marketing, i.e. from acquiring new customers to retaining customers through service quality.
From above discussion it can be said that the customers’ repurchase intentions to a great
extent are influenced by service quality.
27
1.8.2 Perceived Value
Value implies a trade-off between benefits and sacrifices. Moreover, it implies an interaction
between a customer and a product or service (Payne and Holt, 2001). In economic terms,
‘value’ has traditionally been equated with utility or desirability. In this regard, the ‘theory of
utility’ provides the conceptual groundwork of the value construct (Tellis and Gaeth, 1990).
This theory states that consumers derive value according to the difference between the
‘utility’ provided by the attributes of a product and the ‘disutility’ represented by the price
paid.
However, Sánchez-Fernández et al. (2007) argued that the nature of perceived value is
complex and multi-dimensional that involves more than a mere rational assessment of
‘utility’. Moreover, ‘price’ is, in itself, an indistinct and elusive construct (Dodds et al., 1991;
Woodruff and Gardial, 1996). Although ‘price’ is usually understood as the monetary value of
a product, a full appreciation of the concept also includes considerations of the time, effort
and search involved in the overall cost or sacrifice made by the customer in the consumption
experience. It is thus apparent that perceived value is a broader and richer construct than a
mere trade-off between ‘utility’ and ‘price’ (Monroe, 1990; Zeithaml, 1988).
The first determinant of overall customer satisfaction is perceived quality and the second
determinant of overall customer satisfaction is perceived value (Fornell et al., 1996).
Customer satisfaction is recognized as being highly associated with ‘value’ and is based,
conceptually, on the amalgamation of service quality attributes with such attributes as price
(Athanassopoulos, 2000, p. 192).Perceived price is defined according to Zeithaml (1988) as
the price as it is encoded by the consumer. Chang and Wildt (1994) defined perceived price as
the consumers’ perceptual representation or subjective perception of the objective price of the
product/service. As Storbacka et al. (1994) and Patterson and Spreng (1997) claimed that
28
buyers have an acceptable price range for a given purchase, rather than a single price, and this
should not be ignored, because in the case of continuously provided services, it serves as
normative price expectation for the service (Bolton and Lemon, 1999).
According to the literature, price has an effect on customer purchase intentions. As Engel et
al. (1995) mentioned, price is an important factor influencing consumers’ purchase behaviour.
In addition, Chang and Wildt (1994) examined the links among price, product attribute cues,
perceived quality and value and purchase intention. They conducted a laboratory experiment
for a student housing service unit and a PC purchasing unit. Their findings indicated that both
perceived price and perceived quality had direct effects on purchase intentions. Blery et al.
(2009) concluded that perceived price of service is negatively associated with repurchase
intention. Further that repeat business depends also on other factors like barriers to switching
to other providers, transaction costs and search costs etc. Hence it is important for service
providers to match their service offerings according to customer’s perceived price for their
services.
“Customer Satisfaction is an output, resulting from the customer’s pre-purchase comparison
of expected performance with perceived actual performance and incurred cost”, (Churchill
and Surprenant, 1982). According to Yi (1991) the customer satisfaction operates in two
different ways, i.e. transaction specific and general overall. The transaction concept concerns
customers’ satisfaction as the assessment made after a specific purchase. Overall satisfaction
refers to the customers’ rating of the brand, based on all encounters and experiences (Johnson
and Fornell 1991).
Parasuraman et al. (1994) have suggested that satisfaction is influenced by service quality,
product quality and price. They researched satisfaction on a transactional level, implying that
29
the overall satisfaction is a function of transactions. A widely accepted definition is given by
Oliver (1997) as, “Satisfaction is the consumers’ fulfilment response. It is a judgment that a
product or service feature, or the product of service itself, provided (or providing) a
pleasurable level of consumption-related fulfilment, including levels of under- or over-
fulfilment.” Further, Satisfaction with a product/service is a construct that requires experience
and use of a product or service (Oliver, 1997). Hence, the end consumer, who actually
consumes the service, should be considered rather than the customer who pays for it.
Neda Shishavi (2006) concludes that the consumer satisfaction is an emotional response
pertaining to a particular focus (such as expectations, product, consumption experience, etc.)
that occurs at a certain time (after consumption or after choice or based on accumulated
experience, etc.). Customer Satisfaction has significant implications for the economic
performance of firms. For example, customer satisfaction has been found to have a positive
impact on customer loyalty and usage behaviour and a negative impact on customer
complaints (Fornell 1992). Increased customer loyalty may increase usage levels, secure
future revenues (Rust, Moorman and Dickson 2002), and minimize the likelihood of customer
defection (Sullivan 1993). Customer Satisfaction may also reduce costs related to warranties,
complaints, defective goods, and field service costs (Fornell 1992).
Oyeniyi et al. (2008) examined the potential constructs in customer retention by investigating
the chain of effects of retention from customer service, satisfaction, value and behavioural
intention. They conclude by saying that when customer service is high, customer retention is
also high as customer retention is achieved only when the customers believe that customer
services offered are effective and high and up to their level of satisfaction. And that
Customer’s behavioural intentions have a strong influence on customer retention. Customers
30
are likely to continue their patronage if they are satisfied with the perceived value of service.
Hence continued patronage would lead to retention of customers.
Eze et al. (2008) studied Internet Service Providers’ (ISPs) service quality and customer
satisfaction in southern region of Malaysia. They argue that as competition is increasing in
ICT service sector, it is becoming hard for ISPs to satisfy and retain customers. They made a
point that out of various dimensions of service quality of the ISPs, all but Reliability factor
were significantly present. Hence Malaysian ISPs should improve their service reliability in
order to improve their overall service offerings and customer satisfaction. Chadha and Kapoor
(2009) in their study suggested that the service providers should maximize service quality and
customer satisfaction in order to enhance customer loyalty by concentrating their efforts on
improving network quality, pricing and Value Added Services (VAS).
Customer loyalty is viewed as the strength of the relationship between an individual’s relative
attitude and repeat patronage. It refers to a favourable attitude towards a particular brand in
addition to repeating it repeatedly (Day 1969). According to Dick and Basu (1994), it is a
relationship between relative attitude towards an entity and repeat patronage behaviour. Jones
and Sasser (1995) conceptualized customer loyalty as the feeling of attachment to or affection
for a company’s people, products or services.
According to the literature, customer loyalty can be defined as an attitude and as behavioural
loyalty (Hallowell 1996). Loyalty as an attitude is the consumer’s relatively enduring
affective orientation for a product, store or service (Parasuraman et al.1988). Behavioural
loyalty is the customer’s intention to repurchase the product/service (Hallowell 1996).
As behaviour, customer loyalty has been measured as the customers’ repeat purchase
probability (Rajshekhar et al. (1997). However, loyalty as an attitude cannot be measured
31
with repurchase intent, because it can capture a behavioural component of loyalty and taps a
behavioural intention. In the service management literature, loyalty is mainly defined
according to the behavioural view, and the majority of loyalty studies were operationalized
behaviourally.
Blery et al. (2009) in their research defined Customer repurchase intention in the mobile
telephony sector as the users’ intention to continue to repurchase the service from their mobile
operator, and not switch to another operator even after their contract expires. Hence, their
research focused on the customers’ stated purchase behaviour, i.e. their propensity to buy
again (behavioural component) to measure customer loyalty and did not measure their attitude
towards the service and their actual behaviour, i.e. repurchase itself. They further argue that
although customers stated their intention to repurchase, they may not actually do so due to a
variety of reasons such as lower prices or unexpected factors such as financial reasons,
pressures from friends/relatives or some other reasons. However, according to Jones and
Sasser (1995), secondary behaviour is another alternative way to assess customer loyalty, i.e.
customer referrals, endorsements and word of mouth, which are extremely important forms of
consumer behaviour for a company.
One of the most widely accepted fact is that it is more expensive to win a new customer than
to retain an existing customer. Loyalty initiates a series of economic effects, and the net return
on investments for the companies could be much higher for retention strategies than for
strategies to attract new customers (Zeithaml et al. 1996; Reichheld 1996). It is not only
companies who benefit from customer loyalty, but also the customers. Researchers such as
Peterson (1995) and Barnes (1994) argued that for a long-term relationship to exist, both the
firm and the customer must benefit. Customer benefits of being loyal include social benefits,
mutual trust, confidence benefits, financial benefits and non-monetary economic benefits.
32
Oyeniyi et al. (2008) tried to determine the relationship between customer service and
customer retention in Nigerian telecom industry. They argue that if retention strategies are not
managed properly, then customer’s loyalty may be lost.
Silva and Yapa (2009) tried to explore the aspects or attributes that corporate customers
considered relevant in deciding whether to continue with the current service provider (retain)
or to switch to an alternative provider (migrate) or to switch off completely (defect). The
authors argue that the most important factor in determining customer loyalty is the ability of
service provider to add value to customer’s business process and that loyalty programs offered
by service providers do not have substantial effect on customer decision making process.
Chadha and Kapoor (2009) argue that as the Indian cellular market is growing, competition
and consumer demands are also growing and as such the main condition for protecting the
subscriber base is to win customer loyalty. They conclude by saying that there is a positive
relationship between switching cost and customer perceived service quality, customer
satisfaction and customer loyalty. Although customer satisfaction is the most significant
predictor of customer loyalty, switching cost and service quality also affect the customer
intention to stay with particular service provider. They should implement some reward
programs to increase the benefits of subscription that may lead to loyalty inertia.
It is realized well by all telecommunication companies that they should expand their services
increase their revenue streams and keep subscribers loyal. Value Added Service (VAS) is new
innovation to create more attractive and valuable services. It is operator customized service
that they can change, modify or remove anytime, if it doesn’t meet the market requirement.
The opportunity of value added services is very big.
33
1.9 NEED FOR STUDY
The Indian mobile telephony market has grown at a rapid pace in the past six to seven years.
Declining call tariffs in conjunction with favourable regulatory policies

icies have led to a
tremendous increase in the subscriber base. As mentioned earlier in the introduction, the
Indian wireless market now consists of around 729 million subscribers with an annual revenue
of 1,07,110 Crores in financial year 2009-2010.

2010. But as every coin has two sides, similarly
this growth story has its painful facts too. While the growing subscriber base has positively
impacted industry revenues (which have risen consistently over the past few years), the
operator margins have

ve shrunk, pulling down “Average Revenue per User” (ARPU). As ARPU
declines and the basic voice service gets commoditized, the challenge is to retain customers,
develop alternative revenue streams, and create a basis for differentiation in high-churn
high
markets.
ts. However, in times to come, people will buy mobile phones not just to remain
connected but to express themselves in a variety of ways.
The value added service (VAS) market in India is also rapidly growing. The current mobile
value added services industryy stood at 11,860

860 crores in June 2010 is estimated to touch
14,500
500 crores by end December 2010 (IAMAI & eTechnology Group @ IMRB, 2010).
VAS currently contributes around 17% to the cellular operators’ revenue (Table 1.2) and it is
expected to increase to substantially in coming years.

years. Hence, the service providers are shifting
their focus from subscriber base expansion to Value Added Services (VAS),, as it has potential
to generate good revenue for the telecom operators.
With the coming up of 3G services,

rvices, competition is going to get tougher as entertainment VAS
is expected to drive the growth of the market going forward with Video/TV and games
registering the highest growth rates among other segments in the near future (Boston
Analytics, 2007). The situation has further been complicated with the introduction of Mobile
34
Number Portability (MNP). This facility allows a subscriber of one service provider to shift to
other service provider without having to change his existing mobile number, in accordance
with one’s preference, ease and the kind of service one likes, without having to bother about
any other thing.
With increasing number of licensees in the telecom space the average numbers of operators in
many circles have increased to 5-6 operators offering more choices to the consumer. Thus the
competition among the operators has increased tremendously. To add to it, Indian consumer
has also grown smarter and is demanding more in terms of quality service. Therefore, it is
very important for the operators to differentiate themselves from the others. Today, as is well
known, majority of operators now have their network coverage in almost all the important
stations of the city and offer superior voice quality. Hence they all are using mobile value
added services for their differentiation and marketing these services heavily for creating
awareness among the consumers. Moreover, the traditionally CDMA based service providers
(TATA & Reliance), having realized the potential of GSM based value added services market,
are entering the arena with full force, thereby increasing the threat of churning of existing
customer base to these companies.
The above discussion therefore highlights the fact that the future growth and survival of
players depends to a large extent on strategically using value added services (VAS) to
enhance the perceived service quality among customers thereby building loyalty for the
service provider. Therefore, it becomes all the more important to understand how value added
services can be used as a service differentiator and as a tool for increasing customer
satisfaction and ultimately enhancing the chances of customer repurchasing the services
leading to customer loyalty
35
1.10 OUTLINE OF THE STUDY
The main body of this research study is divided into six chapters, along with tables and
annexure to support the analysis and findings of the study. A concise overview of the contents
of all the chapters is given below:
Chapter I gives an overview of Services sector followed by Telecom services in an economy.
The service has further been discussed with regards to its evolution in Indian economy.
Value Added Services (VAS) as a concept has been deliberated in detail in this chapter,
further highlighting its role as a strategic tool for building customer loyalty. Further, the key
constructs which have been used to conduct the study have also been deliberated upon.
Chapter II focuses on the review of related literature. The review has been presented under
following broad heads:
1. Research Papers and Articles in Journal
2. Published Books
3. Industry Reports
4. Thesis and Dissertations
5. Other Miscellaneous Articles
Chapter III describes the profiles of the companies under the study. It focuses on the market
shares, major achievements of the companies selected for study.
The companies under study are:
1. Bharti Airtel Limited.
2. Vodafone Essar Limited.
3. Reliance Communications Limited.
4. Bharat Sanchar Nigam Limited.
36
It is to mention that only GSM mobile services divisions of these operators are considered for
study.
Chapter IV deals with the research methodology part of the study. The main objectives of the
study are:
1. To study the impact of Value Added Services (VAS) offered on the Perceived Service
Quality.
2. To analyze the relationship between the Perceived Service Quality and Perceived
Value of the Services.
3. To evaluate the relationship between the Perceived Value of Service and Customer
Satisfaction.
4. To examine the relationship between Customer Satisfaction and Customer Loyalty.
5. To suggest strategic options for the cellular operators to develop Value Added
Services (VAS) offers for enhancing Customer Loyalty.
For the purpose, data in the form of structured questionnaire from the consumers of GSM
cellular services of the selected operators was collected. The data collection was undertaken
in four cities of north India namely:
1. Chandigarh
2. Jammu
3. Ludhiana
4. Shimla
The chapter also contains a discussion regarding formation of research hypotheses and scope
of the study, research area, sampling, questionnaire designing, pilot survey, final data
collection and tabulation.
37
Chapter V is about analysis and interpretations of the results derived from applying various
relevant statistical tools and techniques to the data. The main tools that were used to conduct
the study are:
1. Factor Analysis
2. Reliability Analysis using Cronbach’s Alpha method
3. Regression Analysis
4. ANOVA
Chapter VI is the last chapter of this study. It gives the summary of the research findings and
highlights the conclusion and suggestions emerging from the discussion.
38
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CHAPTER 2
REVIEW OF LITERATURE
Telecommunication has emerged as a key sector in every economy. One of the key reasons
for its phenomenal growth has been the value added services being provided through mobile
telephony. Studies have been conducted in the international context regarding various
constructs like Service Quality, Value Added Services, Perceived Value, Customer
Satisfaction and Customer Loyalty in telecom sector. It is in this context, the relevant
literature covering all important aspects of the study have been reviewed and presented under
the following five broad headings:
• Research Papers and Articles in Journals
• Published Books
• Industry Reports
• Thesis and Dissertations
• Other Miscellaneous Papers/ Articles
2.1 RESEARCH PAPERS AND ARTICLES IN JOURNALS
Parasuraman, Zeithamal and Berry (1985) introduced a model of service quality
summarizing its nature and determinants as perceived by consumers. They have argued that
there are ten dimensions that consumers use in forming expectations about and perceptions of
services. These dimensions comprise of Reliability, Competence, Access, Courtesy,
48
Communication, Credibility, Security, Understanding/Knowing the customer and Tangibles.
The authors also pointed out some discrepancies or gaps on the service provider’s part that are
likely to affect service quality as perceived by consumers.
Parasuraman, Zeithamal and Berry (1988) presented the development of twenty-two item
instrument called SERVQUAL for assessing the customer perceptions of service quality in
services and retailing organizations. After the discussion on the conceptualization and
operationalization of the service quality construct, the tools used in constructing and refining
a multiple item scale to measure the constructs are described. Evidence of scales reliability,
factor structure and validity on the basis of analyzing the data from four independent samples
is presented next and in the concluding part, potential applications of the scale are given.
Zeithmal (1988) through an exploratory study have tried to understand how perceptions of
quality and value are formed in consumers and whether these are same across consumers and
products. The author has also studied how consumers relate quality, price and value in their
deliberations about product and services. Further, author has presented a discussion related to
direction for research and implications for managing price, quality and value.
Cronin and Taylor (1992) in their study have investigated the conceptualization and
measurement of service quality and the relationships between service quality, consumer
satisfaction, and purchase intentions. They argue that a performance-based measure of service
quality may be an improved means of measuring the service quality construct as service
quality is an antecedent of consumer satisfaction. Further, they have pointed out that
consumer satisfaction has a significant effect on purchase intentions, and service quality has
less effect on purchase intentions than does consumer satisfaction.
Grönroos (1994) have discussed about the negative consequences of relatively outdated
concept of marketing mix and emphasized a need for fresh perspective to marketing due to
49
modern research into Industrial marketing and services marketing and customer economics.
This claim is further reinforced by evolving trends in business, such as strategic partnerships,
alliances and networks.
Zeithamal et al. (1996) have presented a conceptual model of impact of service quality on
particular behaviours that signal whether customers remain with or defect from a company.
The paper reveals that when customer’s service quality assessments are high, their
behavioural intentions are favourable which strengthens the relationship with the company.
The reverse is true for low service quality assessments. The authors therefore believe that
behavioural intentions can be viewed as significant indicators that signal whether customers
will remain with or defect from the company.
Johns (1999) tried to examine the subtleties which arise when ‘service’ is used to denote
industries, outcomes and processes, and explore more specific service concepts, such as the
quality of service encounters and service experiences. The author concludes that many of the
concept's ambiguities relate to the use of the word ‘service’ and shifts of meaning which
result. Further, that these ideas frequently become confused and that authors need to exercise
greater care in using the word and therefore suggests that ‘service’ should always be
accompanied by a qualifying word to clarify the sense in which it is being used, and that the
context should be carefully explained. Author indicated that there are clear dichotomies
between providers' and customers' views of ‘service’. Parallel dichotomies can be found
between the delivery and consumption of ‘core services’ and the emotional/hedonic
dimensions of service performance. He further discussed the importance of these and
suggested ideas for the marketing and management of services. In addition, developed a broad
structural framework with which these ideas can be linked.
50
Mittal, Kumar and Tsiros (1999) have argued that firms and their partners, instead of
offering just products or services alone are increasingly offering consumption systems
characterized by a significant product and service subsystem, as well as a pattern of
consumption in which consumption occurs in multiple episodes over time. The authors claim
that an inter-temporal examination of attribute-level performance, satisfaction, and
behavioural intentions can improve an understanding of their relationships because these
relationships change as the consumption of the product unfolds. Furthermore, the crossover
effect of product and service satisfaction in determining intentions towards the manufacturer
and the service provider is asymmetric and this asymmetry reverses over time. Also, service
satisfaction initially has a much larger impact in determining intentions toward the
manufacturer, but later, product satisfaction is more influential in generating intentions toward
the service provider and manufacturer. They also claim that there is no direct link between
satisfaction and behavioural intentions. Rather, satisfaction affects behavioural intentions in
the future through a dual-mediation route.
Cronin, Brady and Hult (2000) have tried to make an empirical assessment of a model of
service encounters that simultaneously considers the direct effects of quality, satisfaction and
value on consumers’ behavioural intentions. Authors have claimed that service quality,
service value, and satisfaction may all be directly related to behavioural intentions when all of
these variables are considered collectively. They further argue that the indirect effects of the
service quality and value constructs enhanced their impact on behavioural intentions.
Dabholkar, Shepherd and Thorpe (2000) proposed that the factors relevant to service
quality are better conceived as its antecedents rather than its components and that customer
satisfaction strongly mediates the effect of service quality on behavioural intentions. They
have discussed the application of this framework in understanding and predicting service
51
quality and its consequences. They further claim that perceptions and measured
disconfirmation offer several advantages over computed disconfirmation (i.e., difference
scores), and that a cross-sectional measurement design for service quality is preferred to a
longitudinal design. The authors have also discussed the implications of these findings for
practitioners and for future research on service quality.
Reinartz and Kumar (2002) in their study analyzed how different organizations invest in
Customer Relationship Management (CRM) and Loyalty programs without taking into
consideration the actual requirements and when to invest in which customers. The authors
have claimed that the relationship between loyalty and profitability is much weaker and subtle
than what is claimed by the supporters of loyalty programs. Further, that the organizations
instead of focusing on loyalty alone, will have to find ways to measure the relationship
between loyalty and profitability so that they can better identify which customers to focus on
and which to ignore. They critically discussed the popular claims about loyalty programs
which are: It costs less to serve loyal customers; loyal customers pay higher prices for same
bundle of goods and loyal customers market the company.
Ancarani and Shankar (2003) in their study have highlighted the fact that mobile device
operating system is at the heart of convergence of computing, telecommunications and
mobility that results in hybrid mobile devices. They argue that in a convergent industry the
boundaries between the traditional industries are blurred and, as new competitors emerge,
traditional rules of competition are challenged. Firms need to effectively compete and
collaborate with one another at the same time by focusing on customer needs. For the
purpose, they have taken a case study of Symbian, which is a joint venture between Nokia,
Sony-Ericsson, Motorola, Matsushita, Siemens and Psion. In traditional mobile device
market, all these are leading competitors but at the same time, by using Symbian joint
52
venture, they are working towards synergizing their efforts in order to compete with
Microsoft’s Stringer and Smartphone 2002 in the mobile device operating system market.
They stressed the need for the firms to focus more on end customer and less on industry or
technology in convergent industries as customer based assets are critical for achieving
competitive advantage in these industries. Further, the firms should also focus on increasing
the knowledge about their customers and integrating it with their efforts and customers should
be viewed as value partners and as a source of competence for the firm. Finally they highlight
the fact that the strategic ability of firm to create and manage relationship with a network of
collaborators and complementors is the key to winning the battle in the convergent industry
and as such, managers should focus on forming ‘Learning Alliances’.
Morhange and Fontela (2003) argue that the characteristic dimensions of the mobile
communications system are based on the interaction between technological performance, cost
for the user and value added. Further, these dimensions allow for the positioning of all mobile
communication services into a morphological cube. They claim that the supply of new high
value added services with low-price applications, that are characteristics of mass consumer
market, is yet to be developed by the industry. They claim that this development is utmost
important if 3G services are to be developed as a successful innovation in the years to come.
Vlachos, Vrechopoulos and Doukidis (2003) tried to investigate consumer attitudes towards
mobile music services through an exploratory research approach conducted in Finland, UK
and Greece in order to support content providers and mobile operators to capitalize on
unexplored marketing challenges existing in the virgin territory of mobile music. The findings
indicate that content-centric criteria (i.e. sound/image quality and content variety) are most
critical success factors for mobile music diffusion and consumer adoption, while content
personalization capabilities, ubiquity and easy-to-use interfaces constitute, for the consumers,
53
the most desired features of a mobile music application. Significant differences were observed
between consumers willing to adopt mobile music services and those who are not, in terms of
importance they assign to specific mobile music application selection criteria and features.
Also, there were significant differences between the consumers’ willingness to adopt mobile
music services in all the three countries under investigation.
O’Neill and Palmer (2004) in their study examined the relationship between cognitive (post-
consumption) dissonance and change in consumers’ perception of service quality over a
period of time by studying the behaviour of university students undergoing a first year
orientation process. They surveyed and took responses from students twice, first immediately
after orientation process and second time after one month from the first survey. The authors
have argued that an individual’s perception regarding service quality changes with the
passage of time and that any such change is inversely related to the level of cognitive
dissonance he/she experienced over the same period of time. Further they have suggested that
with the passage of time, the consumer tends to selectively forget elements of total service
experience and his/her perceptions are influenced by subsequent exposure to related stimuli
and as such, as the consumer’s expectation rise, his/her perception of previous service
delivery decline. Hence the managers should make sure that they administer survey for
measuring customer’s perception of quality of service at a critical point in next buying cycle
and not immediately after he/she has consumed the service. Finally they suggest that as the
cognitive dissonance provides an opportunity to marketers to remove the negative feelings
about a product, so they should design their after-sale communication in such a way that it
helps the consumer to overcome his/her dissonance.
Yavas, Benkenstin and Stuhldreier (2004) examined the relationships between Service
Quality, Satisfaction and Behavioral outcomes for retail banking of private banks in Germany.
54
Authors argue that the Service Quality is at the root of Customer Satisfaction and is linked to
behavioural outcomes such as word-of-mouth, complaint and recommending or switching.
Different aspects of Service Quality and different consumer characteristics are associated with
different outcomes. The primary reason for these deviations is the intangibility of services and
human involvement. They suggested that the tangible elements of service quality and female
customers are more closely associated with positive word-of-mouth and commitment,
whereas timeliness aspects of service delivery are more related to customer satisfaction,
complaint and switching behaviours. Hence, companies should look to improve Service
Quality vis-à-vis customer satisfaction for positive customer behaviour. Also, where
companies are using sophisticated technology to improve service quality and delivery, they
should also take due care to educate customers regarding the correct and convenient use of it
so that it does not becomes a nightmare for them and a reason for dissatisfaction rather than
giving positive behaviour.
Adomi (2005) has analysed the growth of GSM cellular services in Nigeria. Author has
argued that the operators need to ensure problems of interconnectivity and limited mobile
coverage. Further that, high cost of services, shortage of trained and qualified manpower, poor
financial capital etc. need to be tackled so that Nigerians could take full advantage of mobile
telephony.
Pura (2005) has analysed the direct effect of perceived value dimensions (monetary,
convenience, social, emotional, conditional and epistemic value) on attitudinal and
behavioural components of loyalty in location-based mobile services. Author has claimed that
the behavioural intentions are most influenced by conditional value, i.e., the context, in which
the service is used, followed closely by commitment and to some extent monetary value. He
has further claimed that commitment can be enhanced through building emotional value and
55
conditional value by focusing on offering fun service experiences in the right context. Also,
that the influence of social and epistemic value was not significant.
Roos et al. (2005) have tried to understand the club's role in the customer relationships of a
telecommunications company by re-considering the concepts of frequency and commitment
in a telecom-customer club. Authors claim that an umbrella concept for the club regarding
loyalty (keeping function), divided the customer club in two ways. First, the affective role
makes the customer stay with the company and second, the calculative role with a more
inferred loyalty function. They further claim that customers do not merely look at certain parts
of the club offering where loyalty is concerned instead, they evaluate the club and their
relationship with the service provider according to different criteria.
Seth et al. (2005) in their study have tried to critically appraise various service quality models
and identify issues for future research based on the critical analysis of literature. For the
purpose, authors have examined nineteen different service quality models as reported in the
services marketing literature, tried to derive linkage between them, and highlight the area for
further research. The authors have argued that the review of various service quality models
has revealed that the service quality outcome and measurement is dependent on type of
service setting, situation, time, need etc. factors. In addition to this even the customer's
expectations towards particular services also changes with respect to factors like time,
increase in the number of encounters with a particular service, competitive environment, etc.
Bismut (2006) has argued that in recent years the European telecommunications market has
witnessed major developments, with rapid expansion in access to telecommunications
networks and a surge in the number of available services and applications. While many
factors have contributed to the transformation of the telecommunications industry,
competition has played a key role in driving telecom players to invest in new technologies, to
56
innovate and to offer new services. Moreover, increased competitive pressure is being felt
across all market segments, even though significant differences remain across services and
countries. Further, broadband roll-out has allowed operators to offer multiple-play services,
thereby transforming traditional segment boundaries and competitive market structures.
Chinnadurai and Kalpana (2006) have argued that the increasing competition and changing
taste and preferences of the customer’s all over the world are forcing companies to change
their targeting strategies. They claim that advertisements play a dominant role in influencing
the customers but most of the customers are of opinion that promotional strategies of cellular
companies are more sales oriented rather than customer oriented.
Ehigie (2006) tried to examine how customer expectations, perceived service quality and
satisfaction predict loyalty among bank customers in Nigeria. Author applied hierarchical
regression analysis on data and conclude that perceptions of service quality and satisfaction
are significant predictors of customer loyalty with customer satisfaction being the dominant
contributor.
Greenland et al (2006) in their study have tried to investigate East African consumer
perceptions of retail banking and argue that developing economies offer tremendous potential
for future growth. The organizations, which appreciate these consumers’ requirements, stand
to reap considerable returns. They have identified 13 core service dimensions which are the
key drivers of customer satisfaction. However, the authors further state that the established
standardized research instruments are likely to miss or under-represent service attributes
important in developing countries as they are constructed by keeping only developed
economies in focus.
Lee and Murphy (2006) in their study have analysed the mobile services consumption
behaviour of the youth population in Australia. The authors claim that the youth segment
57
utilizes mobile services for utilitarian needs and hedonic use, but more so for hedonic reasons,
and their peers influence consumer behaviour in regards to the choice of mobile service
providers and mobile services usage. They have further argued that since mobile data services
are seen as the key to driving growth for mobile service providers in many developed markets
and the growing importance of the youth segment is not only due to their increasing numbers
in terms of potential subscribers, but because they are the biggest consumers of mobile data
services. Therefore, it would make sense to develop marketing programs that in some way
focus on the youth segment or at least are relevant to them.
Lim et al (2006) tried to investigate determinants of satisfaction and loyalty decisions in the
use of mobile services. They identified five distinct dimensions of mobile service quality, and
analysed their direct and indirect effects on economic value, emotional value and loyalty
intention through satisfaction. They claim that two dimensions of perceived value (i.e.
economic value, emotional value) had significant influences on customer satisfaction, and
then, on loyalty intention. Also, there exists an interrelationship between economic and
emotional value. They have further claimed that each dimension of mobile service quality
appeared to have different effects on perceived economic value, emotional value, and the
level of satisfaction. Therefore, they suggested the mobile service managers to develop
strategic promotion efforts based on targeted consumers’ needs and marketing goals.
Madhani (2006) has argued that the growth of Mobile Telephony in India is leading itself
into colossal proportion that demands the role of regulatory authority in protecting consumer
interests. Author has discussed role of Telecom Regulatory Authority of India (TRAI) in
evolution of Quality of Service (QoS) benchmarks. Author has also tried to underline world
trend of Mobile Number Portability (MNP). Author has concluded that MNP increases the
58
level of competition among service providers and rewards customers with the best customer
service, network coverage, and service quality.
Roig, Garcia, Tena and Monzonis (2006) studied the dimensions of perceived value of
banking services by using GLOVAL scale of measurement, developed by Sanchez et al. in
2006 for tourism sector. According to this scale, Overall perceived value of purchase is equal
to sum total of consumption experience and purchase experience. Also, total Perceived Value
is equal to sum total of perceived value Service/Product; perceived value of
Establishment/Organization and perceived value of customer service personnel. It considers
functional aspects (valuations of: Establishment; Contact Person; Quality of Service and
Price) and affective aspects (Emotional value and Social value) to measure overall perceived
value. Authors state that in today’s competitive business environment, organizations must
become providers of value and must do it differently from each other, as this skill will permit
them to differentiate themselves, improve their results and increase their future possibilities of
survival. They defined perceived value as a judgment or a valuation by the customer, of the
comparison between the benefits or utility obtained from a product, service or relationship
and perceived sacrifices or costs.
Sigala (2006) has tried to analyze the Mass Communication strategies developed by mobile
phone service providers in Greece and simultaneously identify the type of customer values
perceived by mobile phone users who get their services customized. The author has used a
customer-centric one rather than provider-centric and claimed that the customers’ perceive
value in two dimensions vis-à-vis ‘Give’ and ‘Get’. The ‘Get’ dimension refers to the benefits
that customers get and includes: Functional-Convenience Value; Social Value; Emotional
Value; Conditional value; Epistemic Value and Control/Freedom of choice Value. The ‘Give’
dimension refers to the Sacrifices or costs incurred by the customers and include: Monetary
59
Sacrifice (Perceived fee) and Non-Monetary Sacrifice (Technicality, Time). This highlights
the fact that customers realize that the customization of services does not come for free and as
such seek corresponding value before opting for it. Therefore, it becomes imperative for the
providers to actually identify and provide enhanced customer values. This would help the
providers to actually make customer-value based market segmentation for enhancing
marketing effectiveness and mass customization customer adoption.
Sridhar (2006) has tried to forecast the penetration of mobile services in India. Author has
argued that quick deployments, competition, advancement in technologies and reduced cost of
access have propelled the growth of mobile services in India. Further, the author has
commented that predicting growth of subscriber base is critical for service providers so that
they can plan their network investments accordingly. Accurate forecast of subscriber base will
also help policy makers and regulators to formulate appropriate policies and guidelines for
sustainable growth of mobile services. Author has tried to demonstrate the use of internal
influence based logistic model and constant rate exponential model for predicting growth of
mobile services. Author has further argued that though these models forecast, with reasonable
amount of accuracy, the early stages of mobile service diffusion in the country,
comprehensive models which take into consideration various external factors that affect
growth of the sector need to be developed.
Caceres and Paparoidamis (2007) attempted to establish a theoretical basis for evaluating a
strategic increase in customers’ perceptions of service/product quality, specifically in terms of
an increase in relationship quality and customer loyalty in b2b environment. The authors have
claimed that using Grönroos conceptualization, a clear pattern of service quality dimensions is
established and several important findings are achieved that include empirical verification of
the mediating role of overall relationship satisfaction in the formation of loyalty attributes.
60
They further claimed that in a b2b environment, managers need to clearly define relationship
development strategies, service provision policies and develop homogeneous service
provision.
Chandrashekaran, Rotte, Tax and Grewal (2007) tried to study the translation of
satisfaction strength into loyalty. Authors have claimed that the satisfaction strength is a vital
determinant of customer vulnerability because it plays a crucial role in the translation of
stated satisfaction into customer loyalty. They argued that the examination of the strength
with which customer sentiments are held is important in the context of ongoing customer
relationship and after some critical events (like service failure) that may serve to destabilize
customer relationships. This is so because service variability and failures can sensitize
customers towards the potential hazards of dealing with a service provider, and hence increase
uncertainties and fears that can threaten the relationship and result in customers becoming
vulnerable to defection. Building upon Judgment Uncertainty and Magnitude Parameters
(JUMP) model, they suggest that customers’ stated satisfaction is made up of two related but
independent facets, i.e. Satisfaction Level and Satisfaction Strength. They claim that
satisfaction translates into loyalty when satisfaction is strongly held (i.e. less uncertain). This
translation is significantly lowered, on an average by approximately 60% when the same
satisfaction is more weakly held (i.e. high uncertainty). In the end they made a very
significant claim that the customers with positive prior relationship experience were most
vulnerable to defect.
Chowdhary and Prakash (2007) tried to investigate the possibility of any generalization in
importance of service quality dimensions. The dimensions they used were: Tangibles,
Reliability, Responsiveness, Assurance and Empathy (given by Parasuraman et al.) plus one
more dimension, ‘Fees’ for price. It was a two stage research process and in first stage,
61
researchers classified four types of service: People Processing; Possession Processing; mental
Stimuli Processing and Information Processing (as mentioned by Lovelock in 1983). Under
each type they took four services so as to make a total of sixteen services and the respondents
were asked to free list the factors that added value to their consumption. In second phase, all
these free listed factors were classified under the previously mentioned six dimensions. They
concluded that no simple generalization of relative importance of determinants of service
quality is possible as the importance of every determinant of quality for customers would vary
across different service types. Further, tangibility is important for services with more tangible
actions and the importance reduces as one shifts from services targeted at possessions.
Services with intangible nature and targeted at possessions of customers require high
reliability, whereas the services targeted at the customer require more assurance. Also,
information and people processing services require more empathy as compared to other types
of services and prices are considered relatively more important by consumers of possession
and mental-stimuli processing services.
Das and Mohanty (2007) have attempted to examine consumer-buying motives and
identified the factors affecting choice of operator in cellular services. They claim that for
gaining customers’ trust, cellular operators should concentrate their efforts on providing better
network, better customer care, and quality services.
Fernandez and Kakani (2007) attempted at understanding the strategic dynamics of the
evolving environment within which the Indian mobile value added services industry players
are operating, the challenges faced by them and the industry structures. They have argued that
while the value chain of industry is complicated yet one can observe the bipolar nature of
bargaining powers between mobile network operators and content aggregators where the
regulator plays an important role. Moreover, with technology reducing the differentiation at
62
the rendering point the only factor that would differentiate one service from the other would
be the content, and this is why media companies will be so critical in the value chain. With
better technology adaptation both in wireless communications and handsets manufacturing,
reliable (quality and price) internet service in mobiles won’t be a distant dream. Once internet
access in mobile platforms becomes ubiquitous then the mobile network operators would
reduce in dominance when it comes to content delivery, since then the content could be
directly downloaded from the web.
Patterson (2007) examined the variations in loyalty behaviour and loyalty motives for
medium to high contact service industries vis-à-vis three demographic characteristics of age,
gender and occupation. Author has suggested that age and occupation are associated with
service loyalty while gender is not. Further, mature age groups (35-54 years and over 55
years) display significantly more loyal behaviour than their younger counterparts (18-24 years
and 25-34 years). Additionally, older clients of business possess different motives (i.e. social
benefits, special treatment and confidence) for staying loyal than younger clients. Author
claimed that the research has revealed the fact that customers who are more concerned about
prices are less loyal and high income groups being more loyal than low income groups.
Sánchez-Fernández and Iniesta-Bonillo (2007) have presented a systematic review of the
extensive research that has been conducted on the conceptualization of perceived value.
Authors concluded that both uni-dimensional and multi-dimensional models of value have
their roles to play in providing simplified (uni-dimensional) and complex (multi-dimensional)
understanding of the concept. The nature of perceived value is complex and multi-
dimensional and implies an interaction between a consumer and a product. The value is
relative by virtue of its comparative, personal and situational nature and is preferential,
perceptual and cognitive-affective in nature.
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Anderson (2008) undertook a research to explore the challenges of reaching low-income
customers in developing markets. Author has suggested that managers need to go beyond
traditional approaches to serving the poor, and innovate by taking into account the unique
institutional context of developing markets. Author further argues, while citing the example of
Hutchison Essar, that mobile network operators can deliver availability and affordability to
achieve increased individual or household penetration through business model innovation.
Baryshnikov et al (2008) have argued that emergence of converged multimedia services has
led operators to seek clear tactical and strategic advantages in developing differentiated
service offerings. Effectiveness of the offer strategies is influenced by factors such as service
delivery investment, operations cost, market segment preferences, competitive multimedia
offers, service pricing, and consumer price sensitivities. Differentiation in any of these factors
in a competitive environment has a direct influence on market share and profitability of
communication service providers.
Bhatt (2008), in his study has claimed that it is important for mobile carriers, service
providers, content developers, equipment manufacturers, as well as for parents and young
people alike that the key characteristics of mobile technology is well understood so that the
risks associated with its potentially damaging or disruptive aspects can be mitigated.
Debnath and Shankar (2008) in their study have argued that technological modernization is
increasingly viewed as a premeditated necessity in today's era of growth and prosperity for
any country. Telecommunications has entered a new age of development with advanced
technology and increased competition with established players. The technological advances in
the telecommunication sector are associated with an uninterrupted growth of the mobile
sector. Authors further argue that the prime focus of the service providers is to create a loyal
customer base by benchmarking their performances and retaining existing customers in order
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to benefit from their loyalty. Authors have identified the inefficient service providers who can
improve their efficiency by making the efficient providers as their role model and further
identified some generic insights.
Ferguson and Brohaugh (2008) have argued that companies with sound customer strategies
can use loyalty program as a differentiator in an increasingly muddled market. In an
increasingly competitive market, customer loyalty efforts can play a major part in the
attraction of new customers and the retention of current ones. Moreover, companies must
transition to offer a suite of services as “bundling” strategies proliferate and further ignite
pricing wars. They have also claimed that as consumers' choices expand, the importance of a
sound customer relationship strategy becomes more and more important for the success of the
company.
Ganguli (2008) has claimed that according to the perception of cellular users, the important
dimensions of service features are process quality, service competitiveness (degree of
competitiveness of the cellular companies reflected through prices, value added services and
innovation), service reliability, market reputation, supporting services, network performance
and customer convenience. Hence operators should focus their efforts on these dimensions.
Jallat and Ancarani (2008) in their study have pointed out that telecommunication industry
is undergoing a process of increased competition. Therefore, dynamic convergence, yield
management techniques can help telecom operators to optimize the benefits they can derive
from a subtle management of information networks and partnerships. However, such an
approach is more difficult to implement in the telecommunication industry than in the airlines
sector because of the difficulty to control (and sometimes refuse) network access to
customers.
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McMullan and Gilmore (2008) have attempted to identify the different levels of an
individual’s loyalty and the factors that help in developing it by using two stage case study of
ferry-service sector of UK. In first stage, the efforts were made to establish the levels of
loyalty which are: High; Medium and Low. It also identified their respective sustainer factors
and vulnerabilities (i.e. mediating effects), whereas the second stage examined the factors as
to what sustains and develops loyalty among different levels of loyalty. Authors argue that a
differentiated approach is required for developing and managing customer loyalty by
appropriately rewarding customers at different levels. There is a need to acknowledge the
importance of reciprocity in terms of such aspects of service which customer value. Further,
that not all customers are interested in developing a relationship. However those interested,
have an expectation that the company will reciprocate and recognize loyalty with appropriate
rewards. Finally, the authors also pointed out a very delicate issue of differential treatment.
They explained this by citing a finding of their study that the customers with high level of
loyalty are less flexible towards service failure. Therefore, it is important for the companies to
understand that as the level of loyalty increases, the expectations of customers also increase
because of the higher level of involvement and commitment.
Oyeniyi and Joachim (2008) have tried to highlight changing focus of marketing i.e. from
acquiring customers to retaining customers through service quality. They argue that if
retention strategies are not managed, then customers’ loyalty may be lost. The researchers
examined the potential constructs in customer retention by investigating the chain of effects of
retention from customer service, satisfaction, value and behavioral intention. They argue that
as the competition is getting fierce due to the ease and the rate at with product and services
are duplicated in the industry and multidimensional communication, the mobile operators are
continuously struggling for customers share and there is an increasing need to build loyal
customers through effective customers’ service activities. They concluded that there is a
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positive relationship between the level of perceived service level and customer satisfaction.
Further, the customers are likely to continue their patronage if they are satisfied with the
perceived value of service and hence continued patronage will lead to retention of customers.
Moreover, when customer service is high, customer retention is also high as customer
retention is achieved only when the customers believe that customer services offered are
effective and high. Also, customers’ behavioural intentions have a strong influence on
customer retention process.
Robins (2008) studied the marketing of third generation (3G) services of cellular telephony
and tried to draw attention towards the elements of technological and product convergence,
highlighting the point that while industry convergence on digital technology is a fact, today’s
mobile telephony marketplace is nonetheless characterised by three generations of technology
and the latest generation, 3G, embraces three related but competing standards. Author
discussed 2G, 2.5G and 3G developments around the world and identified factors relevant to
the marketing of 3G, including recognition of geographical and user diversity and the
consequent need for marketers to keep these various user perspectives in mind. However,
customers’ desire for personalisation, including personalised 3G services, are important
features of the marketplace, as will be the availability of simple, secure payment systems.
Roos and Friman (2008) attempted to understand the role of emotion in customer switching
processes and identifying the relative frequency of negative discrete emotions in terms of
different triggers. Authors have claimed that the identified emotions were located in the
trigger part of the relationship, and were expressed by the respondents during the switching
process in form of annoyance, anxiety, disappointment, dissatisfaction, distress, depression,
rage, stress and tension.
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Schnorrenberge (2008) analysed the market’s expectations of converged services and
discussed the impact on the market. Internet paradigm is being introduced in all areas of
communication. Rapid development of wireless technology leading to increased bit rates and
support for mobility enabled true convergence of services and therefore as a result, the same
end-user services can be reached by both mobile and fixed access channels via the same user
interface. He further argues that the market is evolving and there is growing demand for the
convergence of services, devices and applications. Therefore, author suggests that a customer-
focused, converged offering will succeed and open up new markets and business models.
Consequently, service providers with a strong and single-minded brand that combines
network-based services and applications would be able to provide a real added value to the
consumer and ultimately win the convergence battle. Moreover, in cases where the services
and technologies are not wholly owned by the service provider itself, a new set of
relationships with the right partners having the right expertise should be build up that will
secure the service provider’s success and revenue growth now and in the future.
Seth et al (2008) have claimed that there is relative importance of service quality attributes
and that responsiveness is the most importance dimension followed by reliability, customer
perceived network quality, assurance, convenience, empathy and tangibles. Authors have also
tried to develop a reliable and valid instrument for assessing customer perceived service
quality for cellular mobile services.
Vlachos and Vrechopoulos (2008) tried to study behavioural intentions in mobile internet
services context. They have claimed that content quality, contextual quality, device quality,
connection quality and privacy concerns have a strong positive influence on service quality
perceptions. Also, service quality, value and satisfaction have a simultaneous direct effect on
behavioural intentions. Further, they argue that consumers, in order to adopt mobile e-
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commerce services are required to be rewarded with high levels of outcome quality, anytime
and most importantly at any place. The authors have also suggested that when it comes to
specifying service evaluation frameworks employing service quality, satisfaction and value
operationalized at a cumulative level, traditional exchange contexts are not different from
electronic commerce exchanges.
Waarden (2008) aimed at providing theoretical and empirical knowledge about the impact of
loyalty programs on purchasing behaviour of customers of retail stores with the help of
market-wide panel data on supermarket purchases in France. Author argued that as the
competition increases day by day, all the firms, be it airlines, hotels, retail etc. have started
realizing the importance of customers’ long term relationships with them in order to increase
their customer retention rates and customer’s wallet share. He has concluded that the loyalty
program members are heavier purchasers than non-members in all trading areas of the
supermarkets.
Akbar and Parvez (2009) have proposed a conceptual framework to investigate the effects of
customers’ perceived service quality, trust, and customer satisfaction on customer loyalty in
Bangladesh. They have claimed that trust and customer satisfaction are significantly and
positively related to customer loyalty. Further, customer satisfaction is an important mediator
between perceived service quality and customer loyalty.
Blery et al. (2009) conducted a study in Greek mobile telephony sector in order to identify the
influence of service quality on customer loyalty. For measuring service quality they used
SERVPERF model. It is a performance based model for measuring service quality and uses
five dimensions [Tangibles; Reliability; Responsiveness; Assurance and Empathy] and twenty
two items of SERVQUAL model, but it ignores the importance weights. They used
repurchase intention and positive word of mouth as behavioural components to measure
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customer loyalty, but also argue that customers’ stated repurchase intention does not always
ensure their actual repurchase behaviour. They conclude that service quality is an important
decision making criterion for service consumers and any efforts to improve quality would be
beneficial. Further, that perceived price of service is negatively associated with repurchase
intention and repeat business also depends on other factors like barriers to switching to other
providers, transaction costs and search costs etc.
Chadha and Kapoor (2009) attempted to study the impact of increasing competition and
consumer demand on mobile telecom services business in Indian context. Authors have
argued that with the increasing competition and demanding customers, the main condition for
protecting the subscriber base is to win customer loyalty. Further, that switching cost, service
quality and customer satisfaction have positive impact/association with customer loyalty and
that customer satisfaction was found to be the best predictor of customer loyalty.
Chircu and Mahajan (2009) tried to analyse the effect of mobile communication
technologies in bridging the digital divide between developing and developed countries.
Authors argue that while mobile technology depth (number subscriptions as percentage of
population) is lower in BRIC countries, it has been rapidly growing, equalling, or surpassing
some developed countries for BRIC such as Russia and Brazil. BRIC such as India and Russia
also equalled or surpassed several developed countries in 2006 in terms of mobile technology
breadth (service variety) on 34 individual and five categories of mobile services available
worldwide. Although some BRIC countries were behind developed countries on one of these
dimensions in 2006, yet they were ahead on the other dimension. Thus, the digital divide
between BRIC and developed countries can be narrower, absent, or even reversed, depending
on the metric used. They argued that BRIC can serve as frontrunners whose lessons on
technology diffusion can be applied in other developing countries. They further discussed
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implications for new product and innovation management and digital divide research and for
policy making and business processes for high-tech companies in BRIC and other developing
countries.
Gupta and Sharma (2009) tried to test the relationship of customer loyalty and the approach
of service providers in India. Authors argue that the cellular service providers are not
perceived to be ‘‘up to the mark’’ by consumers as about 40% of consumers are not satisfied
by their service provider. The consumers are forced to continue with their service providers
due to absence of mobile number portability. Therefore, the onus clearly lies on the service
providers to convert this spurious loyalty into real loyalty once mobile number portability is
introduced in India. For this, the operators would have to provide service with reliable quality
without any hidden price because customer satisfaction, and hence customer loyalty, depends
upon reliability and honesty on the part of service provider.
Gupta, Jain, K. and Jain, D. (2009) tried to examine the factors that influence customers’
intention to continue purchasing from an organized retailer. The authors claim that the
customers’ perceived value is an important indicator of customers’ continuance intention and
simultaneously loyalty incentives provided by the store also play a crucial role. Further, in
case of supermarkets in semi-urban areas, convenience is more important for customers than
enjoyment. Organized retailers can increase customer retention by focusing on their strategies
towards making customer experience more valuable and convenient.
Jawahar and Maheshwari (2009) highlighted the fact that perception of service performance
leads to an emotional attachment with the service provider and emotional attachment
generally results in brand loyalty. Emotional Attachment acts as a mediator in building strong
brands which can turn into Emotional Brands. They have proposed a model for Emotional
Brand in which Service Evaluation Index (SEI) is an independent variable, which is a
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combination of Service Encounter Satisfaction and Service Quality and measured using
SERVPERF. Emotional Attachment is mediating variable between SEI and Emotional Brand.
Therefore, they suggested that the organizations should try to increase Emotional attachment
for their brand in order to evolve their brand as Emotional Brand.
Kim, Telang, Vogt and Krishnan (2009) in their study have tried to develop a structural
model to examine user demand for voice and SMS services. They measured own-price and
cross-price elasticity of these services. The cross-price elasticity is of significant importance
because marketing activities are critically influenced by the fact that whether the products are
substitutes or compliments. Using the individual consumption data of more than six thousand
customers, authors claim that SMS and Voice services are small substitutes. Further, a 10%
increase in price of voice services would induce about 0.8% increase in demand for SMS. The
own-price elasticity of voice services is also as low as -0.1. Moreover, younger users’ demand
is far more inelastic than that of older users.
Kuo, Wu and Deng (2009) conducted a study in Taiwan and tried to construct an instrument
to evaluate service quality of mobile value-added services. Authors have discussed the
relationships among service quality, perceived value, customer satisfaction, and post-purchase
intention. They claim that service quality positively influences both perceived value and
customer satisfaction, whereas perceived value positively influences both customer
satisfaction and post-purchase intention. Further, customer satisfaction positively influences
post-purchase intention and service quality has an indirect positive influence on post-purchase
intention through customer satisfaction or perceived value. They argue that among the
dimensions of service quality, “customer service and system reliability” have the major
influence on perceived value and customer satisfaction, followed by the influence of “content
quality”.
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Lee (2009) has tried to investigate consumers’ perceptions and attitudes toward mobile
Internet services in Korean market and proposed a new construct of perceived fulfilment of
expectation used to explain consumers’ attitudes toward the mobile Internet services. Authors
claim that consumers’ expectation is fulfilled differently for different service categories. The
expectation is more fulfilled through system attributes (network-wise) for personalization and
information services, and through contents attributes for entertainment services. Further,
consumers of different age groups have shown different patterns of fulfilment of expectation
with the same services.
Lenka, Suar and Mohapatra (2009) have examined the relationship between service quality
and customer satisfaction and ultimately customer loyalty in banking services. They tried to
identify the major factor (out of human aspects, technical aspects and tangible aspects) that
affects quality of service offered and in turn the customer satisfaction. Authors have claimed
that although all three (human, technical and tangible) aspects of service quality of banks
increase customer satisfaction but human aspects have the highest effect on service quality
and hence banks should concentrate on improving this factor.
Li and Zhang (2009) used Action Network Theory (ANT) to analyze 3G diffusion and
adoption in China and provide suggestions and recommendations for successful
implementation. Authors claim that 3G implementation in China is between the stage of
interessement and enrolment and it is different from many other countries that have
implemented 3G, the Chinese government has much more significant influence on the
management and business of the telecommunication operators. They further claim that 3G
will help to overcome the digital divide in China. Many people in rural areas do not own a
computer because they could not see the immediate usefulness of a computer and consider
computers only something for entertainment indicating that people living in rural areas are
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likely to embrace 3G phones because of its immediate usefulness for voice communications
and the ability to connect to the Internet. Therefore, 3G operators and government should pay
special attention to rural users in 3G implementation, rather than focusing exclusively on
urban users. More importantly, 3G applications should not be limited to entertainments.
Critical 3G applications should target mobile health, mobile government, and mobile
commerce because the success of 3G services depends on consumer acceptance, which in turn
depends on the type of applications and contents available on the 3G network.
Liang, Wang and Farguhar (2009) have proposed a model that examines the relationship
between customer perceptions in terms of product attributes, benefits, satisfaction, trust,
commitment and behavioural loyalty with that of financial performance of a merchant bank.
The study basically aimed to demonstrate the existence of a close association between
investments in customer relationships and financial performance for service providers.
Authors have claimed that customer perceptions positively affect financial performance and
customers purchase financial services with dissimilar benefits, all of which come with
corresponding attributes, and hence result in different levels of customer satisfaction and
behavioural sequence, which is important in reinforcing customers’ trust, commitment,
repurchase intentions and corporate financial performance.
Narayana (2009) has tried to estimate the socioeconomic and demographic determinants of
household access demand for telecom services in Karnataka State (India). The author claims
that social caste, education level, size of income, income tax payers, and location of friends
and relatives in local call area have significant impact on household access demand. However,
the nature and magnitude of the impact of these determinants are different in rural and urban
areas, respectively. Further, given the socioeconomic and demographic characteristics, a rise
in the average income of households had a remarkable increase in the probability for access
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demand. Therefore, the knowledge of socioeconomic and demographic determinants are
relevant inputs for design of a promotional policy for access to telecom services.
Negi (2009) conducted a study in order to explore the causal relationship between service
quality dimensions and overall service quality, and to identify service quality gaps as
experienced by the subscribers of the mobile services of Ethiopian Telecommunication
Corporation by using seven modified dimensions of SERVQUAL, namely tangibles,
reliability, responsiveness, empathy, assurance, network aspect, and convenience for
measuring customers’ perceptions and expectations of mobile telecommunications services.
The author has suggested that Ethiopian Telecommunication Corporation should concentrate
on providing superior reliability, particularly, accuracy and dependability in mobile services.
Further, the company should exert an extended focus on the items of network aspect
dimension (transmission quality and network coverage) so as to improve customers’
perceived quality of mobile services.
Vanniarajan and Stephen (2009) investigated the quality of service offered to the students
in institutional computers centre in their study. They also measured tangible and intangible
aspects of service quality vis-à-vis customer satisfaction and revisit intentions. Tangible
aspects referred to the technical quality of centre, i.e. processing and communication facilities
available in the computer centre and up-to-date infrastructure, whereas intangible aspects
referred to functional quality, i.e. the manner in which the services are delivered. Authors
have used SERVQUAL (22 items) to measure customer satisfaction and argue that the service
quality of the centres generally lags behind the users’ expectations. Further, that any efforts,
leading to improvement in service quality results in higher satisfaction. Moreover, tangible
aspects have greater direct effect on revisit intentions and referrals, whereas intangible aspects
affect the revisit intentions indirectly through user satisfaction channel.
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Vannirajan and Gurunathan (2009) have argued that as Indian cellular phone service
market is becoming more competitive, the success of cellular service providers depends upon
their capability to retain their customers and make them loyal to their brand. Authors have
claimed that the service quality factors namely core service quality; network quality and value
added service quality have a significant positive impact on customer loyalty but through the
customer satisfaction. In addition, perceived service quality is a necessary but not sufficient
condition for customer loyalty.
Wei and Hsiao (2009) tried to highlight the difference between the service quality of
Multimedia On Demand (MOD) service provided by Chunghwa Telecom and the perceived
service quality of the customers, so as to provide a reference for the improvement of service
quality of the service provider. They used factor analysis to identify the key factors
influencing service quality as: Prompt Response; Safety Guarantee; Faith-Concern; Service
Content; Entity Service and Program Quality. Further, in order to measure overall satisfaction
with respect to the identified factors, they used Pearson’s correlation technique. They
conclude that customer expectation of MOD service quality is higher than the actual
recognizable level of service quality. There is a positive correlation between the overall
degree of satisfaction and each of the six factors and Service Content has the highest
correlation with overall satisfaction. Further, there is a significant positive correlation between
the overall satisfaction and customer loyalty.
Haque et al (2010) have tried to identify the factors that play significant role in selecting the
telecommunication service providers by Bangladeshi mobile service consumers. They
included demographic background, price, service quality, product quality and availability and
promotional offers for consumer perception in the study parameters. They have concluded by
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saying that among all the significant variables, Price is the most important for consumers
followed by service quality, product quality and promotion.
Samanta et al. (2010) have analysed the factors impacting the subscription demand for
mobile telephone services in countries worldwide. They argued that factors like availability of
land line telephone, number of technology standards, competition among operators, income
and educational level do not have consistent impact and therefore can provide misleading
information for modelling the demand for mobile telephone services. Authors therefore, have
proposed a non-linear demand model based on the initial access/connection charge, monthly
subscription charges and call charge for assessing the demand for mobile telephone services.
Santouridis and Trivellas (2010) have attempted to investigate crucial factors that lead to
customer loyalty in the mobile telephony sector in Greece, namely service quality and
customer satisfaction. Furthermore, the mediation effect of customer satisfaction on the
service quality and customer loyalty relationship was also examined. The authors claim that
Customer service, pricing structure and billing system are the service quality dimensions that
have the most significant positive influence on customer satisfaction, which in turn has a
significant positive impact on customer loyalty. They further claim that customer satisfaction
has a mediation role on the service quality and customer loyalty relationship.
Suryanegara and Miyazaki (2010) analysed the diffusion of mobile telephony in Indonesia
by focusing on the perspective of operators’ strategies. The authors identified three successful
diffusion factors where operators made the right choice in adopting appropriate standards and
had the ability to understand and to drive the Indonesian market. They claim that all operators
have similarities in applying pragmatic strategies to build economic perception through
various tariff plans and service customisation.
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Boohene and Agyapong (2011) have investigated the determinants of customer loyalty in
Vodafone (Ghana). Authors have claimed that there is a positive relationship between service
quality and customer loyalty. They have further suggested that telecom managers need to
emphasise service quality. Further, telecom firms do not provide tangible products and hence
their service quality is usually assessed by measures of the service provider’s relationship
with customers. Thus, telecom service providers should pay attention to staff skill possession
and offering fast and efficient services.
John (2011) has tried to explore the factors that influence customer loyalty of BSNL mobile
customers. Author has claimed that network quality, customer service along with value added
services provided by BSNL have enhanced the loyalty of the customers. Further, BSNL
should work on its problems related to servers as this will further strengthen the customer
satisfaction and loyalty. Besides, author has suggested that telecommunication service
providers should look beyond price wars to keep their customers satisfied and loyal.
Kumar (2011) has tried to study the impact of various factors influencing mobile users in
selecting service provider. Author has claimed that customer service, service accessibility and
service affordability are relatively more important factors influencing the mobile users’
decision, as compared to promotional offers, in selecting service provider.
Nimako et al. (2010) have tried to analyse overall customer satisfaction with service quality
delivered by mobile telecommunication networks (MTNs) in Ghana. Authors have claimed
that irrespective of mobile telecom network customer satisfaction is low; neither equal to nor
better than desire and expectation of the customers. They have further argued that the
National Communication Authority (NCA), the regulator and policy makers are empirically
informed of the general customer dissatisfaction with mobile telecom service in Ghana and
therefore, should ensure that network operators in Ghana improve upon their service quality.
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2.2 PUBLISHED BOOKS
Lovelock (1998) in his book has deliberated upon marketing of services. The author holds the
view that service sector is evolving rapidly. Service industries face dramatic changes in their
environment, ranging from developments in computerisation and telecommunications to the
emergence of global markets. Moreover, the competition has also been increasing in this
sector. The author has emphasised the distinct nature of services thereby requiring a distinct
approach of marketing.
Krishnakumar (2010) in his book, ‘Mobile VAS’ has discussed the evolution of mobile
value added services from a simple SMS to modern day multimedia-rich content services.
Author has emphasised the fact that with the advancements in handsets, cellular networks and
web technologies, users can access much more advanced value added services from their
mobile devices. The next wave of growth for mobile VAS is expected from services that offer
benefits such as personalisation, convenience, security, high-class entertainment. The book
covers the areas of mobile VAS architecture; mobile application development; security and
billing aspects, followed by growth frontiers and latest trends in mobile VAS.
Zeithaml et al. (2010) has provided a comprehensive review and analysis of services
marketing issues, practices and strategies. Authors have used GAPS Model of service quality
and have identified critical gaps which often arise between the customers and company. They
have further discussed the ways and means of closing those gaps. Authors have also tried to
discuss the strategies aimed at developing strong customer relationships through quality
service(s). This is supplemented by discussions on topics like management and measurement
of service quality; service recovery; linking of customer measurement to performance
measurement; service blue printing; customer co-production and cross-functional treatment of
issues through integration of marketing with other managerial discipline.
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2.3 INDUSTRY REPORTS
Boston Analytics (2007) research report explores the Indian Mobile Value Added
Services (MVAS) marketplace and seeks to provide a systemic view of the industry, while
addressing issues across the MVAS value chain in India. This research indicates that the
Indian MVAS market will witness a high growth trajectory, creating tremendous
opportunities for all stakeholders. However, all stakeholders across the value chain need
to work collaboratively to overcome growth barriers and create an ecosystem that
generates fair rewards for all. The report suggests that the key challenges in front of
MVAS industry are to establish the required content authentication standards, and enact
laws pertaining to copyright protection. Further, a transparent revenue-sharing
arrangement set out under the aegis of an industry apex body such as the Telecom
Regulatory Authority of India (TRAI) would bring more clarity to the potential rewards
for all stakeholders, thereby ensuring equitable participation across the value chain. As far
as content is concerned, there is a need to go beyond music, music, and sports, to cater to
the needs of all consumer segments.
IMAI and eTechnology Group@ IMRB (2010) in their report have argued that as the
metropolitan and large urban cities have reached a high level of penetration, Tier I & II
cities as well as rural towns seem to be the next beneficiaries of mobile communications
technology. Due to this duality, network providers and other industry stakeholders have to
provide advanced services to the existing matured users as well as ensure that financially
challenged sectors are provided mobile services at affordable costs. Consequently, Mobile
Value Added Services (MVAS) which comprise advanced as well as basic services will
need to be provided to the divergent mobile subscribers. Further, this report has discussed
the growth of revenue through MVAS over the past years, and have suggested that in
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order to ensure a high growth in MVAS revenue, it is imperative that newer avenues are
explored to provide user-centric content and application services. Moreover, long term
growth will be ensured if detailed learning from user experiences is examined
continuously in providing innovative services.
2.4 THESIS AND DISSERTATIONS
Yao (2006) tried to examine determinant factors of customer repatronage towards Third-
Generation (3G) mobile services by studying possible variables that may affect willingness of
customers to use the 3G service of the same telecom service provider. The variables that were
studied are Network Externality, Switching Cost, Customer Satisfaction, Customer Loyalty
and Technical Functional Factors. Author claims that Customer Loyalty and Switching Cost
of Time and Special Offering are two main factors which are significantly positively related
to Customer Repatronage.
Nimako and Azumah (2009) in their Master’s thesis sought to assess and analyse customer
satisfaction with service delivery of mobile telecommunication networks (MTNs) within
Ghana. They suggest that “Technical quality” is the most important dimension, followed by
“empathy”, “reliability”, “economy”, “responsiveness”, “image”, and “assurance”, while
“tangibles” is found not significantly important to the customers in Ghana’s MTNs.
Moreover, the authors claim that Desire and Expectation Disconfirmations collectively and
individually explain overall customer satisfaction significantly in Ghana’s MTNs and
Customers’ switching intention is different among the networks.
Zhang and Feng (2009) tried to investigate the impact of relationship marketing tactics on
customer satisfaction and trust, which in turn increase customer loyalty, by focusing on
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Swedish mobile telecommunication sector. They argue that service quality, price perception,
and value offers have impact on customer loyalty indirectly via the customer satisfaction and
trust. In addition, brand image is positively and directly related to customer loyalty. However,
switching costs has been found to have less correlation with customer loyalty, as well as
satisfaction and trust in Sweden telecommunication industry.
2.5 OTHER MISCELLANEOUS PAPERS AND ARTICLES
Rao et al (2003) in a case study tried to examine the key factors of customer loyalty in the
context of a large retail banking organization - National Bank of Oman (NBO). Further,
authors have tried to probe whether the practices of NBO reflect extant theories and also to
identify gaps between both practice and theory. The claim that the bank besides applying most
of the prescriptions in the form of core and front-end loyalty factors, is practicing back-end
loyalty factors to enhance creditability, transparency, reliability through good corporate
governance in the present competitive environment.
Valor and Sieber (2003) have claimed that young people’s adoption of technology does not
depend only on their technological knowledge, but also on their overall environment, as
young people in Spain adopt mobile phones regardless of their technology expertise.
However, mobile phone usage varies depending on the technology savviness of each
youngster, and only those with high technology knowledge think of their mobile phone as a
multi-purpose device. Further, mobiles and new technology is reshaping some youngsters’
lifestyle and the ways they interact, as well as covering different needs and motivations.
Lee and Murphy (2005) investigated determinants that cause mobile phone customers to
transit from being loyal to switching. The authors, while examining the factors related to what
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keeps customers loyal and what provokes the same customer to switch, have suggested that
the transition from loyalty to switching may be due to changes in underlying determinants as
well as new determinants. They conclude that mobile telecommunication is a commodity and
offers several applied implications for mobile service providers. They identified ten common
factors that might induce switching as: Price; Technical Service; Functional Service;
Switching Cost; Loyalty Programs; Reference Group Influences; Brand Trust; Behavioural
Factors; Handset Upgrade and Technology. 29
Lee et al (2006) have tried to investigate attitudinal and behavioural loyalty between prepaid
and postpaid customers of mobile telecommunication services. They have argued that unlike
prepaid customers, postpaid customers are bound by contractual obligations, which impose
financial switching costs if the contracts are terminated prematurely. Moreover, cognitive
dissonance reduction may cause postpaid customers to have higher attitudinal loyalty than
prepaid ones. They claim that there is a positive correlation between attitudinal and
behavioural loyalty. However, there is no significant difference in attitudinal or behavioural
loyalty between customer types. Furthermore, postpaid customers show stronger attitudinal
and behavioural loyalty than prepaid ones.
Shankar (2006) examined the emergence of innovation and value creation for enhancing
customers' experience, as a result of increasing competition in the Indian telecom industry
during the late 1990s and early 2000s. The report provides a detailed account of the evolution
of the Indian telecom industry. It traces various developments in the industry before, during
and after the liberalization of the Indian telecom sector. It also provides information about the
increasing popularity of cellular services which led to the emergence of several private
telecom operators like Bharati Tele Ventures, Hutchison Telecom, Idea Cellular Ltd, Reliance
Telecom Ltd, etc.
83
Eze, Sin, Ismail and Siang (2008) have drawn the attention towards the fact that the service
industry is fast becoming a growth catalyst in most economies driven by the strategic roles of
information and communication technologies. The authors argue that out of various
dimensions of service quality, all but Reliability were significantly present in Malaysian
Internet Service Providers’ (ISP) offerings and hence they should improve their service
reliability in order to improve their overall service offering and in turn customer satisfaction.
Iqbal et. Al (2008) in their study focused on estimating and comparing the perceived
expectation and the actual satisfaction level of prepaid cellular service users in Pakistan. They
argue that perceived quality, perceived value and perceived expectations are leading variables
for customer satisfaction: while repurchase likelihood, customer complaints and price
tolerance are dependent on actual satisfaction. They claim that customers have high
expectations and the cellular service providers are able to fulfil those expectations only to
some extent.
Mishra (2009) argues that the Indian telecom landscape has today emerged as one of the most
dynamic business segments in the country. The telecommunication services have made a
rapid stride both in quality and quantity. However the users at large are found dissatisfied
with the quality of service made available to them. The process of technological
sophistication has gained the momentum but the users are yet to get the quality service. The
author further argues that India is today one of the world’s most promising markets, but for
the telecom companies it is both promising and difficult because of presence of at least 6
operators in each telecom circle, leading to extreme competition. Moreover, the customers are
very demanding and are willing to churn easily, all this in addition to the fact that ARPU is
dropping by 4 percent every quarter. Therefore, telecom companies must attract and retain
customers and meet their ever growing demands and create profits. This is not possible by
84
offering just innovative services and products, but must be accompanied by new innovative
ways of reaching out to the customers.
Silva and Yapa (2009) in their study have tried to explore the aspects or attributes that
corporate customers consider relevant in deciding whether to continue with current service
provider (retain) or to switch to an alternative provider (migrate) or to switch off completely
(defect). The main research objective was to ascertain the relative importance of
characteristic/s towards loyalty of corporate telecom customers. They argued that the most
important factor in determining customer loyalty was the ability of service provider to add
value to customers’ business process and that loyalty programs offered by service providers
do not have substantial effect on customers’ decision making process.
2.6 RESEARCH GAP
The discussion above indicates that mobile telecommunication in India is a dynamic market,
where loyalty is of vital importance for service providers to grow and be profitable.
Therefore, research on loyalty and its antecedents is of great importance. Moreover, few
studies have been conducted outside India, which investigate the consumption pattern of
mobile services from a behavioural perspective, necessitating an in-depth study in Indian
context also. Further, Vanniarajan and Gurunathan (2009) have suggested that the future
researches may be directed towards analyzing consumers’ perceptions about service quality,
satisfaction and loyalty in GSM services market in India. They have also suggested
comparing and contrasting customer loyalty among consumers of various service providers.
Hence, this study is an attempt to fill in the gaps identified above and focuses upon customers
perceptions about these three key constructs discussed above for the major GSM service
providers.
85
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CHAPTER 3
PROFILE OF COMPANIES
3.1 INTRODUCTION TO INDIAN CELLULAR MARKET
The mobile telecom market in India has grown exponentially since 1990s when, under
privatization policy, it was opened for private players. In 1995, the sector was commercially
launched and the operators followed the National Telecom Policy of 1994. The high prices of
mobile handsets and high tariff structures of cellular services resulted into a slow growth in
the initial five to six years. However, in the year 2003-04 and 2004-05, a number of proactive
initiatives were taken by the Indian Government and the market regulators, resulting into a
substantial increase in subscriber base. Some of the key factors that fuelled the growth of
wireless telephony in India are:
• Vast geographic expanse of India which acted as a catalyst to boost mobility.
• Low call costs since 2002, which played a key role in fuelling the growth in wireless
segment.
• Narrowing gap of call costs between fixed and wireless convinced customers to
subscribe to wireless connections.
• Nationwide roaming facilities on GSM.
• SMS facility.
• Mobile Internet along with subscription bundling.
• Reduced cost of handsets and affordability factor.
• In remote areas where providing fixed line connections were difficult, wireless
services became easily available.
98
Today, itt is the second largest market in the world with a subscriber base of more than 752
million (Telecom Regulatory Authority of India, 29th April 2011: The Indian Telecom
Services Performance Indicators October - December 2010). However, the number of mobile
phone connections presently dwarfs the wire-line

wire line segment by many leaps and bounds (Figure
3.1).
Figure 3.1: Composition of Indian Telecom Subscribers

Subscriber
Wireline,
4.46%
Wireless,
95.54%
Source: Telecom Regulatory Authority of India (29th April 2011):

2011 The Indian Telecom
Services Performance Indicators October - December 2010.
India primarily follows the GSM mobile

mobile system, in the 900 MHz band, but the increase in the
number of subscribers and operators has resulted into operations

o in the 1800 MHz band as
well.. The dominant players in Indian market are Airtel, Reliance, Vodafone, BSNL and Idea.
There are many smaller players, with operations in only a few states.
Hence, for administrative and licensing purposes, the country has been divided into multiple
zones, called telecom circles (roughly along state boundaries) where Government and several
private players run local and long distance telephone services.

s In total,
total there are 279 cellular
services licences (241

241 UASL and 38 CMTS)
CMTS) issued to various service providers in the country
99
as on 31 December, 2010. Following section gives a list of Licensed Cellular (GSM &
CDMA) Service Providers:
1. Bharti Airtel
2. Aircel Group
3. Reliance Communications and Reliance Telecom
4. Vodafone
5. Tata Teleservices
6. IDEA/ Spice Communications
7. Sistema Shyam Telelink
8. BSNL
9. MTNL
10. Loop Telecom Private Ltd
11. Unitech Group
12. Videocon Telecommunications Ltd
13. M/s Etisalat DB Telecom Pvt. Ltd & M/s Allianz Private Ltd
14. S Tel Ltd
15. Quadrant (HFCL)
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By the end of December 2010, out of the total cellular subscriber base of 752.19 million
subscribers in India, 641.73 millions are GSM subscribers whereas only 110.46 million are
using CDMA services (Figure 3.2)
Figure 3.2: Composition of Indian Cellular Subscribers
CDMA
(110.46 m),
14.68%
GSM
(641.73 m),
85.32%
Source: Telecom Regulatory Authority of India (29th April 2011): The Indian Telecom
Out of the total GSM subscribers of 641.73 million at the quarter ending December
Dec 2010,
Bharti Airtel with 152.50 million subscribers is the largest GSM mobile operator, followed by
Vodafone (124.26 million). Figure 3.3 shows

show the group-wise
wise market share of all the GSM
operators in India.
Figure 3.3: Group-wise

wise Market Share (in terms of subscribers) of Indian GSM Operators
Videocon, 1.14% MTNL, 0.80% Loop, 0.47% Quadrant , 0.21%

Unitech, 2.88% S Tel, 0.36%
Etisalat, 0.04%
Tata, 6.60%
Aircel, 7.82% Airtel, 23.76%

Idea/Spice, 12.74%
Vodafone,
Reliance, 19.36%
11.15% BSNL,
12.66%
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paid subscribers dominate the Indian cellular services market with 96.65% GSM
Further, Pre-paid
subscribers being pre-paid

paid customers (Figure 3.4).
Figure 3.4: Proportion of Pre-Paid

Paid & Post-Paid
Post Subscribers in Indian GSM Market
100%
90%
80%
70%
60%
Axis Title
50%
40%
30%
20%
10%
0%
Circle A Circle B Circle C Metros All India
Pre-Paid 96.04% 98.19% 98.08% 91.16% 96.65%
Post-Paid 3.96% 1.81% 1.92% 8.84% 3.35%
Such a typical market composition has emerged as one of the important factors affecting the
ARPUs of all the cellular operators in the Indian market. This is highlighted by the fact that
the
he all India blended ARPU per month has declined
decline 4.38% from 110 in Sep-20
2010 to 105
in Dec-2010.
The present research work entails a detailed study about the Indian GSM cellular services
market. Therefore, the four leading players namely: Bharti Airtel; Vodafone-Essar;
Vodafone Essar; BSNL and
Reliance Communications who together constitute a market share of 66.93% (as on 31st
102
December, 2010) have been analysed. A profile of each of the four selected operators has
been discussed in the following sections.
3.2 BHARTI
HARTI AIRTEL LIMITED
Bharti Airtel Limited is one of the world’s leading telecommunication services providers with
pan-India presence and operations in Sri Lanka,

anka, Bangladesh and Africa also. It served an
aggregate of 207.8 million customers as of December 31, 2010 (Bharti

( Airtel Limited
Quarterly report on the results for the third quarter and nine months ended December 31,
2010). Further, it is the largest wireless service provider in India, based on the number of
customers as of December 31, 2010 (Telecom Authority 29th April 2011: The
Telecom Regulatory Authority,
Indian Telecom Services Performance Indicators October - December 2010).

2010 It has been rated
as the 6th most valued brand according to an annual survey conducted by Brand Finance and
The Economic Times in 2010 (“India’s top 10 brands,” 2010)
It offers an integrated suite of telecom solutions to its enterprise customers, in addition to
providing long distance connectivity both nationally and internationally, Digital TV and IPTV
rvices. All these services are rendered under a unified brand “airtel”.
Services. “airtel” The company also
deploys, owns and manages passive infrastructure pertaining to telecom operations under its
subsidiary Bharti Infratel Limited. Bharti Infratel owns 42% of Indus Towers
Tower Limited. Bharti
Infratel and Indus Towers are amongst top providers of passive infrastructure services in
India.
103
Bharti Airtel Limited was incorporated on July 7, 1995 as a company with limited liability
under the Companies Act, for promoting telecommunications

telecommunications services. The Company was
initially formed as a wholly-owned

owned subsidiary of Bharti Telecom Limited and was known as
Bharti Tele-Ventures Limited.. It is the Flagship

Flagship Company of Bharti Group, which was
founded by Sunil Bharti Mittal in 1976, which has grown from being a manufacturer of
bicycle parts to one of the largest and most respected business groups in India. Bharti started
its telecom services business by launching mobile services in Delhi (India) in 1995. Since
then Bharti Airtel has emerged as one of top telecom companies in the world and is amongst
the top five wireless operators in the world.
Bharti Airtel Limited today is a leading emerging market telecom services provider with
operations in 19 countries across Asia and Africa. The mobile business

business offers services across
19 countries in Asia and Africa represented by area shaded in red colour in figure 3.5 below.
Figure 3.5: Global Presence of Airtel
Source: http://en.wikipedia.org/wiki/File:Bharti-Airtel-Country-Map.PNG
http://en.wikipedia.org/wiki/File:Bharti
The company is structured into four strategic business units - Mobile, Telemedia, Enterprise
and Digital TV. The Telemedia business provides broadband, IPTV and telephone services
across India. The enterprise business provides end-to-end

end end telecom solutions to corporate
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customers and also acts as a carrier for national and international long distance
communication services. The Digital TV business provides DTH services across India. All
these services are provided under the unified brand ‘Airtel’
3.2.2 History
In 1983, Sunil Mittal was into an agreement with Germany's Siemens to manufacture the
company's push-button telephone models for the Indian market. In 1986, Sunil Bharti Mittal
incorporated Bharti Telecom Limited (BTL) and his company became the first in India to
offer push-button telephones, establishing the basis of Bharti Enterprises. This first-mover
advantage allowed Sunil Mittal to expand his manufacturing capacity elsewhere in the
telecommunications market. By the early 1990s, Sunil Mittal had also launched the country's
first fax machines and its first cordless telephones. In 1992, Sunil Mittal won a bid to build a
cellular phone network in Delhi. In 1995, Sunil Mittal incorporated the cellular operations as
Bharti Tele-Ventures and launched service in Delhi. In 1996, cellular service was extended to
Himachal Pradesh. In 1999, Bharti Enterprises acquired control of JT Holdings, and extended
cellular operations to Karnataka and Andhra Pradesh. In 2000, Bharti acquired control of
Skycell Communications, in Chennai. In 2001, the company acquired control of Spice Cell in
Calcutta. Bharti Enterprises went public in 2002, and the company was listed on Bombay
Stock Exchange and National Stock Exchange of India. In 2003, the cellular phone operations
were rebranded under the single Airtel brand. In 2004, Bharti acquired control of Hexacom
and entered Rajasthan. In 2005, Bharti extended its network to Andaman and Nicobar. In
2009, Airtel launched its first international mobile network in Sri Lanka. In 2010, Airtel
began operating in Bangladesh and 16 African countries. Today, Airtel is the largest cellular
service provider in India and fifth largest in the world.
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On 19 October 2004, Airtel announced the launch of a BlackBerry Wireless Solution in India.
The launch is a result of a tie-up between Bharti Tele-Ventures Limited and Research In
Motion (RIM). The Apple iPhone 3G was rolled out in India on 22 August 2008 by Airtel and
Vodafone. Both the cellular service providers rolled out their Apple iPhone 3GS in the first
quarter of 2010. However, high prices and contract bonds discouraged consumers and it was
not as successful for both the service providers as much as the iPhone is successful in other
markets of the world.
In May 2008, Bharti Airtel made an attempt of buying the MTN Group, a South Africa-based
telecommunications company with coverage in 21 countries in Africa and the Middle East.
By offering US$45 billion for a 100% stake in MTN, which would have been, the largest
overseas acquisition ever by an Indian firm (The Economist, 2008). However, the talks fell
apart as MTN group tried to reverse the negotiations by making Bharti almost a subsidiary of
the new company (The New York Times, 2008)
In May 2009, Bharti Airtel again confirmed that it is in Talks with MTN and companies have
now agreed to discuss the potential transaction exclusively by July 31, 2009 (“Bharti Renews
MTN Talks,” 2009) Talks eventually ended without agreement, due to the South African
government opposition (Telecoms.com, 2009).
In March 2010, Bharti clinched a deal to buy a Kuwait based firm Zain's mobile operations in
15 African countries., It was the second biggest overseas acquisition by an Indian business
house after Tata Steel's $13 billion buy of Corus in 2007. Bharti Airtel after this $9 billion
acquisition of African operations from Kuwait's Zain, became the world's No. 5 wireless
carrier by subscribers. On May 9, 2009 Airtel signed a major deal with Manchester United
Football Club. As a result of the deal, Airtel got the rights to broadcast the matches played by
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the team to its customers. Bharti Airtel also signed a five-year
five year deal with ESPN-Star
ESPN Sports to
become the title sponsor of

of the Champions League Twenty20 cricket tournament. The
tournament itself is named "Airtel Champions League Twenty20" (ESPNSTAR.com,

(ESPNSTAR.com 2009).
On 18 November 2010, Airtel rebranded itself in India in the first phase of a global
rebranding strategy. The company unveiled a new logo with 'airtel' written in lower case
which was designed

esigned by London-based
London based brand agency, Brand Union, the new logo is the letter
'a' in lowercase, with 'airtel' written in lowercase under the logo (“Airtel dons a new look,
plans to be closer to consumers across the globe,” 2010). The signature tune of Airtel has
been composed by Indian musician A. R. Rahman. The tune became hugely popular and is the
world's most downloaded mobile music with over 150 million downloads (Bharat, 2009). A
new version of Airtel’s signature tune was also released on 18 November 2010, as part of the
rebranding of the company. This version too was composed by A. R. Rahman.
On November 23, 2010, Airtel's Africa operations were also rebranded to 'airtel',
'airtel' followed by
rebranding in Sri Lanka on November 28, 2010 and finally Warid Telecom was also
rebranded to 'airtel' in Bangladesh on December 20, 2010.
On May 18, 2010, 3G spectrum auction was completed and Airtel spent 12,295 crores
(US$2.73 billion), the highest

highest amount spent by an operator in this auction. Airtel won 3G
licenses in 13 telecom circles of India: Delhi, Mumbai, Andhra Pradesh, Karnataka, Tamil
Nadu, Uttar Pradesh (east), Rajasthan, West Bengal, Himachal Pradesh, Bihar, Assam, North
East, Jammu & Kashmir (Nikhil Pahwa, 2010).
On 20 September 2010, Bharti Airtel announced the award of contracts to Ericsson India,
Nokia Siemens Networks (NSN) and Huawei Technologies to set up infrastructure for
providing 3G services in the country. Airtel awarded network

network contracts for seven 3G circles to
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Ericsson India, three circles to Nokia Siemens Networks and three circles to Chinese telecom
equipment vendor Huawei Technologies (PTI, 2010).
On January 24, 2011, Airtel launched 3G services in Bangalore, Karnataka - its largest circle
by revenue. With this launch, Airtel became the third private operator (fifth overall) to launch
its 3G services in the country following Reliance Communications and Tata Docomo (IANS,
2011). On January 27, 2011, Airtel launched 3G in Chennai and Coimbatore. Airtel plans to
cover 1,500 cities across 13 circles by the end of March 2012. It is also in talks with other
service providers to roll out the services in the remaining 10 circles as part of its roaming
offerings (Business Standard, 2011). Airtel had about 3 million 3G subscribers as of May
2011 (Ershad, 2011).
3.2.4 Corporate Vision and Promise
“By 2015 airtel will be the most loved brand, enriching the lives of millions.”
“Enriching lives means putting the customer at the heart of everything we do. We will meet
their needs based on our deep understanding of their ambitions, wherever they are. By having
this focus we will enrich our own lives and those of our other key stakeholders. Only then will
we be thought of as exciting, innovation, on their side and a truly world class company.”
3.2.5 Management Team
• Sunil Bharti Mittal: Chairman and Managing Director
• Manoj Kohli: MD and CEO (International Business Group)
• Sanjay Kapoor: CEO (India and South Asia business division).
India and South Asia division of Airtel comprises of:
• Drew Kelton: President (Enterprise Services)
• Ajai Puri: Business Director (DTH Services)
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• Atul Bindal: President (Mobile Services)
• K. Srinivas: President (Telemedia Services)
• Joachim Hom: Executive Director (Network Services Group)
• Krish Shankar: Executive Director (Human Resource)
• S. Asokan: Executive Director (Supply Chain)
• Srikanth Balachander:
Balachander Executive Director (Finance)
• Amrita Gandotra: Director (IT)
• Jyoti Pawar: Director (Legal & Regulatory)
• Shamini Ramalingam:
Ramalingam Director (Internal Assurance)
3.2.6 Milestones
Year 2003
• Cellular brand "Airtel" unveils free multimedia messaging services (MMS) for its
customers. The company has also rolled out pan-India

pa India GPRS for its corporate subscribers
• Launches its `IndiaOne MeetXpress' audio-conferencing

audio service.
• Free incoming calls facility in Punjab and Haryana.
• SMS facilities for hearing impaired in Chennai.
• 'Voice Portal' services for Goa and Maharashtra.
• Airtel
irtel subscribers cross 3 million mark
• Airtel rolls out voice mail service for pre-paid

pre customers
• Offers 0-1-2,
2, a new cellular package for the customers, which means zero charges on
incoming calls, 1 on mobile-to-mobile

mobile outgoing calls, 2 on mobile-to-mobile
mobile STD
calls.
• Rolls out Airtel messenger service
• Bharti launches first dual band network in Delhi
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Year 2004
• Launches WAP enabled portal Service in Kerala
• On Pongal, Airtel launches its first ever MMS downloads in Tamil.
• Bharti Tele-Ventures
ures (BTVL) signed and received unified access service licence to
provide GSM services in Uttar Pradesh (East), West Bengal & Andaman Nicobar, Orissa,
Bihar and Jammu & Kashmir. The licence was granted to Bharti Cellular Ltd (BCL), the
cellular arm and subsidiary

sidiary of BTVL.
• Airtel and Mobilink, the only GSM cellular service provider in Pakistan, sign the first-
first
ever bilateral roaming agreement between India and Pakistan
• Acquires switching systems from Tekelec
Ventures Ltd signed an information technology
technology outsourcing deal with infotech
major IBM, estimated to be in the range of 0-750

0 million for a ten-year
year period.
• Signs MoU to join the South East Asia - Middle East - Western Europe 4 (SEA-ME-WE-
(SEA
4) consortium along with 15 other global telecom operators.

operato
Ventures struck a deal with Shyam Telecom to buy out the latter's 67.5 per
cent stake in cellular services company Hexacom for 430 crore.
• The Bharti group finalised a 500-crore deal to share its national long-distance
distance (STD)
network with VSNL in a first-of-its-kind

first kind accord between two top telecom service
providers in a bid to optimise capacities in the NLD segment.
• Internet gateway and services provider, Videsh Sanchar Nigam Ltd. (VSNL) signed a
Right to Use (RoU) agreement to deploy mobile

mobile telephony major, Bharti Tele-Ventures'
Tele
existing National Long Distance (NLD) backbone.
• Airtel launched two-way

way international roaming and GPRS for prepaid customers in the
Maharshtra and Goa circles
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• Bharti Tele-Venture on July 19 launched "Caller Tunes" service, a personalized mobile
music service where the caller hears songs and other sound clips instead of the traditional
switchboard ring-ring tone
• Rolls out Enhanced Data Rate for Global Evolution (EDGE) network in Pune on
September 9, 2004, Ties up with Nokia for sale of Nokia 6230, an EDGE-enabled
handset.
• Airtel unveiled first virtual calling cards in India
Year 2005
• Bharti inks 5-m deal with Nokia for rural network expansion
• Bharti Tele Ventures Ltd has announced that Airtel, ICICI Bank & VISA joined hands to
launch mCheq - a revolutionary new service - a credit card on the mobile phone
• Airtel introduces BlackBerry Connect in India
• Bharti Tele Ventures announces agreement with Vodafone
• Bharti Tele-Ventures launches undersea cable system
Year 2006
• Airtel announced the launch of `Save My Phone Contact' service for its pre-paid and post-
paid customers in Delhi
• Bharti Tele Ventures bags 'Wireless Service Provider of the Year' & 'Competitive Service
Provider of the Year' awards
• Bharti Airtel Ltd and Microsoft announced a strategic partnership that will offer a range of
software and services for small and medium businesses (SMBs) in India.
• Bharti Airtel Ltd on Nov 8, announced a first-of-its-kind alliance with the Adani Group
for establishing an end-to-end modern telecommunication network infrastructure for the
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latter's multi-sector special economic zone (SEZ), located near Mundra Port in Kutch
district of Gujarat.
Year 2007
• Bharti Airtel on February 11 gets awarded with QCI-DL Shah National Award on
Economics of Quality.
• Bharti Airtel Ltd on April 01, 2007, announces the reduction in ISD Tariffs for all its
mobile customers in India.
Year 2008
• Nokia Siemens Networks on Jan 3 declared that it has been awarded a multi million euro
contract from Bharti Airtel Ltd for deployment of a single interactive voice response
(IVR) platform across 23 circles.
• Bharti Airtel Ltd on February 13, 2008 achieved the 60 million mobile, fixed line and
broadband customers.
• Bharti Airtel tied up with US-based Apple Inc to bring the popular GSM-based iPhone in
the country.
• Bharti Airtel Ltd forged a technology alliance with Infosys Technologies Ltd to launch its
Direct-to-Home (DTH) television services. Infosys, through its digital convergence
platform, will offer a suite of products including devices, application servers and
interactive applications for Airtel's DTH services.
Year 2009
• Bharti Airtel signed a five-year managed services deal with Alcatel-Lucent for its fixed-
line and broadband operations.
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• Bharti Airtel launched the 'Airtel Advantage' initiative. The initiative is aimed at offering
the added advantage to Airtel customers to be in touch with each other at an

a affordable
rate of 50 paise per minute, be it a national long distance call (STD) or a local call.
• In order to create products and services for the small, medium and large enterprises,
Bharti Airtel and Cisco announced a strategic business alliance. The alliance would
combine the strengths of Airtel's network service and Cisco' Internet Protocol (IP)
technologies.
• Airtel and mChek announce milestone of 1 Million users and introduce a broad range of
new mCommerce services.
Year 2010
• Bharti Airtel acquires 70% stake in Warid Telecom, Bangladesh.
• Bharti Airtel enters into a legally binding definitive agreement with Zain Group to acquire
Zain Africa.
• Bharti Airtel acquires the mobile operations of Zain in 15 African countries. Becomes the
fifth largest mobile operator in the world
• Bharti Airtel has partnered with US-based

US based software maker VMware Inc. to focus on the
cloud-based
based managed computer services market.
• On May 18, 2010, Airtel won 3G spectrum in 13 circles: Delhi, Mumbai, Andhra Pradesh,
Karnataka, Tamil Nadu, Uttar Pradesh (West), Rajasthan, West Bengal, Himachal
Pradesh, Bihar, Assam, North East, Jammu & Kashmir for

f 12,295 crores (Nikhil Pahwa
2010).
• Bharti Airtel wins broadband spectrum in four circles: Maharashtra, Karnataka, Punjab
and Kolkata for 3314.36 crores (IANS 2011).

2011)
• On August 11, 2010, Bharti Airtel acquired 100% stake in Telecom Seychelles for US$62
million taking its global presence to 19 countries.
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• On 20 September 2010, Bharti Airtel awarded contracts to Ericsson India, Nokia Siemens
Networks (NSN) and Huawei Technologies to set up infrastructure for providing 3G
services in the country.
• On 18 November, 2010, Bharti Airtel announced a re-branding campaign wherein, they
would be referred as airtel, with a new logo.
• On 20 December 2010, Airtel launched its new identity for Bangladesh subscribers.
• On 23 December 2010, Airtel opened its first underground terrestrial fiber optic cable
built in alliance with China Telecom.
Year 2011
• On 24 January 2011, Bharti Airtel launched its 3G services for the first time in India. The
service was launched in Bangalore.
• On 31 January 2011, India’s first mobile wallet service - Airtel Money was launched in
the millennium city of Gurgaon. Airtel mobile customers will be able to use mobile
platform to make payments.
• On 6 February 2011, Bharti airtel announced partnership with Savvis to leverage state-of-
the-art Data Centres to expand its service platforms in India.
• On 23 February 2011, Bharti Airtel launched the 15,000 kilometer long Europe-India
gateway cable system, along with 16 other global telecom firms between Mumbai and
London.
• On 27 February 2011, Bharti Airtel launched its speech recognition based service, 'One
Number, One Voice'.
• On 14 March, 2011, Airtel launched Broadband TV, which enables the customers to
watch live TV on their computers or laptops.
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• On 18 April, 2011, Bharti Airtel entered into an exclusive partnership with leading photo
service-Zoomin.com
Zoomin.com to launch ‘Airtel Photo Service’
Service’ that enables the Airtel customers to
upload unlimited number of photos online and also get the prints at their doorstep.
3.3 VODAFONE ESSAR
Vodafone Essar,, formerly known as Hutchison Essar,

Essar, is a cellular operator in India that
covers 23 telecom circles in India. It is based in Mumbai. Vodafone Essar is the Indian
India
subsidiary of Vodafone Group in which,

which, 33% share was owned by Essar Group. Vodafone
Group bought out the 33% stake of Essar Group for $5 billion thereby acquiring the majority
and controlling stake in the firm ownership.. It is the second largest mobile phone operator in
India in terms of customers, behind Bharti Airtel with 124.26 million customers as of
December 2010 (Telecom Regulatory Authority 29th April 2011: The Indian Telecom
Services Performance Indicators October - December 2010).
On February 11, 2007, Vodafone agreed to acquire the controlling interest of 67% held by Li
Ka Shing Holdings in Hutch-Essar

Hutch for US$11.1 billion, leaving behind Reliance
Communications, Hinduja Group, and Essar Group, which is also the owner of the remaining
33 percent.. The whole company was valued at USD 18.8 billion (Parker et. al 2007) and the
t
transaction closed on May 8, 2007. Despite the official name being Vodafone Essar, its
products are simply branded as Vodafone.. It offers both prepaid and postpaid GSM cellular
115
phone coverage throughout India with good presence in the metros. Vodafone Essar provides
2.75G services based on 900 MHz and 1800 MHz digital GSM technology. Vodafone Essar
plans to spend up to $500 million within two years on its 3G networks (The Times of India
2010).
Vodafone Essar Limited is an Indian subsidiary of Vodafone Group plc,, which is a global
telecommunications company
pany headquartered
headquar in London, United Kingdom. It is the world's
largest mobile telecommunications company measured by revenues with around 370.9 million
subscribers as of 31st March, 2011. It operates networks in over 30 countries and has partner
networks in over 40 additional countries.

countries It owns 45% of Verizon Wireless, the largest mobile
telecommunications company in the United States measured by subscribers (Vodafone Group
Plc Annual Report for year ended 31 March 2011). The name Vodafone comes from voice
data fone,, chosen by the company to "reflect the provision of voice and data services over
mobile phones". Vodafone’s primary listing is on the London Stock Exchange and it is a
constituent of the FTSE 100 Index. It had a market capitalization of approximately

approximately £93 billion
as of 9 March 2011, making it the fourth largest company

company on the London Stock Exchange.
Figure 3.6: Global Presence of Vodafone
Source: http://en.wikipedia.org/wiki/File:Vodafone_World_Footprint.svg
http://en.wikipedia.org/wiki/File:Vodafone_ _Footprint.svg
116
The Essar Group is a diversified business corporation with a balanced portfolio of assets in
the manufacturing and services sectors of Steel, Energy, Power, Communications, Shipping,
Ports & Logistics, and Projects. Essar employs more than 50,000 people across offices in
Asia, Africa, Europe and the Americas.
3.3.2 History
3.3.2.1 Vodafone Group Plc
Vodafone was initially incorporated under English law in 1984 as Racal Strategic Radio
Limited (registered number 1833679). After various name changes, 20% of Racal Telecom
Plc capital was offered to the public in October 1988. The Company was fully demerged from
Racal Electronics Plc and became an independent company in September 1991, at which time
it changed its name to Vodafone Group Plc. Since then it has entered into various transactions
which consolidated its position in the United Kingdom and enhanced its international
presence. The most significant of these transactions were as follows:
• Merger with AirTouch Communications Inc. which completed on 30 June 1999. The
Company changed its name to Vodafone AirTouch Plc in June 1999 but then reverted
to its former name, Vodafone Group Plc, on 28 July 2000;
• On 12th April, 2000, the company acquired Mannesmann AG. Through this transaction
it acquired businesses in Germany and Italy and increased its indirect holding in SFR;
• Through a series of business transactions between 1999 and 2004, it acquired a 97.7%
stake in Vodafone Japan. This was then disposed of on 27 April 2006; and
• On 8 May 2007 it acquired companies with interests in Vodafone Essar for US$10.9
billion (£5.5 billion), following which it gained control of Vodafone Essar.
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3.3.2.2 Vodafone Essar Limited
In 1992, Hutchison Whampoa and its Indian business partner – Max Group, established a
company that in 1994 was awarded a license to provide mobile telecommunications services
in Bombay (now Mumbai) and launched commercial services as Hutchison Max in November
1995. In Delhi, Uttar Pradesh (East), Rajasthan and Haryana, Essar Group was the major
partner but later on Hutch took the majority stake.
Initially, around 1995, the company services were branded Max Touch¸ then renamed to
Orange in the year 2000. In December 2006, Hutchison Essar re-launched the "Hutch" brand
nationwide while consolidating its services under a single identity. The company was known
as Hutchison Essar, reflecting the name of its previous owner, Hutchison. However, the brand
was marketed as Hutch.
In 2004 Hutchison Telecom brought Initial Public Offering and had acquired interests in six
mobile telecommunications operators providing service in 13 of India's 23 license areas and
following the completion of the acquisition of BPL Mobile that number increased to 16. In
2006, it announced the acquisition of a company (Essar Spacetel — A subsidiary of Essar
Group) that held licence applications for the seven remaining license areas.
Initially, the company grew its business in the largest wireless markets in India — in cities
like Mumbai, Delhi and Kolkata. In these densely populated urban areas it was able to
establish a robust network, well known brand and large distribution network – all vital to
long-term success in India. Then it also targeted business users and high-end post-paid
customers which helped Hutchison Essar to consistently generate a higher Average Revenue
Per User (ARPU) than its competitors. By adopting this focused growth plan, it was able to
establish leading positions in India's largest markets providing the resources to expand its
footprint nationwide.
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In February 2007, Hutchison Telecom announced that it had entered into a binding agreement
with a subsidiary of Vodafone Group Plc to sell its 67% direct and indirect equity and loan
interests in Hutchison Essar Limited for a total cash consideration (before costs, expenses and
interests) of approximately $11.1 billion.
After getting the necessary government approvals with regards to the acquisition of a
majority by the Vodafone Group, the company was rebranded as Vodafone Essar and the
marketing brand was officially changed to Vodafone on 20 September 2007. Cheap and
affordable cell-phones were also launched simultaneously in the Indian market under the
Vodafone brand.
3.3.3 Recent Developments
In 2007, Vodafone granted options to Essar that would enable the conglomerate to sell its
entire stake for $5bn, or to dispose of part of the 33 per cent shareholding at an independently
appraised fair market value. In January 2011, Vodafone objected to Essar’s plans to place part
of its 33% stake in India Securities, a small public company. Vodafone feared the move
would give an inflated market value to Vodafone Essar (Parker and Khan 2011). It had
approached the market regulator SEBI and also filed a petition in the Madras High Court.
On March 31, 2011, Vodafone Group Plc announced that it would buy an additional 33%
stake in its Indian joint venture for $5 billion after partner Essar Group exercised an option to
sell the holding in the mobile-phone operator. The deal shall raise Vodafone’s stake to 75%
(Browning 2011). The final shareholding pattern post this deal was not provided by the
company as it was not clear whether Vodafone's stake would exceed the 74 per cent FDI
limit. Indian laws don't allow foreign companies to own more than 74% in a local mobile-
phone operator. Vodafone has assured it will comply with local rules. Vodafone will have to
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sell that 1% to some Indian entity, or they’ll have to consider an initial public offering.
Vodafone also said that final settlement is anticipated to be completed by November 2011.
The completion of the deal would be subject to meeting certain

certain conditions which include
Reserve Bank of India's permission as

a well as valuation of the deal.
On 19 May 2010, the 3G spectrum auction in India ended. Vodafone paid 11617.86 million
(the second highest amount in the auctions) for spectrum in 9 circles. The
The circles it will
provide 3G in are Delhi, Gujarat, Haryana, Kolkata, Maharashtra & Goa, Mumbai, Tamil
Nadu, Uttar Pradesh (East) and West Bengal (Pahwa, 2010). On 16 March, 2011, Vodafone
launched 3G services in Uttar Pradesh (East) in the cities of Kanpur

Kanpur and Lucknow. It had
already launched limited 3G services in Chennai and Delhi earlier, but the Uttar Pradesh
(East) launch counts as its first fully commercial launch. This makes Vodafone the fifth
private operator (seventh overall) to launch its 3G services

services in the country following Tata
Docomo, Reliance Communications, Airtel and Aircel.
Creative advertising has been one

ne of the key distinguishing features of Vodafone Essar Ltd..
Ltd.
Hutch was known for some of its award winning advertisements which all follow a clean,
minimalist look. A recurrent theme is that its message Hi stands out visibly though it uses
only white letters on red background. Another successful ad campaign in 2003 featured a pug
named Cheeka following a boy around in unlikely places, with the tagline, ‘Wherever
Wherever you go,
our network follows’.
The simple yet powerful advertisement campaigns won it many admirers. Ads featuring the
pug were continued by Vodafone even after

after rebranding. The brand subsequently introduced
Zoo-Zoos
oos which gained even higher popularity than was created by the Pug.
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3.3.4 Corporate Vision and Strategy
In November 2010 Vodafone Plc. unveiled an updated strategy to move from ‘A Stronger
Vodafone’ to ‘A More Valuable Vodafone’. The new strategy is composed of four main
elements:
• Focus on key areas of growth potential:
o Mobile data, emerging markets, enterprise, total communications and new
services.
• Deliver value and efficiency from scale
o Using our size and scale to drive cost efficiencies and operational
effectiveness.
• Generate liquidity or free cash flow from non-controlled interests
o Releasing liquidity and free cash flow from minority stakes and investments.
• Apply rigorous capital discipline to investment decisions
o Allocating capital to maximise shareholder value.
3.3.5 Milestones
Year 2003
• Acquired AirCel Digilink (ADIL - Essar Subsidiary) which operated in Rajasthan, Uttar
Pradesh East and Haryana telecom circles and renamed it under Hutch brand
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Year 2004
• Launched in three additional telecom circles of India namely 'Punjab', 'Uttar Pradesh
West' and 'West Bengal'
Year 2005
• Acquired BPL, another mobile service provider in India
Year 2008
• Vodafone acquired Dishnet Wireless, a service provider in Orissa and successfully
launched its services in the circle.
• Vodafone launched the Apple iPhone 3G to be used on its 17 circle 2G network.
• Increased the stake in Arcor for €460 million (£366 million) and now own 100% of Arcor.
• Acquired 70.0% of Ghana Telecommunications for cash consideration of £486 million.
Year 2009
• Verizon Wireless completed its acquisition of Alltel Corp. for approximately US$5.9
billion (£3.9 billion).
• Acquired an additional 15.0% stake in Vodacom for cash consideration of ZAR 20.6
billion (£1.6 billion). Later on, Vodacom became a subsidiary.
• Vodafone Qatar completed a public offering of 40.0% of its authorised share capital
raising QAR 3.4 billion (£0.6 billion). The shares were listed on the Qatar Exchange on 22
July 2009. Qatar launched full services on its network on 7 July 2009.
• Vodafone Australia merged with Hutchison 3G Australia to form a 50:50 joint venture,
Vodafone Hutchison Australia Pty Limited.
Year 2010
• Sold entire 3.2% interest in China Mobile Limited for cash consideration of £4.3 billion.
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Year 2011
• The Essar Group exercised its underwritten put option over 22.0% of Vodafone Essar
Limited (‘VEL’), following which Vodafone Plc exercised their call option over the
remaining 11.0% of VEL

VEL owned by the Essar Group. The total consideration due under
these two options is US$5 billion (£3.1 billion).
• Agreed
greed to sell entire 44% interest in SFR to Vivendi for a cash consideration of €7.75
billion (£6.8 billion).
• Would also receive a final dividend

divi from SFR of €200 million (£176
( million) on
completion of the transaction which, subject to competition authority and regulatory
approvals, is expected during the second calendar quarter of 2011.
• Launched 3G services
vices in India in February 2011.
• Business
usiness in India has grown from 28 million customers at the time of acquisition in May
2007 to become the largest market of Vodafone Group Plc with over 134 million
customers at 31 March 2011.
3.4 RELIANCE COMMUNICATIONS LIMITED
Reliancee Communications Limited commonly known as RCOM and is one of the major
Indian telecommunication companies with its headquarters in Navi Mumbai, India.

India It
currently serves over 142 million individual, enterprise, and carrier customers by offering a
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complete range of telecom services covering mobile and fixed line telephony including
broadband, national and international long distance services and data services along with an
exhaustive range of value-added services and applications.
Reliance Mobile (formerly Reliance India Mobile) was launched on 28 December 2002,
coinciding with the 70th birthday of late Dhirubhai Ambani. RCOM, founded by Late
Dhirubhai H. Ambani, is the flagship company of the Reliance Anil Dhirubhai Ambani Group
(ADAG) and is among the India’s leading integrated telecom companies and is listed on the
National Stock Exchange and the Bombay Stock Exchange. Reliance – Anil Dhirubhai
Ambani Group is an offshoot of the Reliance Group founded by Late Dhirubhai H Ambani
(1932-2002) and ranks among India’s top three private sector business houses in terms of net
worth. The group has business operations ranging from telecommunications (Reliance
Communications Limited) to financial services (Reliance Capital Ltd) and the generation and
distribution of power (Reliance Infrastructure Limited).
They have established a pan-India, high-capacity, integrated (wireless and wireline),
convergent (voice, data and video) digital network, to offer services spanning the entire
infocomm value chain. The company offers the full value chain of wireless (CDMA and
GSM), wireline, national long distance, international, voice, data, video, Direct-To-Home
(DTH) and internet based communications services under various business units organized
into three strategic customer-facing business segments; Wireless, Global and Broadband.
These strategic business units are supported by passive infrastructure connected to nationwide
backbone of fully integrated Optic Fiber Network operation system and by the largest retail
distribution and customer services facilities.
The Company also owns through its subsidiaries, a global submarine cable network
infrastructure and offers managed services, managed Ethernet and application delivery
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services. The company is India's first telecom service provider offering nationwide CDMA
and GSM mobile services with digital voice clarity. Their mobile portal, R World, offers the
widest range of mobile content spanning e-commerce, m-commerce entertainment, music,
news, astrology, cricket, Bollywood, maps, search, one-click set-up, access to email and
social networking. The company offers the most comprehensive portfolio of enterprise voice,
data, video, internet and IT infrastructure services catering to large, medium and small
enterprises for their communications, networking and IT infrastructure needs. Their product
portfolio includes national and international private leased circuits, broadband internet access,
audio solutions including Centrex, toll free services, voice VPN, video conferencing , MPLS-
VPN, remote access VPN, Global MPLS VPN managed internet data centre (IDC) services
etc.
The company also operates nationwide Direct-to-Home satellite TV services under its wholly
owned subsidiary, Reliance Big TV Limited (Big TV). They formed an alliance with Polycom
Inc., the global leader in tele-presence, video and voice solutions, to introduce world's first
wireless, high-resolution video and CD-quality audio, conferencing service along with
simple-to-use content sharing capabilities - at a bandwidth speed of 256 kbps at any place.
They own and operate the world's largest next generation IP enabled connectivity
infrastructure, comprising over 2,77,000 kilometers of fiber optic cable systems in India,
USA, Europe, Middle East and the Asia Pacific region (India Infoline, 2011).
3.4.2 History
Reliance Communications Ltd was incorporated on July 15, 2004 as a private limited
company with the name of Reliance Infrastructure Developers Pvt Ltd. On July 25, 2005, the
company was converted into public limited company and the name was changed to Reliance
Infrastructure Developers Ltd. During the year, the company altered the objects clause of the
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memorandum of association to carry on the business of telecommunication, infrastructure,
telecommunication system, telecommunication network and telecommunication services.
On August 3, 2005, they further changed their name to Reliance Communication Ventures
Ltd and on August 11, 2005, the equity shares of the company were acquired by Reliance
Industries Ltd and thus the company became the wholly owned subsidiary of Reliance
Industries Ltd. As per the scheme of arrangement, all the properties, investments, assets and
liabilities related to Telecommunication Undertaking of Reliance Industries Ltd was
transferred and vested in the company on a going concern basis with effect from December
21, 2005.
On March 6, 2006, the equity shares of the company were listed on the Bombay Stock
Exchange Ltd and the National Stock Exchange of India Ltd and on June 7, 2006, the name of
the company was changed from Reliance Communication Ventures Ltd to Reliance
Communications Ltd. As a result of a scheme of arrangement with Reliance Industries
Limited, the company became the holding company of minority interests in the
telecommunications companies formerly controlled by Reliance Industries Ltd. The company
restructured the telecom businesses by realigning the economic ownership of various
businesses into the company. Under a Scheme of Amalgamation and Arrangement which
became effective from September 12, 2006, inter alia, Reliance Infocomm Ltd, Ambani
Enterprises Pvt Ltd, Reliance Business Management Pvt Ltd, Formax Commercial Pvt Ltd,
Reliance Communications Technologies Ltd, Reliance Software Solutions Pvt Ltd, Reliance
Communications Solutions Pvt Ltd and Panther Consultants Pvt Ltd were amalgamated with
the company and the Network division of Reliance Communications Infrastructure Ltd was
de-merged to the company. Upon the Scheme of Amalgamation and Arrangement all the
subsidiaries of erstwhile Reliance Infocomm Ltd, Reliance Infocomm Infrastructure Pvt Ltd,
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Reliable Internet Services Ltd and Campion Properties Pvt Ltd including the subsidiaries of
Reliance Communications Infrastructure Ltd, Reliance Telecom Ltd and Flag Telecom Group
Ltd became the subsidiaries of the company.
During the period 2006-07, Paradox Studios Ltd, Reliance Digital World Ltd and NIS Sparta
Ltd ceased to be subsidiaries of the company and Gateway Net Trading Pte Ltd, Reliance
Communications (Singapore) Pte Ltd, Reliance Communications (Hong Kong) Ltd, Reliance
Communications (New Zealand) Pte Ltd, Reliance Communication (Australia) Pty Ltd.
RCOM Malaysia SDN BHD, Synergy Entrepreneur Solutions Pvt Ltd and Reliance Next
Generation Technology Pvt Ltd became subsidiaries of the company.
During the year 2007-08, Reliance Tech Services Pvt Ltd, Reliance Big TV Ltd, Yipes
Holdings Inc, Reliance Globalcom Services Inc, Yipes Systems Inc, YTV Inc, Anupam
Globalsoft (U) Ltd, Lagerwood Investments Ltd and Reliance Telecom Infrastructure
(Cyprus) Holdings Ltd became the subsidiaries of the company. While, Flag Projects Pte Ltd,
Alsign Holdings Pte Ltd, Actaram Capital Pte Ltd, Reliance Telephones Ltd and Gateway Net
Trading Pte Ltd ceased to be subsidiaries of the company. As per the scheme of arrangement
amongst the company, Reliance Telecom Limited (RTL) and Reliance Infratel Limited
(RITL), the passive infrastructure of the Company and RTL was de-merged and vested into
RITL, with effect from April 10, 2007. The group structure involving various subsidiaries of
the company was reorganized during the year. Consequently, Reliance Infoinvestments Ltd
and Synergy Entrepreneur Solutions Pvt Ltd amalgamated with Reliance Communications
Infrastructure Ltd with effect from July 23, 2007 and September 1, 2007 respectively and
Reliable Internet Services Ltd amalgamated with Reliance Telecom Ltd with effect from
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September 29, 2007. FLAG Telecom USA Ltd was merged with Yipes Holdings Inc. with
effect from December 17, 2007.
During the same year, the company acquired Uganda-based company Anupam Globalsoft (U)
Ltd, holding Public Infrastructure Provider License and Public Service Provider License to
offer Mobile, Fixed Line, Internet, National and International Long Distance services, in
addition to WiMax and Wifi services, marking their entry in Uganda In April 2008, they also
acquired controlling stake in Reliance WiMax World Limited (formerly eWave World
Limited), a UK headquartered company focused on the rapidly developing market for wireless
telephony services using the WiMAX technology standard.
During the year 2008-09, the company launched GSM services in 14 service areas and
commenced commercial operations. They received start-up spectrum to launch GSM services
from Department of Telecommunications (DoT) under their existing Unified Access Service
License (UASL) in 14 service areas.
Reliance Big TV Ltd, a wholly owned subsidiary of the company launched fully Digital
Home Entertainment Direct To Home (DTH) Service on the most advanced MPEG 4 DTH
Platform. During the year, Reliance Vanco Group Ltd and their subsidiaries, Reliance WiMax
World Ltd and Gateway Net Trading Pte Ltd became the subsidiaries of the company. While,
FLAG Telecom France Network SAS, FLAG Telecom France Services EURL, FLAG
Telecom Korea Ltd and FLAG Telecom Espana SA ceased to be subsidiaries of the company.
The company rolled out their fastest Wireless Internet service, 'Reliance Netconnect
Broadband Plus', with a downlink speed of up to 3.1 Mbps. This makes Netconnect
Broadband Plus best suited for video streaming, video surveillance, rich media content and
superior Internet browsing.
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The company through their wholly owned subsidiary, Reliance Communications
Infrastructure Ltd, formed a joint venture with Krishak Bharati Cooperative Ltd (Kribhco), a
premier co-operative society with an unparalleled marketing network in rural India. The
company made a tie up with Flytxt, a leading technology provider, for the implementation of
an integrated carrier-class mobile marketing software platform called Neon on the RCOM
Network. They also made a tie up with SAS for better business intelligence and analytics and
AMDOCS for Customer Self Service systems.
During the year 2009-10, Global Innovative Solutions Pvt Ltd, Reliance WiMax D.R.C. B.V,
Reliance WiMax Gambia B.V. Reliance WiMax Mauritius B.V., Reliance WiMax
Mozambique B.V, Reliance WiMax Niger B.V., Reliance WiMax Zambia B.V., Access
Bissau LDA became the subsidiaries of the company. While, Reliance Mobile Ltd and Vanco
(India) Pvt Ltd ceased to be subsidiaries of the company. As per scheme of arrangement
between the company and Reliance Infratel Ltd, the Optic Fiber Undertaking of the company
was de-merged and transferred to Reliance Infratel Ltd with effect from April 1, 2008. Also,
Reliance Gateway Net Ltd, a wholly owned subsidiary of the company amalgamated with the
company with effect from July 13, 2009.
During the year 2008-09, the company launched GSM services in 14 service areas and
commenced commercial operations. They received start-up spectrum to launch GSM services
from Department of Telecommunications (DoT) under their existing Unified Access Service
License (UASL) in 14 service areas. The company rolled out their fastest Wireless Internet
service, 'Reliance Netconnect Broadband Plus', with a downlink speed of up to 3.1 Mbps,
making it best suited for video streaming, video surveillance, rich media content and superior
Internet browsing.
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Vision:
“By 2015, be amongst the top 3 most valued Indian companies, providing Information,
Communication & Entertainment services, and being the industry benchmark in Customer
Experience, Employee Centricity and Innovation.”
Mission:
We will create world-class benchmarks by:
• Meeting and exceeding Customer expectations with a segmented approach
• Establishing, re-engineering and automating Processes to make them customer
centric, efficient and effective
• Incessant offering of Products and Services that are value for money and excite
customers
• Providing a Network experience that is best in the industry
• Building Reliance into an iconic Brand which is benchmarked by others and leads
industry in Intention to Purchase and Loyalty
• Developing a professional Leadership team that inspires, nurtures talent and
propagates RCOM Values by personal example
• Anil D. Ambani: Chairman, Promoter, Non-Executive & Non-Independent Director
• Prof. J. Ramachandran: Independent Director
• S. P. Talwar: Independent Director
• Deepak Shourie: Independent Director
• K. Purwar: Independent Director
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3.4.6 Milestones
Year 2003
• Introduces Dhirubhai Ambani Pioneer Offer for Reliance IndiaMobile service
• Launches Reliance WebWorld in top 16 cities
• Launches International Long Distance Services
• Launches Reliance IndiaMobile Service commercially in top 92 cities
with one million customers.
• Launches India's first wireless Point of Sale (POS)
• Launches R Connect Internet connection cable
• R World clocks a phenomenal 1 billion hits in 1 month
• Customer base touches 5 million
• Migrates to Unified License Regime
Year 2004
• International wholesale telecommunications service provider, FLAG Telecom
amalgamates with Reliance Gateway, a wholly owned subsidiary of Reliance
Infocomm
• Reliance subsidiary Flag Telecom announces FALCON Project - a major new Middle
East Loop Terabits Submarine Cable System with links to Egypt and Hong Kong via
India
• Reliance Infocomm introduces World Card - a Prepaid International calling card for
affordable and convenient ISD calls from India.
• Reliance Infocomm introduces first ever auction facility on Mobile phones through R
World.
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• Reliance Infocomm receives the Most Promising Service Provider of the Year 2003
(Asia Pacific) award at the Asia Pacific Technology Awards instituted by Frost &
Sullivan.
• Reliance Infocomm launches multi-player gaming on RIM handsets - a first in India
• Mukesh D. Ambani, Chairman, Reliance Infocomm, receives Voice & Data "Telecom
Man of the Year" award
• Reliance Infocomm bags the CDMA Development Group's 3G CDMA Industry
Achievement Award for International Leadership
Year 2005
• Anil Ambani appointed Chairman of Reliance Infocomm
• Air Deccan and Reliance WebWorld join hands to offer air ticket booking facility at
Reliance WebWorld
• Reliance Infocomm joins hands with Indian Airlines to offer India's first mobile
booking of domestic airline ticket.
• Reliance WebWorld wins Frost & Sullivan Market Leadership Award for Video
Conferencing services
Year 2006
• TIMES NOW launched on Reliance Mobile Phones, making it the world’s first TV
channel to be launched on a mobile phone.
• Reliance Infocomm introduced R World in Hindi to become the world's first operator
to offer mobile data services in more than one language on the same handset.
• Reliance-Anil Dhirubhai Ambani Group signs up Indian cricket's whiz kid and
heartthrob of millions Mahendra Singh Dhoni as the brand ambassador for Reliance
Communications Ventures Ltd.
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• T-Com signs contract with FLAG Telecom for Europe-US bandwidth.
Year 2007
• Reliance joins Lenovo and Intel for ‘Internet on the Move’.
• Booking train ticket from Reliance Mobile Phones with ITZ Cash Cards.
• Reliance Communications ties up with SUN TV to offer video streaming of all SUN
TV programs online 24x7.
• RCOM bags West Bengal e-governance project.
• Reliance Communications ties up with Cisco to launch Business Internet Services for
SMEs in Pune.
• RCOM and QUALCOMM Collaborate on CDMA2000 Expansion.
• Reliance Communications awards Alcatel-Lucent a Next-Gen network expansion
contract.
• Reliance Communications awards Huawei all IP Next-Gen network expansion
contracts.
• RCOM announces sale of equity stake in its Tower Company-Reliance Telecom
Infrastructure Limited.
• RCOM join hands with Yatra.com for air and hotel bookings.
• RCOM offers 'Live Mandi Prices' on Reliance Mobile World.
• Reliance Communications became the official global partner for the first edition of
ICC Twenty 20 World Cup Championship 2007 in South Africa
• Strategic partnership with Vanco.
• Reliance Communications adjudged World’s Top CDMA Operator at the Global
CDMA Industry Achievements Awards Fete.
• Reliance Communications completes Yipes’ acquisition.
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Year 2008
• Reliance Communications receives start-up GSM Spectrum.
• Yahoo partners with Reliance Communications to provide Yahoo One Search for its
CDMA and GSM customers.
• RCOM in partnership with CanvasM, launches Mulitplayer Mobile Games.
• HDFC Bank ties up with RCOM, turns every Reliance Mobile into a credit card.
• Reliance Communications consolidates Global Telecom Business under ‘Business
Globalcom’.
• Reliance Communications forays into International Mobile Market with GSM licence
in Uganda.
• Reliance Globalcom acquires UK based VANCO Group Limited.
• Reliance Globalcom, Stealth Communications forge strategic alliance to extend VOIP
Network across 50 countries.
• Reliance Communications Launches BIG TV DTH Service.
• Reliance Mobile Launches Prepaid Blackberry Services in India.
• RCOM Ties Up with ZMQ to develop mobile games based on UN’s themes.
• RCOM launches GSM service across India
Year 2009
• Won the prestigious Global World Communication Awards 09, held in London. They
also won this award in the Best Device Category where they participated with a new
network device, developed with CISCO.
• Received the Frost and Sullivan Market Share Leadership award for 'Data Center and
Managed Services' category (FY 2009). They also received INFOCOMM - CMAI
National Telecom Award for the 'Largest Telecom Network' category.
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• The company has joined the consortium of USD 400 million, 8,300 km, 17 Tbps
design capacity Singapore - Hong Kong - Japan (SJC) cable system. The SJC cable
system is expected to be completed by third quarter of 2011.
• ICRA assigns LAAA rating to RCOM’s NCD Program and enhanced Bank Lines;
• RCOM Infrastructure & KRIBHCO forge rural marketing joint venture
• Reliance BIG TV launches iStock India’s first portfolio tracking service on a DTH
platform
• Etisalat DB Telecom & Reliance Communications Announce A Long-Term

Long Strategic
Telecom Infrastructure Sharing Agreement
Year 2010
• Reliance Communications achieves a landmark of 100 million customers
• Reliance Communications signs strategic alliance with GetJar to create India’s
largest and free applications store.
• BIG TV launches India’s first HD DVR Service
• RCOM makes 8,585 crore payment towards 3G spectrum to DoT for 13 circles
• RCOM Announces The Launch of 3G Services
Year 2011
• Reliance Communications draws down ECB of US$ 255 Million ( 1155 Cr) for
3G Spectrum Refinancing.
• Reliance Communications signs pact with Radio Netherlands

Netherlan Worldwide
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3.5 BHARAT SANCHAR NIGAM LIMITED (BSNL)
3.5.1 Company Background and History
It is a state-owned telecommunications company with its headquarters in New Delhi, India.
BSNL is oldest and one of the largest Indian cellular service providers, with over 81.23
million subscribers as of December 2010, and the largest land line telephone provider in
India. However, in recent years the company's revenue and market share has plunged into
heavy losses due to intense competition in Indian telecommunications sector (Banerjee, 2010;
The Hindu, 2010). It has footprints throughout India except for the metropolitan cities of
Mumbai and New Delhi, which are managed by Mahanagar Telephone Nigam Limited
(MTNL).
It provides comprehensive range of telecom services in India that include Wireline, CDMA
mobile, GSM Mobile, Internet, Broadband, Carrier service, MPLS-VPN, VSAT, VoIP
services, IN Services etc. Presently it is one of the largest and leading public sector units in
India.
Before its corporatization, BSNL was known as Department of Telecom (DoT) and had a near
monopoly during the socialist period of the Indian economy. During this period, BSNL was
the only telecom service provider in the country apart from MTNL which was present only in
Mumbai and New Delhi. During this period BSNL operated as a typical state-run
organization, inefficient, slow, bureaucratic, and heavily dominated by unions. As a result,
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subscribers had to wait for as long as five years to get a telephone connection. The
corporation tasted competition for the first time after the liberalization of Indian economy in
1991. Faced with stiff competition from the private telecom service providers, it subsequently
tried to increase efficiencies itself. At that time, as with all state-owned service providers,
Department of Telecom was required to function as medium for achieving egalitarian growth
across all segments of the society. However, DoT failed miserably to achieve this and India
languished among the most poorly connected countries in the world.
BSNL was born in 2000 after the corporatization of Department of Telecom (DoT). Since
then the efficiency of the company has somewhat improved but, the performance level is
nowhere near the private players. The corporation still remains heavily unionized and is
comparatively slow in decision making and its implementation without bothering about the
outcomes. Management has been reactive to the schemes of private telecom players. Though
it offers services at lowest tariffs, the private players continue to notch up better numbers in
all areas, years after year. BSNL has been providing connections in both urban and rural
areas. Pre-activated Mobile connections are available at many places across India. BSNL has
also unveiled cost-effective broadband internet access plans (DataOne) targeted at homes and
small businesses. On the 20th of March, 2009, BSNL advertised the launch of BlackBerry
services across its Telecom circles in India.
BSNL and MTNL were the maiden players to provide 3G services in India, as the auction of
3G services for private players in India got delayed due to various reasons and both these
state-owned operators were given a head start by the government in the 3G space by allotting
the required 3G spectrum, on the condition that each will have to pay an amount which will
be equivalent to the highest bid in the respective service areas as and when the 3G auctions
take place (CXOtoday.com 2010). BSNL has the largest 3G network in India and the services
usually cover not only the main town/city but also the adjoining suburbs and rural areas as
137
well. BSNL also launched a mobile Entertainment Portal called BSNL Hungama which
provides contents like music and music video to users for download.
3.5.2 Corporate Mission and Vision
• Be the leading Telecom Service Provider in India with global presence.
• Create a customer focused organisation with excellence in sales, marketing and customer
care.
• Leverage technology to provide affordable and innovative products/services across
customer segments.
• Provide a conducive work environment with strong focus on performance.
• Establish efficient business processes enabled by IT.
The Board comprise of 12 Directors, of which 6 [including the CMD] are whole time
Directors; 2 Government Nominee Directors and 4 Non-official Part Time Directors. Thus,
the Board has the optimum mix of 50% Whole-time and 50% part-time Directors. The
composition is as per Corporate Governance Norms for the unlisted CPSEs, laid down by the
Department of Public Enterprises.
Some of the Key Officials are:
• R.K. Upadhyay: Chairman & Managing Director
• Rajesh Wadhwa: Director Consumer Fixed Access (CFA)
• R. K. Agarwal: Director - Consumer Mobility (CM) & (Enterprise)
• K. Garg: Director - Human Resource (HR)
• S. R. RAO: Govt. Director
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• Sanjiv Gupta: Director
• Ashish Guha: Director
• H. C. Pant: Company Secretary & GM (Legal)
3.5.4 Milestones
Year 2003
• Became market leader within 6 months, in its areas of operation
• The State-owned Bharat Sanchar Nigam Ltd (BSNL), which displaced Spice Telecom
from the position of the second largest cellular company in Karnataka within five
months of its launch, has attributed its success to its extensive network in the State.
• Mobile Cellular Services - CellOne(Post-Paid) & Excel(Pre-Paid) launched.
Year 2004
• SMS on landline was introduced.
Year 2005
• Launch of Dataone Broadband Liberty Plan 495
• Bharat Sanchar Nigam Limited (BSNL) has crossed a milestone of 10 lakh mobile
connections; it is also the only mobile service provider in Lakshadweep.
Year 2006
• BSNL and Ericsson entered in a contract where in Ericsson will be responsible for the
expansion and upgrade of BSNL's existing GSM network and introduction of
CDMA/HSPA functionality
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Year 2007
• Award of ISO 9001:2000 Certificate to BSNL Mobile Services
• Launched Internet Protocol Television (IPTV) in Karnataka in August
• IMImobile and BSNL partnered in April 2007 and have achieved fantastic results:
20,000 â€“ 30,000 subscribers a month have been added through the PRBT service. 1
million users were achieved in a record time of just 52 days
Year 2008
• Prepaid CDMA WLL service introduced, PRBT introduced to mobile and landline
customers
• As part of its roll-out strategy, BSNL plans to launched 3G services using
WCDMA/HSPA technology across more than 11 cities.
• National Energy Conservation Award 2008 awarded to RTTC Trivandrum,
• BSNL web conferencing Services Introduced.
Year 2009
• Launched Black Berry services
• Launched 3G services
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CHAPTER 4
RESEARCH METHODOLOGY
4.1 RESEARCH PURPOSE
The primary focus of this research is to investigate the use of Value Added Services as a
strategic tool by the cellular operators for improving their service quality and ultimately
prevent the churn of customer along with enhancing the customer base. There is an increasing
debate regarding the use and effectiveness of value added services in order to increase the
usage by the cellular subscribers and thereby support the declining average user revenue
stream. Critiques in the telecom industry argue that as the voice is getting commoditized and
the consumers have become more demanding, the organizations that are able to provide better
value proposition to their customers in terms of service offerings and experience, would only
be able to survive and grow in the coming times of high competition. The success and
survival of an operator hinges on the Quality of Service it provides, as the low call charges or
upfront costs of mobile are only a bait to lure customers and only the Quality of Service can
ensure the retention capability for a service provider. It has become imperative for the service
providers to adopt such technologies and strategies which ensure their success in a dynamic
situation.
The situation has further been complicated with the invocation of number portability, as it is
going to enhance the customer churn rate due to the intense competition being faced by the
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operators in the market on the one hand and on the other very demanding customers. As a
result, the service providers are trying to develop an understanding about the customers in
terms of enriching their experience by providing higher quality services resulting into a higher
satisfaction and ultimately loyalty. Moreover, the entry of new global players in telecom
market has led to an ever-increasing customer acquisition and retention costs. Hence, the
biggest challenge being faced by the cellular service operators is to offer such value added
services which are capable of providing an enriching experience to the customers thereby,
differentiating their more or less commoditized offerings.
factor responsible for developing satisfaction and loyalty among the customers. This fact has
also been substantiated in a study conducted by Chadha and Kapoor (2009), which suggest
that the service providers should maximize service quality and customer satisfaction in order
to enhance customer loyalty by concentrating their efforts on improving network quality,
pricing and value added services (VAS).
Therefore, the present research study attempts to study the effects of Value Added Services
(VAS) on Service Quality vis-à-vis Customer Satisfaction and Customer Loyalty in wireless
telecommunication market.
Further, Silva and Yapa (2009) have tried to explore the aspects or attributes that corporate
customers consider relevant in deciding whether to continue with the current service provider
(retain) or to switch to an alternative provider (migrate) or to switch off completely (defect).
The authors have argued that the most important factor in determining customer loyalty is the
ability of service provider to add value to customer’s business process and that loyalty
146
programs offered by service providers do not have substantial effect on customer decision
making process.
4.2 RESEARCH HYPOTHESES
Telecommunication is emerging in a form which is more powerful than it has ever been
witnessed before. It is so due to the fact that two independent sectors viz. telecom and media
have integrated, which has led to a change in the very basics of accessing media and
communicating. This convergence had led to evolving of telecom sector in a new direction,
where voice has become a commodity and millions of people armed with mobiles wanted to
be entertained indicating the size of the potential value added services market (Fernandez and
Kakani 2007). Value added services bring five values to customers that are: time-critical
needs and arrangements; spontaneous needs and decisions; entertainment needs; efficiency
needs and ambitions; and mobility related needs (Anckar and D’Incau 2002), thus proving to
be new opportunities for service operators to provide higher value propositions to the
customers. Therefore pointing towards the fact that value added services can be effectively
used to increase revenue and be a strategic tool for service providers.
The previous services marketing literature has clearly pointed out the fact that the means to
achieve corporate success and competitive advantage is the enhancement of service quality,
perceived value and customer satisfaction (Patterson and Spreng, 1997; Khatibi et al., 2002;
Landrum and Prybutok, 2004; Wang et al., 2004; Yang and Peterson, 2004). While referring
to service quality, a number of constructs have been developed by researchers (Parasuraman
et al. 1985; 1988; Cronin and Taylor 1992). However, in one of the studies conducted by Kuo
(2003) to research the website service quality, besides other factors, one of the key factors
affecting service quality was extra functions and service. Service quality of mobile service
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was measured by Chae et al.(2002) by using the information quality of networks, which is
also a category of value added services. Further, in another study, Kim et al (2004) examined
the service quality of mobile services in Korea by analysing call quality; value added services
and customer support.
All this suggests that in order to evaluate the quality of telecom services being provided by
various operators, value added services play a pivotal role. Thus, hypothesis 1 is proposed as
follows:
H1: Value Added Services (VAS) have a positive impact on Perceived Service Quality.
Service Quality is an important determinant of customer satisfaction, a number of researchers
have reached this conclusion (Cronin and Taylor, 1992; Hallowell, 1996). Further to prove the
relevance of customer satisfaction, Anderson and Srinivasan (2003) said that “a dissatisfied
customer is more likely to search for information on alternatives and more likely to yield to
competitor overtures than is a satisfied customer”, thus identifying it as a key antecedent of
loyalty (Jones and Sasser, 1995; Sheth and Sisodia, 1999). Therefore keeping in mind the
conceptual framework, hypothesis 2 is proposed as:
H2: Customer Satisfaction is positively correlated to Customer Loyalty.
Customer Loyalty has been defined in two ways i.e. as behavioral loyalty and as an attitude.
Behavioral loyalty is the customer’s intention to repurchase the product/service (Hallowell
1996). Whereas, loyalty as an attitude is the consumer’s relatively enduring affective
orientation for a product, store or service (Parasuraman et al.1988).
In the service management literature, loyalty has been mainly analyzed in accordance with the
behavioral view. It has been measured as the customers’ repeat purchase probability
(Rajshekhar et al. 1997). Customer repurchase intention in the mobile telephony sector has
148
been studied as the users’ intention to continue to repurchase the service from their mobile
operator, and not switch to another operator even after their contract expires, i.e. their
propensity to buy again (behavioural component) and not their attitude towards the service
and their actual behaviour, i.e. repurchase itself. Further, it has been seen that the customers
may state their intention to repurchase the service, yet they may not actually do so due to a
variety of reasons such as lower prices or unexpected factors such as financial reasons,
pressures from friends/relatives or some other reasons (Blery et al. 2009). However,
according to Jones and Sasser (1995), secondary behaviour is another alternative way to
assess customer loyalty, i.e. customer referrals, endorsements and word of mouth, which are
extremely important forms of consumer behaviour for a company. Thus, from the discussion
above it can be concluded that the customers’ loyalty has to be studied on two distinct
dimensions, which are: intention to use in future and intention to recommend to others. Hence
Hypothesis 2 has further been segregated into two sub-hypotheses H2a and H2b as follows:
H2a: Customer Satisfaction is positively correlated to Customer’s Intention to use
services in future.
H2b: Customer Satisfaction is positively correlated to Customer’s Intention to
recommend services to other.
4.3 RESEARCH OBJECTIVES
Keeping in view the hypotheses framed for the study, the following five research objectives
were set forth:
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1. To study the impact of Value Added Services (VAS) offered on the Perceived Service
Quality.
2. To analyze the relationship between the Perceived Service Quality and Perceived Value
of the Services.
3. To evaluate the relationship between the Perceived Value of Services and Customer
Satisfaction.
4. To examine the relationship between Customer Satisfaction and Customer Loyalty.
5. To suggest strategic options for the cellular operators to develop Value Added Services
(VAS) offers for enhancing Customer Loyalty.
Besides the above mentioned objectives and hypotheses of the study, relationships of Value
Added Services with other variables have also been analyzed so as to get a complete
understanding of the entire relationship structure between the various variables analyzed in
the study, which have been discussed in detail in Chapter-V (Data Analysis and Findings).
4.4 QUESTIONNAIRE DESIGN AND DEVELOPMENT
Since the study is consumer centric, the primary data has been collected using the field survey
method. For the purpose, a structured questionnaire was developed, pre-tested and personally
administered to the target population of individual mobile subscribers. The initial
questionnaire was based on SERVQUAL technique using seven point Likert scale containing
66 items for measuring various variables under study namely:
• Quality of Value Added Services (18 items)
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• Service Quality (25 items)
• Perceived Value (9 items)
• Customer Satisfaction (8 items) and
• Customer Loyalty (6 items).
The various measurement items for each scale is presented as follows:
4.4.1 Quality of Value added Services
1. The operator has wide variety of Value Added Services apart from basic voice
service.
2. The Value Added Services provided are easy to understand.
3. It is easy to activate or deactivate a given Value Added Service.
4. Operators provide full information related to the use and charged of Value Added
Service.
5. I chose this operator only because of the Value Added Services it offers.
6. If the Value Added Services are withdrawn, I would change the service provider.
7. The Value Added Services offered are very appealing and user friendly.
8. Value Added Service availed is available/ accessible 24 hours a day and 7 days a
week.
9. Value Added Services offered is the only USP of the operator.
10. The value-added services offered provide complete content.
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11. Value-added service provides appropriate content.
12. Value-added service availed by me provides important content.
13. Value-added services offered by operator provide fashionable content.
14. Value-added service provides regularly-updated content.
15. I can fully understand the content provided via VAS.
16. This operator’s value-added service system is stable.
17. Errors seldom occur to the value-added service system of the operator.
18. It does not take too much time to get the information I need by using the value
added service system.
1. The operator has best network quality.
2. The operator has best network coverage.
3. The employees/ Customer Care Executives (CCE’s) are professional and courteous
in their dealings.
4. Materials associated with Value Added Services (manuals, pamphlets, statements)
are visually appealing and easy to understand.
5. The operator provides Value Added Services at the promised time.
6. The employees/ CCE’s show a sincere interest in solving the problems of
customers.
152
7. The company provides its services efficiently from the very first time.
8. Operator provides all its services at promised time.
9. Company provides customers with accurate and error free records.
10. The employees/ CCE’s of company tell customers exactly when services will be
performed.
11. I can get prompt access to Value Added Service(s) desired/ activated.
12. Employees give prompt service to customers.
13. Employees are always willing to help.
14. I feel safe as to hidden charges when I use Value Added Services offered.
15. This telecom operator provides a FAQ for value-added services.
16. This telecom operator provides good post-sales services.
17. This value-added service system can instantly react to the data I input.
18. Staff is friendly and helpful if I need to subscribe/unsubscribe or change a value
added service.
19. The operator provides better signal and communication quality as more people
choose the same operator.
20. The CCEs have the professional knowledge.
21. The service centres of this operator have great reputation among customers.
22. It is easy to get in contact with service provider.
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23. Service provider is interested in feedback.
24. The operator provides quick reply to the service requests.
25. Based on my experience, I can say that the operator cares about customers.
1. Value Added Services are reasonably priced by the operator.
2. There are no hidden charges for Value Added Services provided.
3. Call rates/ tariffs offered made me select this operator.
4. This operator provides multiple tariff options.
5. I feel I am getting good mobile value-added services for a reasonable price.
6. Using the value-added services provided by this telecom company is worth for me
to sacrifice some time and efforts.
7. Compared with other telecom companies, it is wise to choose this telecom
company.
8. The discount on intra-network calls is the reason behind opting this operator.
9. Calls within the same network are cheaper as compared to other operators.
1. I am satisfied with the value-added services provided by this telecom company.
2. I think this telecom company has successfully provided value-added services.
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3. The value-added services offered are better than expected.
4. I am fully satisfied with the voice quality.
5. It’s easy to get a new mobile connection from the current operator.
6. The company offers a good security system to stop junk/bulk or advertisement
calls/messages
7. I prefer the service of the operator to the service of competitors.
8. I have a positive attitude towards the operator.
1. In the future, I will use the value-added services provided by this telecom
company again.
2. In the future, I will recommend the value-added services provided by this telecom
company to my relatives and friends.
3. In the future, I will continue to use the value-added services provided by this
telecom company.
4. I am willing and would definitely continue using the services of my current
operator.
5. I would like to use the same services of the company even if it increases the
service charges.
6. I will voluntarily recommend my operator to others.
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Apart from these, there were some additional questions concerning overall service quality,
perceived price and customers’ repurchase intention, as well as their intention for positive
word of mouth and the demographic characteristics and the value added services availed and
used by them.
4.5 PRETESTING AND FINAL INSTRUMENT
The pretesting of the initial questionnaire was done by collecting responses from 100 mobile
phone subscribers in Jammu city. The results of the pilot survey suggested that the instrument
was not measuring the variables as per the requirement and as such the questionnaire needed
to be redrafted by adding/deleting some items. This was followed by another survey of related
literature so as to develop an effective and more reliable measuring instrument.
The final questionnaire was framed using a seven point Likert scale items consisting of
statements covering the following dimensions vis-à-vis: Value Added Services (VAS);
Perceived Value of Services (PV); Overall Service Quality (SQ); Customer Satisfaction (CS)
and Customer Loyalty (CL). All the dimensions except Customer Satisfaction (CS) and
Customer Loyalty (CL) were measured on a scale of 1 to 7, where 1 represents Strongly
Disagree and 7 represents Strongly Agree.
The various measurement items are presented in the following section.
4.5.1 Value Added Services
1. The value-added services offered provide complete content/ information
2. Value-added service provides appropriate content.
3. Value-added service availed by me provides important content.
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4. Value-added services offered by operator provide fashionable content.
5. Value-added service provides regularly-updated content.
6. Operator provides full information related to the use and charges of Value Added
Service.
7. The Value-Added Service System of the operator is error free.
8. The operator provides Value Added Services at the promised time.
9. I feel safe as to hidden charges when I use Value Added Services offered.
10. The company provides its value added services efficiently from the very first time.
11. The employees/ CCE’s of company tell customers exactly when services will be
performed.
12. The Value Added Services provided are easy to understand.
13. It is easy to activate or deactivate a given Value Added Service.
14. The Value Added Services offered are very appealing and user friendly.
15. Value Added Service availed is available/ accessible 24 hours a day and 7 days a
week.
16. I can get prompt access to Value Added Service(s) desired/ activated.
17. The employees/ Customer Care Executives (CCE’s) handling VAS requests are
professional and courteous in their dealings.
18. Service provider is interested in feedback.
157
19. Staff is friendly and helpful if I need to subscribe/unsubscribe or change a value
added service.
20. The employees/ CCE’s show a sincere interest in solving the problems of
customers
1. I feel I am getting good mobile value-added services for a reasonable price.
2. Tariffs for VAS offered made me select this operator
3. Value Added Services are reasonably priced by the operator.
4. Using the value-added services provided by this telecom company is worth for me
to sacrifice some time and efforts.
4.5.3 Overall Service Quality
1. My mobile telephony operator provides Excellent overall Service.
2. Services provided by my current operator are of very High Quality.
3. The operator has a very High Standard of Service Delivery.
4. Operator provides the services that are Superior in every way.
For Customer Satisfaction, measurement was done using three seven point Likert scale items
with endpoints: Completely dissatisfied /Completely Satisfied; Very Displeased/ Very
Pleased; Absolutely Terrible/ Absolutely Delighted.
158
Customer Loyalty was measured under two parts viz; Intention to use services in future and
Intention to recommend services to others using two seven point Likert scale items each, with
endpoints: Very Unlikely/ Very Likely and Definitely Would Not/ Definitely Would.
After making the required amendments in the final questionnaire, it was again pretested by
taking data from 100 respondents of Jammu city and then final survey was conducted.
4.6 SAMPLING
The data was collected using stratified random sampling technique from 300 respondents each
from four cities of north India i.e. Jammu, Chandigarh, Shimla and Ludhiana from the
subscribers of four major telecom players in these cities vis-à-vis: BSNL, Airtel, Vodafone
and Reliance (GSM) who were using value added services of their operators. After
preliminary examination, 1058 questionnaires out of 1200 were found to be complete and
valid that constituted 88.16% response rate.
The sample size was calculated by using the sampling by proportions method with a 95
percent confidence interval and a margin of error of 3 percent. At this confidence level, it is
expected that if all the subscribers of the select operators were asked the same survey
questions, the responses to the survey would change no more than ±3 percent. To confirm that
the sample size of 1200 was adequate, calculations for sample size determination by
proportions were made as follows, using the maximum possible population proportion (π =
0.7).It is so due to the fact that the secondary data analysis clearly showed that around 70
percent of population in each of the select cities was being catered to by the selected four
service providers (Telecom Regulatory Authority of India reports, January 2010 & January
159
2011. Therefore, the value of π was considered to be 0.7. The precision of D in this study is
0.03 for a 95% percent confidence level. The sample size has been arrived at by using formula
(Malhotra and Dash 2009):

.

.
.
N= = = 277.76

.

As per the above mentioned formula 278 responses from each city were sufficient to capture
the customers’ perceptions for the purpose of the study. Therefore, sample of 300 respondents
from each of the selected cities were taken.
Moreover, it has been found during literature survey that majority of researches regarding
mobile telephony have been conducted using sample size of 150 to 500 respondents (Blery et
al. 2009; Oyeniyi et al. 2008; Silva and Yapa 2009; Chadha and Kapoor 2009; Kim et al.
2004).
During the preliminary information gathering stage and subsequently during the pilot survey
it was found that the users between the ages 18 years to 34 years were main users of value
added services and for whom the various aspects of service quality and variety really
mattered. For the users above 35 years, mobile telephony is just a case of staying connected
and nothing more. This can be due to variety of reasons like lack of information regarding
usage and availability, low familiarity with latest technology equipments and cumbersome
operations of the smart mobile phones. Therefore, for the purpose of final data collection,
only two age groups were considered viz. 18-24 years; 25-34 years. In terms of gender
distribution, there is almost equal representation of both the genders. Again, while collecting
the data it has been deliberately ensured that equal representation is given to the customers of
each of the selected operators, so as to facilitate a better comparison between the operators.
160
The respondents of the survey included both Pre-Paid as well as Post-Paid customers of the
cellular operators. The proportion of both the types of customers in the survey is in
accordance with the actual market situation where pre-paid subscribers dominate the market
place.
4.7 DATA TABULATION, STATISTICAL TOOLS AND TECNIQUES USED FOR
PROCESSING
The data so collected from the respondents was coded as per the requirement and
simultaneously fed into the MS-Excel 2007 spreadsheet and then transferred to SPSS 19 data
editor file for further statistical processing. The various statistical tools that were used for
conducting the study are:
4.7.1 Measure of Central Tendency (Mean)
This measure is mainly used for summarizing the essential features of a series and for
enabling data to be compared. It is amenable to algebraic treatment and is used in further
statistical calculations.
In this study, measure of central tendency (Mean) was used in order to identify the point about
which items have shown a tendency to cluster.
4.7.2 Measure of Dispersion (Standard Deviation)
An average can represent a series only to some extent and can not reveal the entire story of
any phenomenon under study. It fails to give any idea about the scatter of the values of items
of a variable in the series around the true value of average. In order to measure this scatter,
statistical dispersion is calculated.
161
4.7.3 Regression Analysis
Regression analysis is a statistical tool with the help of which the estimates of the dependent
variable are derived from values of one or more independent variables. It is used for finding
the ‘line of best fit’ for one dependent variable based on one or more independent variables.
For the present study, this tool has been used for studying the relationships among the various
variables involved in the research process and hence the dependent and independent variables
are assigned according to the relationship to be analyzed.
4.7.4 Percentage Analysis
This technique has been applied to examine the percentages of the demographic profile of the
respondents.
4.7.5 Analysis of Variance (ANOVA)
ANOVA or Analysis of Variance is used to compare the means of more than two populations.
It uncovers the main and interaction effects of classification of independent variables on one
or more dependent variables.
In the present study, the data was subjected to ANOVA test in order to analyze the variation
in perception of customers regarding the select operators with respect to the various variables
involved in the research study.
4.7.6 Factor Analysis
Data related to measurement of Value Added Services was subjected to factor analysis for
dimension reduction and find relevant factors. Bartlett’s Test of Sphericity indicated a high
Chi-square value of 6865.249 with 190 degrees of freedom at significance level of 0.000
162
leading to the rejection of null hypothesis, i.e. ‘the population correlation matrix is an identity
matrix’. Further, a high KMO value of 0.842 (>0.5) confirmed the appropriateness of use of
Factor analysis for identification of relevant variables. Varimax Rotation results indicated that
20 statements relating to Value Added Services (VAS) could be reduced into four factors vis-
à-vis:
1. Features of VAS;
2. Reliability of VAS;
3. Comfort in usage of VAS;
4. Personal Attention given by operator.
Hence, value added services were analyzed on the basis of these four factors. The total
cumulative variance explained by the four factors combined is 55.695 percent. These factors
have also been identified by Dabholkar et al. (2000).
4.7.7 Reliability Analysis of Measurement Scales
The reliability analysis of various measurement scales was done using Cronbach’s Alpha
method. Since the Alpha values of all the scales were above 0.7, the measurement instrument
is deemed to be reliable for use.
Thus, the present research has been undertaken by using advanced statistical techniques like
Factor Analysis, ANOVA, and Regression Analysis to achieve research objectives and
validate the hypotheses of the study. A detailed data analysis has been presented in Chapter-
V, outlining the key findings of the study.
163
REFERENCES
Anckar, B. and D’Incau, D. (2002) ‘Value creation in mobile commerce: Findings from a
consumer survey’. Journal of Information Technology Theory and Application, 4(1), 43-64.
Anderson, R.E. and Srinivasan, S.S. (2003) ‘E-satisfaction and e-loyalty: a contingency
framework’. Psychology and Marketing, 20(2), 123-38.
University Journal of Marketing Management, VIII (1), 23-37.
Chae, M., Kim, J., Kim, H. and Ryu, H. (2002) ‘Information quality for mobile internet
services: A theoretical model with empirical validation’. Electronic Markets, 12(1), 38-46.
Cronin, J. J. and Taylor, S. A. (1992) ‘Measuring service quality: A reexamination and
extension’. Journal of Marketing, 56(3), 55-68.
longitudinal study’, Journal of Retailing, 76(2): 139-173.
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profitability: an empirical study’. International Journal of Service Industry Management,
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Khatibi, A. A., Ismail, H.and Thyagarajan, V. (2002) ‘What drives customer loyalty: An
analysis from the telecommunications industry’. Journal of Targeting, Measurement and
Analysis for Marketing, 11(1), 34-44.
Kim, M. K., Park, M. C. and Jeong, D. H. (2004) ‘The effects of customer satisfaction and
switching barrier on customer loyalty in Korean mobile telecommunication services’.
Telecommunications Policy, 28(2), 145-159.
Kuo, Y. F. (2003) ‘A study on service quality of community websites’. Total Quality
Management and Business Excellence, 14(4), 461-473.
Landrum, H. and Prybutok, V. R. (2004) ‘A service quality and success model for the
information service industry’. European Journal of Operational Research, 156(3), 628-642.
Malhotra, N. K. and Dash, S. (2009) ‘Marketing research: an applied orientation’, 5th
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quality and its implications for future research’. Journal of Marketing, 49(4): 41-50.
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Parasuraman, A., Zeithaml, V. A. and Berry, L. L. (1988) ‘SERVQUAL: A multiple-item
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Sheth, J.N. and Sisodia, R.S. (1999) ‘Revisiting marketing’s lawlike generalizations’.
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Wang, Y., Lo, H. P. and Yang, Y. (2004) ‘An integrated framework for service quality,
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Yang, Z. and Peterson, R. T. (2004) ‘Customer perceived value, satisfaction, and loyalty:
The role of switching costs’. Psychology & Marketing, 21(10), 799-822.
167
CHAPTER 5
DATA ANALYSIS AND
INTERPRETATIONS
The data was collected from 300 respondents each from four cities of north India i.e. Jammu,
Chandigarh, Shimla and Ludhiana from the subscribers of four major telecom players in these
cities viz: BSNL, Airtel, Vodafone and Reliance (GSM) who were using the value added
services of their operators. After preliminary examination, 1058 questionnaires out of 1200
were found to be complete and valid.
5.1 DEMOGRAPHIC PROFILE
The section below presents demographic profiles of the respondents of the study. As
mentioned above, the data was collected from four cities and the city wise distribution of
valid responses has been given in the table 5.1 below:
TABLE 5.1: Respondents in Select Cities
NUMBER OF
CITY PERCENT
RESPONDENTS
Jammu 271 25.6

Chandigarh 278 26.3
Shimla 257 24.3
Ludhiana 252 23.8
Total 1058 100.0
168
In terms of gender distribution, there is almost equal representation of both the genders. The
gender profile of the respondents is represented in the following table 5.2:
TABLE 5.2: Gender Profile of Respondents
NUMBER OF
GENDER PERCENT
RESPONDENTS
Male 584 55.2
Female 474 44.8
Total 1058 100
During the preliminary information gathering stage and subsequently during the pilot survey
it was found that the users between the ages 18 years to 34 years were main users of value
added services and for whom the various aspects of service quality and variety really
mattered. For the users above 35 years, mobile telephony is just a case of staying connected
and nothing more. This can be due to variety of reasons like lack of information regarding
usage and availability, low familiarity with latest technology equipments and cumbersome
operations of the smart mobile phones. Therefore, for the purpose of final data collection,
only two age groups were considered viz. 18-24 years; 25-34 years. The age wise distribution
of respondents has been given in the following table 5.3.
TABLE 5.3: Age-wise Representation of Respondents
NUMBER OF
AGE GROUP PERCENT
RESPONDENTS
18-24 819 77.4

25-34 239 19.7
Total 1058 100.0
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Again, while collecting the data it was deliberately ensured that equal representation is given
to the customers of each of the selected operators, so as to facilitate a better comparison
between the operators. However, out of 1058 valid questionnaires considered for the study,
the operator wise distribution of respondents

res across all the cities combined is presented in the
figure 5.1 below:
Figure 5.1:: Respondents of Select Operators
BSNL (260), Airtel (299),

24.60% 28.30%
Reliance
(230), Vodafone
21.70% (269),
25.40%
The respondents of the survey included

include both Pre-Paid as well as Post-Paid
Paid customers of the
cellular operators. The proportion of both the types of customers in the survey (table 5.4) is in
accordance with the actual market situation where pre-paid

pre paid subscribers dominate the market
place.
TABLE 5.4:: Type of Connection of Respondents
NUMBER OF
TYPE PERCENT
RESPONDENTS
Pre-paid 881 83.3

Post-paid 177 16.7
Total 1058 100.0
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Since, it was important to understand the variety of Value Added Services being used by the
respondents,, the subscribers were asked to indicate which of the value added services were
being availed by them. The services mentioned in the final questionnaire were arrived at after
interviews with the various marketing/product departments of the operators and industry
reports regarding
garding value added services. The following figure 5.2 depicts the percentages
percentage of
respondents using each type of value added service.
Figure 5.2:: Respondents Using Different types of Value Added Services
100%
90%
80%
70%
Percentage
60%
50%
40%
30%
20%
10%
0%
CRBT P2P SMS Premium MCA WAP/ Content
SMS GPRS Download
Non-Users 10.20% 1.20% 81.10% 66% 59.40% 73.10%
Users 89.80% 98.80% 18.90% 34.00% 40.60% 26.90%
Here again the data has confirmed the fact that P2P SMS is the most common and widely
used value added service with almost all the users availing this service followed by the CRBT
service for which almost ninety percent of the respondents have responded in affirmation.
affirmation The
third most widely

ly used value added service is wireless internet (GPRS/WAP/EDGE) that is
being availed by around forty percent of the respondents.
The data so collected was initially fed into the MS-Excel

Excel spreadsheet first and then later on
subjected to statistical processing

proces using the SPSS-19 software package for statistical tools like
171
averages, reliability analysis, factor analysis, and regression etc. were used for the purpose. A
detailed discussion regarding the various tools used to achieve objectives and verify the
hypotheses has been given in the following sections.
5.2 FACTOR ANALYSIS
Data related to measurement of Value Added Services was subjected to factor analysis for
dimension reduction and find relevant factors.
Bartlett’s Test of Sphericity (table 5.5) indicated a high Chi-square value of 6865.249 with
190 degrees of freedom at significance level of .000, thereby confirming that the population
correlation matrix is not an identity matrix. Further, a high KMO value (table 5.5) of 0.842
(>0.5) confirms the appropriateness of Factor analysis to be used for identification of relevant
variables.
TABLE 5.5: KMO and Bartlett’s Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .842
Approx. Chi-Square 6865.249
Bartlett's Test of Sphericity Df 190.000
Sig. .000
The following table 5.6 indicates that the total cumulative variance explained by the resultant
four factors is 55.695 percent.
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TABLE 5.6: Total Variance Explained
Extraction Sums of Squared Rotation Sums of Squared

Initial Eigenvalues
Loadings Loadings
Component
% of Cumulative % of Cumulative % of Cumulative
Total Total Total
Variance % Variance % Variance %
1 4.100 20.501 20.501 4.100 20.501 20.501 3.364 16.818 16.818
2 3.382 16.909 37.410 3.382 16.909 37.410 3.181 15.905 32.724
3 2.480 12.398 49.808 2.480 12.398 49.808 2.518 12.591 45.314
4 1.177 5.887 55.695 1.177 5.887 55.695 2.076 10.381 55.695
5 .821 4.104 59.799
6 .777 3.885 63.684
7 .750 3.749 67.433
8 .723 3.613 71.046
9 .659 3.297 74.343
10 .610 3.050 77.393
11 .600 2.999 80.391
12 .569 2.844 83.235
13 .539 2.696 85.931
14 .522 2.610 88.542
15 .499 2.496 91.037
16 .438 2.192 93.230
17 .409 2.045 95.274
18 .386 1.928 97.202
19 .310 1.549 98.751
20 .250 1.249 100.000
Extraction Method: Principal Component Analysis.
173
The following table 5.7 represents the factor loading of various measurement items of Value
Added Services (VAS) and the validity of constructs used for the study by using Cronbach’s
Alpha method.
TABLE 5.7: Constructs and Composite Reliability
Composite
Constructs and items Loading
Reliability
f1 The value-added services offered provide complete content/ information .766
Features of VAS
f2 Value-added service provides appropriate content. .346

f3 Value-added service availed by me provides important content. .767 0.733
f4 Value-added services offered by operator provide fashionable content. .671
f5 Value-added service provides regularly-updated content. .455
r1 Operator provides full information related to the use and charges of Value
.601
Added Service.
r2 The Value-Added Service System of the operator is error free. .701
Reliability of VAS
r3 The operator provides Value Added Services at the promised time. .741
r4 I feel safe as to hidden charges when I use Value Added Services offered. .621 0.760
r5 The company provides its value added services efficiently from the very first
.592
time.
r6 The employees/ CCE’s of company tell customers exactly when services will
.660
be performed.
c1 The Value Added Services provided are easy to understand. .810
Comfort in usage of
c2 It is easy to activate or deactivate a given Value Added Service. .816

c3 The Value Added Services offered are very appealing and user friendly. .859
VAS
0.876
c4 Value Added Service availed is available/ accessible 24 hours a day and 7
.765
days a week.
c5 I can get prompt access to Value Added Service(s) desired/ activated. .844
pa1 The employees/ Customer Care Executives (CCE’s) handling VAS requests
.822
Personal Attention by
are professional and courteous in their dealings.

pa2 Service provider is interested in feedback. .765
operator
pa3 Staff is friendly and helpful if I need to subscribe/unsubscribe or change a 0.799

.831
value added service.
pa4 The employees/ CCE’s show a sincere interest in solving the problems of
.739
customers.
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Varimax Rotation results indicate that 20 statements relating to VAS could be minimized into
four factors namely: Features of VAS; Reliability of VAS; Comfort in usage of VAS and
Personal Attention by operator. These factors have also been identified in a study “A
Comprehensive Framework for Service Quality: An Investigation of Critical Conceptual and
Measurement Issues Through a Longitudinal Study” by Dabholkar et al. (2000). The data was
subjected to reliability analysis using Cronbach’s Alpha method. Since the Alpha values of all
the scales are above 0.7, the measurement scale is deemed to be reliable for use.
5.3 DESCRIPTIVE STATISTICS FOR VARIOUS MEASUREMENT
ITEMS
The following section deals with the Mean values and the respective Standard Deviations of
the various measurement items.
The analysis of items related to ‘Features of VAS’ in table 5.8 below suggest that the
respondents believe that features of VAS are important as the overall mean value of 4.9435 on
a 7-point scale clearly indicates its relevance. The mean values for features vary from 4.77 to
5.09 as indicated in the table. Thus it can be inferred that features of VAS provided by the
service providers to a large extent are responsible for ascertaining the quality of telecom
service provided for the respondents.
Table 5.8 further indicates that the respondents give a lot of importance to the ‘Fashionable
Content’, as the mean value recorded has been highest at 5.09 among all five items related to
‘Features of VAS’, followed by the ‘Updated Content’ and ‘Important Content” with mean
values of 5.06 and 5.01.
175
TABLE 5.8: Features of Value Added Services
STD.
FEATURES OF VALUE ADDED SERVICES MEAN
DEV
The value-added services offered provide complete content/

f1 4.79 1.572
information
f2 Value-added service provides appropriate content. 4.77 1.516
f3 Value-added service availed by me provides important content. 5.01 1.703
Value-added services offered by operator provide fashionable

f4 5.09 1.587
content.
f5 Value-added service provides regularly-updated content. 5.06 1.458
Overall mean 4.9435 1.09095
Similarly the overall mean value of 4.9378 for ‘Reliability of VAS’ factor in table 5.9 further
indicates its relevance in defining the service quality of the service provider. The mean values
for various dimensions of reliability factor range between 4.75 and 5.24 highlighting the
importance of reliability of VAS offered with reference to service quality. Moreover, values
related to ‘Reliability of VAS’ in table 5.9 indicate that cellular customers attach highest
importance to ‘efficient provision of Value Added Services from very first time’ (item r5)
with a mean value of 5.24. This is followed by ‘error free value added services system’ with a
mean value of 5.00 on seven-point rating scale.
176
TABLE 5.9: Reliability of Value Added Services
STD.
RELIABILITY OF VALUE ADDED SERVICES MEAN
DEV
Operator provides full information related to the use and charges

r1 4.75 1.460
of Value Added Service.
r2 The Value-Added Service System of the operator is error free. 5.00 1.464
r3 The operator provides Value Added Services at the promised time. 4.95 1.487
I feel safe as to hidden charges when I use Value Added Services

r4 4.75 1.556
offered.
The company provides its value added services efficiently from

r5 5.24 1.605
the very first time.
The employees/ CCE’s of company tell customers exactly when

r6 4.93 1.483
services will be performed.
The following table 5.10 gives the mean values of the items measuring ‘Comfort in usage of
VAS’ offered. If we closely see the mean values, they range between 4.09 and 4.33 and the
overall mean value for all the items combined comes to 4.2556 which on a 7-point rating scale
indicate towards a relatively indifferent attitude of consumers. This means that comfort in
usage of VAS does not have as high impact on defining service quality as the two previous
factors. From another prospective, it can be said that operators have actually failed to use
comfort in usage of value added services as a tool for service differentiation.
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TABLE 5.10: Comfort in Usage of Value Added Services
STD.
COMFORT IN USAGE OF VALUE ADDED SERVICES MEAN
DEV
c1 The Value Added Services provided are easy to understand. 4.33 1.283
c2 It is easy to activate or deactivate a given Value Added Service. 4.09 1.180
The Value Added Services offered are very appealing and user
c3 4.27 1.093
friendly.
Value Added Service availed is available/ accessible 24 hours a

c4 4.33 1.190
day and 7 days a week.
I can get prompt access to Value Added Service(s) desired/

c5 4.26 1.251
activated.
The values given in table 5.11 below related to ‘personal attention given by operator’; again
reflect an indifferent attitude of consumers towards this factor. Thus it can be said that
personal attention given by operators does not play a very influential role in defining service
quality of operator. Further, the customers feel that the customer care department is generally
lack sincere interest in solving customers’ problems (item pa4; mean 3.99), an area that
requires immediate attention if operators want to differentiate their service offerings in order
to increase overall service quality.
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TABLE 5.11: Personal Attention Given by Operator
Personal Attention given by Operator Mean Std. Dev
The employees/ Customer Care Executives (CCE’s) handling
pa1 VAS requests are professional and courteous in their 4.33 1.803
dealings.
pa2 Service provider is interested in feedback. 4.67 1.470
Staff is friendly and helpful if I need to ubscribe/unsubscribe

pa3 4.08 1.520
or change a value added service.
The employees/ CCE’s show a sincere interest in solving the

pa4 3.99 1.387
problems of customers.
In the table 5.12 above while comparing the four factors viz, Features, Reliability, Comfort
and Personal Attention, it has been seen that the features provided are of the highest relevance
to the customers followed by reliability. Comfort and personal attention respectively have
lower values suggesting that although they are relevant, however the customers perceive them
to be less significant, while evaluating the various factors of Value Added Services.
TABLE 5.12: Mean Values of Various Factors of VAS
FACTOR MEASURING VAS MEAN VALUE
Features of VAS 4.94
Reliability of VAS 4.93
Comfort in usage of VAS 4.25
Personal Attention given by operator 4.26
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The following tables (5.13 to 5.17) depict the mean, standard deviations of various items in
remaining measurement scales of the study along with their composite reliability for such
measurements using Cronbach’s Alpha method.
In table 5.13, the mean values of various items measuring Perceived value of services range
from 4.79 to 5.09 with a overall mean value of 4.9877 indicating towards the importance
being attached by the consumers to the value of service offered by their operators. The
composite reliability value of 0.715 supports the measurement of Perceived value of services
using this scale.
TABLE 5.13: Perceived Value of Services
Std. Composite
Perceived Value of Services Mean
Dev Reliability
I feel I am getting good mobile value-added

pv1 4.79 1.572
services for a reasonable price.
Tariffs for VAS offered made me select this

pv2 5.01 1.703
operator
Value Added Services are reasonably priced by

pv3 5.09 1.587 0.715
the operator.
Using the value-added services provided by this
pv4 telecom company is worth for me to sacrifice 5.06 1.458
some time and efforts.
Overall Service Quality was measured using standardized scale (also used by Dabholkar et
al.2000) with a composite reliability of 0.854 (table 5.14) for the four items used. The overall
180
mean value of 5.1623 for overall service quality indicated that customers using VAS perceive
Overall Service quality to be high. However from the analysis of the Service Quality
dimensions further, it is clearly evident that they all have a value higher than 5.00 on a seven
point scale, which shows that the customers perceive service quality as an important factor.
TABLE 5.14: Overall Service Quality
Std. Composite
Overall Service Quality Mean
Dev Reliability
My mobile telephony operator provides Excellent

sq1 5.32 1.297
overall Service
Services provided by my current operator are of

sq2 5.15 1.291
very High Quality
The operator has a very High Standard of Service 0.854

sq3 5.10 1.285
Delivery
Operator provides the services that are Superior in

sq4 5.09 1.383
every way
After analyzing table 5.15, the overall mean value of 4.9461 for satisfaction level indicates
that customers are generally satisfied with their operators but still there is a lot of room for
improvement. Further, the reliability value of 0.842 also suggests that the 3-item scale used to
capture satisfaction is valid.
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TABLE 5.15: Customer Satisfaction Level
Composite
Customer Satisfaction Level Mean Std. Dev
Reliability
cs1 Completely Dissatisfied ---- Completely Satisfied 5.00 1.202
cs2 Very Displeased --------------------- Very Pleased 4.91 1.153

0.842
cs3 Absolutely Terrible -------- Absolutely Delighted 4.93 1.162
The overall mean value of 5.1044 for Intention to Use services in Future given in table 5.16
below indicates that customers although state that they intend to use services of their current
operators in future but there is every possibility that they would churn given one or two bad
experiences with the operator or better offering from the competition. The reliability value of
0.85 represents the validity of the scale for the study.
TABLE 5.16: Intention to Use Services in Future
Composite
Customers’ Intention to Use Services in Future Mean Std. Dev
Reliability
cl1 Very Unlikely ------------------- Very Likely 5.13 1.291
cl2 Definitely Would Not ----------- Definitely Would 5.08 1.245 0.850
Similarly in table 5.17, the overall mean value of 5.005 suggests that consumers generally are
likely to recommend their current operator’s services to others in their peer/ reference groups.
Besides a high reliability value of 0.842 validates the use of scale to conduct the study.
182
TABLE 5.17: Intention to Recommend Services to Others
Customers’ Intention to Recommend Services to Composite

Mean Std. Dev
Others Reliability
cl3 Very Unlikely ------------------- Very Likely 4.97 1.258
cl4 Definitely Would Not --------- Definitely Would 5.04 1.240 0.842
5.4 REGRESSION ANALYSIS
This section deals with the analysis of relationship between various variables that were
considered while conducting the study.
5.4.1 Objective 1: Impact of Value Added Services (VAS) offered on the Perceived
Service Quality.
The objective has been statistically analyzed below in table 5.18a which shows that the Value
Added Services have a significant and positive impact on the Perceived Service Quality of the
operator. The R square value of 0.332 indicates that the variation in Perceived Service Quality
to the tune of 33% is caused by the Value Added Services Offered.
TABLE 5.18a: Regression Analysis: VAS and Perceived SQ
Std. Error Change Statistics

R Adjusted
Model R of the R Square Sig. F
Square R Square F Change df1 df2
Estimate Change Change
1 .576a .332 .330 .89736 .332 130.894 4 1053 .000
a. Predictors: (Constant), Personal Attention, Reliability, Comfort, Features
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TABLE 5.18b: Regression Coefficients: VAS and Perceived SQ
Unstandardized Standardized
Model Coefficients Coefficients t Sig.
B Std. Error Beta
(Constant) 1.499 .212 7.067 .000
Features .237 .031 .236 7.661 .000
Reliability .434 .033 .404 13.091 .000

1
Comfort .057 .028 .051 2.035 .042
Personal
.024 .023 .027 1.053 .293
Attention
a. Dependent Variable: Service Quality
The β coefficients (table 5.18b) indicated that out of all four factors, the Reliability factor
(β=0.404; p=0.000) of Value Added Services has the major influence on the Perceived
Service Quality followed by Features (β=0.236; p=0.000) and Comfort (β=0.051; p=0.042)
factors. It is pertinent to mention here that in case of cellular services, the Personal Attention
(β=0.027; p=0.293) factor has no significant impact on Perceived Service Quality of operator.
5.4.2 Objective 2: Relationship between Perceived Service Quality and Perceived
Value of the Services.
Analysis of relationship between Perceived Service Quality and Perceived Value of Service
has been analyzed as the second objective of the study. The results (tables 5.19a and 5.19b)
clearly point out that the Perceived Service Quality (β=0.437; p=0.000) has a positive
correlation with Perceived Value of service. The R square value of 0.191 further specifies that
184
the variation in Perceived Value of Service to the tune of 19.1% is caused by Perceived
Service Quality. Although the impact is not very high but it is significant in nature. Hence any
effort to improve service quality would definitely result in positively affecting the Perceived
Value of services.
TABLE 5.19a: Regression Analysis: Perceived SQ and PV of Service

R Adjusted
Model R of the R Square F Sig. F
Square R Square df1 df2
Estimate Change Change Change
1 .437a .191 .191 1.04512 .191 249.950 1 1056 .000
a. Predictors: (Constant), Service Quality
TABLE 5.19b: Regression Coefficients: Perceived SQ and PV of Service
Model Coefficients Coefficients T Sig.
B Std. Error Beta
(Constant) 2.594 .155 16.756 .000
1 Service
.464 .029 .437 15.810 .000
Quality
a. Dependent Variable: Perceived Value
185
5.4.3 Objective 3: Relationship between Perceived Value of Service and Customer
Satisfaction.
The Perceived Value of Service (β=0.377; p=0.000) is positively correlated with the Customer
Satisfaction. The relationship between the two variables is of moderate level. The R square
value (0.142) indicated that the Perceived Value of Service has a significant positive impact
on Customer Satisfaction (tables 5.20a and 5.20b).
TABLE 5.20a: Regression Analysis: PV of Service and CS
Change Statistics
R Adjusted R Std. Error of
Model R R Square Sig. F
Square Square the Estimate F Change df1 df2
Change Change
1 .377a .142 .141 .94693 .142 175.136 1 1056 .000
a. Predictors: (Constant), Perceived Value
TABLE 5.20b: Regression Coefficients: PV of Service and CS
B Std. Error Beta
(Constant) 3.291 .128 25.633 .000
1 Perceived
.332 .025 .377 13.234 .000
Value
a. Dependent Variable: Customer Satisfaction
186
5.4.4 Objective 4: Relationship between Customer Satisfaction and Customer Loyalty.
As mentioned earlier in the research methodology chapter, the detailed literature review
suggested that it is better to measure Customer Loyalty on two distinct dimensions viz.
Intention to Use services in future and Intention to recommend services to others. Hence, the
fourth objective of the study was analyzed on these two dimensions.
5.4.4.1 Relationship between Customer Satisfaction and Customers’ Intention to Use
services in Future.
The analysis clearly highlights that Customer Satisfaction (β=0.717; p=0.000) has a high
positive correlation with Customer’s Intention to Use Services in future. Further, the R Square
value of .513 indicates that around 51 percent of variation in customers’ Intention to use
services in future is caused due to their Satisfaction level. This means that if customer is
satisfied then he/she is most likely to continue using the services of the current operator after
the current contract expires (tables 5.21a and 5.21b).
TABLE 5.21a: Regression Analysis: CS and Intention to Use Services In Future
Change Statistics
R Adjusted R Std. Error of
Model R R Square Sig. F
Square Square the Estimate F Change df1 df2
Change Change
1 .717a .513 .513 .82534 .513 1114.061 1 1056 .000
a. Predictors: (Constant), Customer Satisfaction
187
TABLE 5.21b: Regression Coefficients: CS and Intention to Use Services in Future
B Std. Error Beta
(Constant) 1.004 .125 7.999 .000
1 Customer
.829 .025 .717 33.378 .000
Satisfaction
a. Dependent Variable: Intention to use
5.4.4.2 Relationship between Customer Satisfaction and Customers’ Intention to
recommend services to others.
The results of regression analysis regarding this relationship are shown in tables 5.22a and
5.22b below.
TABLE 5.22a: Regression Analysis: CS and Intention to Recommend Services to Others

R Adjusted R
Model R of the R Square Sig. F
Square Square F Change df1 df2
1 .705a .497 .496 .82388 .497 1041.794 1 1056 .000
a. Predictors: (Constant), Customer Satisfaction
Here again the results clearly indicate that Customer Satisfaction (β=0.705; p=0.000) and
Customers’ Intention to Recommend Services to Others are positively correlated to a very
high degree. Further, the variation of more than 49 percent in Customers’ Intention to
recommend services to others is explained by variation in the level of customers’ satisfaction.
188
Therefore it can be concluded that if a customer is satisfied, he/she is most likely to
recommend the services of current operator to others.
TABLE 5.22b: Regression Coefficients: CS and Intention to Recommend Services to
Others
B Std. Error Beta
(Constant) 1.048 .125 8.368 .000
1 Customer
.800 .025 .705 32.277 .000
Satisfaction
a. Dependent Variable: Intention to recommend
Besides the above mentioned objectives of the study, few other relationships have also been
analyzed so as to get a complete understanding of the entire relationship structure between the
various variables analyzed in the study. These are discussed in the following sections:
5.4.5 Relationship between Value Added Services (VAS) offered and Perceived Value
of Service.
While processing the data, it was intended to analyze the direct impact of Value Added
Services on Customers’ Perceived Value of cellular services. Tables 5.23a and 5.23b
represent the results of regression analysis between the two variables.
The R Square value of 0.937 (table 5.23a) indicates that variation in Value Added Services
cause a variation of around 94 percent in customers’ Perceived Value of offered service.
189
TABLE 5.23a: Regression Analysis: VAS and PV of Service
Adjusted Std. Error Change Statistics

R
Model R R of the R Square F Sig. F
Square df1 df2
Square Estimate Change Change Change
1 .968a .937 .937 .29234 .937 3909.474 4 1053 .000
Further, the analysis of regression coefficients (table 5.23b) reveal that ‘Features of VAS’
(β=0.987; p=0.000) is the most significant contributor towards increasing the perceived value
of service, followed by ‘Reliability of VAS’ (β=0.032; p=0.001). Hence any effort to improve
on Features of VAS offered would result in almost proportionate increase in customers’
perceived value of service.
TABLE 5.23b: Regression Coefficients: VAS and PV of Service
B Std. Error Beta
1 (Constant) .034 .069 .487 .626
Features 1.051 .010 .987 104.089 .000
Reliability .037 .011 .032 3.398 .001
Comfort .005 .009 .004 .568 .570
Personal
.007 .007 .008 1.012 .312
Attention
a. Dependent Variable: Perceived Value
190
5.4.6 Relationship between Value Added Services (VAS) offered and Customer
Satisfaction.
The regression results given in tables 5.24a clearly depict that 24% of variation in Customer
satisfaction is due to Value Added Services. Further from table 5.24b it can be implied that
Reliability (β=0.337; p=0.000) and Features (β=0.214; p=0.000) of VAS are the two factors
which significantly impact the customers’ satisfaction.
Hence, it can be said that quality Value Added Services offered is positively correlated with
Customer Satisfaction in cellular telephony.
TABLE 5.24a: Regression Analysis: VAS and CS
Change Statistics
Std.
R Adjusted Error of R
Model R F Sig. F
Square R Square the Square df1 df2
Change Change
Estimate Change
1 .494a .244 .241 .89018 .244 85.031 4 1053 .000
191
TABLE 5.24b: Regression Coefficients: VAS and CS
Coefficients Coefficients
Model t Sig.
Std.
B Beta
Error
(Constant) 2.055 .210 9.767 .000
Features .200 .031 .214 6.522 .000
Reliability .338 .033 .337 10.281 .000

1
Comfort .035 .028 .034 1.251 .211
Personal
.019 .022 .023 .844 .399
Attention
5.4.7 Relationship between Value Added Services (VAS) offered and Customers’
Intention to Use Services in Future.
It can be seen in tables 5.25a and 5.25b that Reliability of VAS (β=0.342; p=0.000) and
Features of VAS (β=0.157; p=0.000) positively impact the customers’ intention to continue
using the services of current operator in future. The R Square value of 0.204 (table 27a)
suggest that around 20 percent of variation in Customers’ Intention to Use services in future is
explained by variation in Value Added Services. Therefore value added services also play a
direct role in building customer loyalty.
192
TABLE 5.25a: Regression Analysis: VAS and Intention to Use Services in Future

R Adjusted
1 .451a .204 .200 1.05740 .204 67.267 4 1053 .000
TABLE 5.25b: Regression Coefficients: VAS and Intention to use Services in Future
B Std. Error Beta
(Constant) 2.165 .250 8.662 .000
Features .170 .037 .157 4.652 .000
Reliability .398 .039 .342 10.174 .000

1
Comfort .007 .033 .006 .211 .833
Personal
.025 .027 .026 .934 .350
Attention
5.4.8 Relationship between Value Added Services (VAS) offered and Customers’
Intention to Recommend Services to others.
As in the case of Customers’ intention to use services in future, customers’ intention to
recommend services to others has also been found to positively affected by Reliability
193
(β=0.352; p=0.000) and Features (β=0.169; p=0.000) of VAS to the tune of up to 21.8%
variation (Tables 5.26a and 5.26b).
TABLE 5.26a: Regression Analysis: VAS and Intention to Recommend Services to Others

R Adjusted
1 .470a .221 .218 1.02652 .221 74.582 4 1053 .000
TABLE 5.26b: Regression Coefficients: VAS and Intention to Recommend Services to
Others
B Std. Error Beta
(Constant) 2.053 .243 8.463 .000
Features .180 .035 .169 5.070 .000
Reliability .402 .038 .352 10.580 .000

1
Comfort .011 .032 .009 .338 .735
Personal
.030 .026 .032 1.168 .243
Attention
194
5.4.9 Relationship between Perceived Service Quality and Customer Satisfaction
This relationship can be analyzed with the help of tables 5.27a and 5.27b below.
TABLE 5.27a: Regression Analysis: SQ and CS

R Adjusted
1 .631a .398 .397 .79331 .398 698.085 1 1056 .000
The analysis shows that Perceived Service Quality has a high correlation with Customer
Satisfaction. Further Service quality with a β value of 0.631 (p=0.000) suggest that Perceived
Service quality positively impacts Customer Satisfaction.
TABLE 5.27b: Regression Coefficients: SQ and CS
B Std. Error Beta
(Constant) 1.909 .117 16.250 .000
1 Service
.588 .022 .631 26.421 .000
Quality
195
5.4.10 Relationship between Perceived Service Quality and Customers’ Intention to Use
Services in Future
Results of regression analysis regarding impact of Perceived Service Quality on Customers’
Intention to Use services in future as shown in tables 5.28a and 5.28b indicate that Perceived
Service Quality (β= 0.584; p=0.000) has a positive impact on Customers’ Intention to use
services in future. Moreover, R-square value of 0.341 points towards the fact that around
34 % of variation in customers’ intention to use services in future is due to the impact of
Perceived Service Quality.
TABLE 5.28a: Regression Analysis: SQ and Intention to Use Services in Future

R
Model R R of the R Square F Sig. F
Square df1 df2
Square Estimate Change Change Change
1 .584a .341 .340 .96063 .341 545.851 1 1056 .000
TABLE 5.28b: Regression Coefficients: SQ and Intention to Use Services in Future
Model Unstandardized Standardized t Sig.
Coefficients Coefficients
B Std. Error Beta
1 (Constant) 1.853 .142 13.022 .000
Service .630 .027 .584 23.363 .000
Quality
196
5.4.11 Relationship between Perceived Service Quality and Customer’s Intention to
Recommend Services to others
As in the case of Customers’ Intention to Use services in future, customers’ Intentions to
recommend services of their operator to friends and relatives is positively affected by the
perceived Service Quality (β= 0.565; p=0.000) of the operator (tables 5.29a and 5.29b)
TABLE 5.29a: Regression Analysis: SQ and Intention to Recommend Services to Others

R
Model R R of the R Square Sig. F
Square F Change df1 df2
Square Estimate Change Change
1 .565a .319 .318 .95829 .319 494.596 1 1056 .000
In other words, if a customer perceives the service of a high quality then he/she is most likely
to recommend the services to his/her friends, family etc.
TABLE 5.29b: Regression Coefficients: SQ and Intention to Recommend Services to
Others
B Std. Error Beta
(Constant) 1.919 .142 13.519 .000
1 Service
.598 .027 .565 22.240 .000
Quality
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5.4.12 Relationship between Perceived Value of Services and Customers’ Intention to
Use Services in Future
The relationship between these two variables has been found to be of relatively very low
degree but Perceived Value of Service (β=0.320; p=0.000) has a positive impact on
Customers’ Intention to use services in future (table 5.30a and 5.30b). Hence, any effort to
increase value of services from customers point of view would definitely contribute towards
making customers loyal.
TABLE 5.30a: Regression Analysis: PV of Service and Intention to Use Services in Future
Change Statistics
Std. Error
R Adjusted R
Model R of the F Sig. F
Square R Square Square df1 df2
Change
1 .320a .103 .102 1.12074 .103 120.866 1 1056 .000
TABLE 5.30b: Regression Coefficients: PV of Service and Intention to Use Services in
Future
Standardized
Unstandardized Coefficients
Model Coefficients t Sig.
B Std. Error Beta
(Constant) 3.477 .152 22.883 .000
1 Perceived
.326 .030 .320 10.994 .000
Value
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5.4.13 Relationship between Perceived Value of Service and Customer’s Intention to
Recommend Services to others
Like the previous case, Perceived Value of service (β=0.338; p=0.000) positively impact
customers’ intention to recommend services to others up to a level where around 11% of
variation in Customers’ Intention to recommend services to others is caused due to Perceived
Value of service (Tables 5.31a and 5.31b).
TABLE 5.31a: Regression Analysis: PV of Service and Customers’ Intention to
Recommend Services to Others
R Std. Error Change Statistics

Adjusted
Model R Squar of the R Square F Sig. F
R Square df1 df2
e Estimate Change Change Change
1 .338a .114 .114 1.09277 .114 136.435 1 1056 .000
TABLE 5.31b: Regression Coefficients: PV of Service and Customers’ Intention to
Recommend Services to Others
B Std. Error Beta
(Constant) 3.321 .148 22.413 .000
1 Perceived
.338 .029 .338 11.681 .000
Value
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5.5 HYPOTHESES TESTING
Further, the hypotheses framed for the study were subjected to statistical tools to test and
validate the findings.
H1: Value Added Services (VAS) has a positive impact on Perceived Service Quality.
The R Square value of 0.332 (table 5.18a) suggests that Value Added Services have a
significant impact on perceived Service Quality and it has further indicated that 33% variation
in Perceived SQ can be attributed to VAS. Further, the “F” value of 130.894 (>2.37) suggest
that Value Added Services has significant impact on perceived Service Quality. Moreover, the
correlation coefficient between Value Added Services and Service Quality has been measured
to 0.576 indicates a positive correlation between the two.
Also, the β coefficients (table 5.18b) of all four factors of VAS [i.e., Reliability of VAS
(β=0.404; p=0.000), Features of VAS (β=0.236; p=0.000), Comfort in usage of VAS
(β=0.051; p=0.042), Personal Attention given by operator (β=0.027; p=0.293)] prove that
Value Added Services have a positive impact on Perceived Service Quality of operator.
Hence, H1 accepted.
Here again, as the literature review suggested, Customer Loyalty has been analyzed on two
parameters leading to generation of two sub-hypotheses.
• H2a: Customer Satisfaction is positively correlated to Customer’s Intention to use services
in future.
• H2b: Customer Satisfaction is positively correlated to Customer’s Intention to recommend
services to others.
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H2a: Customer Satisfaction is positively correlated to Customer’s Intention to use
services in future.
The correlation coefficient between Customer Satisfaction and Intention to Use services in
future has been measured to be 0.717 (table 5.21a) indicating a high positive correlation
between the two. Also, the “F” value of 1114.061 (>3.84) suggest that Customer Satisfaction
has a significant impact on Customers Intention to use service in future. Further, the β
coefficient (tbale 5.21b) of Customer Satisfaction (β=0.717; p=0.000) indicated its positive
impact on Intention to Use services in future.
Hence, H2a accepted.
H2b: Customer Satisfaction is positively correlated to Customer’s Intention to
The correlation coefficient between Customer Satisfaction and Intention to recommend has
been measured to 0.705 (table 5.22a) indicates a highly positive correlation between the two.
The “F” value of 1041.794 (>3.84) suggest that Customer Satisfaction has a significant
impact on Customers intention to recommend services to others. Further, the β coefficient
(table 5.22b) of Customer Satisfaction (β=0.705; p=0.000) indicated its positive impact on
Intention to Recommend services to others.
Hence, H2b accepted.
5.6 ANALYSIS OF VARIANCE (ANOVA)
Vanniarajan and Gurunathan (2009) in their study have suggested that the future researches
may be directed towards analyzing consumers’ perceptions about service quality, satisfaction
and loyalty in GSM services market in India. They have also suggested comparing and
201
contrasting customer loyalty among consumers of various service providers. Hence, the data
was further subjected to ANOVA testing for analyzing the variance in perceptions of the
consumers with respect to their operators.
5.6.1 ANOVA for Value Added Services
The following table 5.32a gives the ANOVA table of the four factors of value added services
with respect to the four operators selected for the study. It is clear from the significance
column (p values) that in terms of Features of VAS and Reliability of VAS, the supposition
that all the four operators are perceived similar is rejected indicating towards the fact that at
least one operator is perceived differently from the rest of the operators and in case of
Comfort in use of VAS and Personal attention given by the operator, all the operators are
perceived similar to each other.
Post hoc Test
Once it was determined from ANOVA table that differences do exist among the means,
Tukey's honestly significant difference (Tukey’s HSD) test which is a post hoc test was used
to determine which means differ. Table 5.32a below, depicts the variance analysis of
perceptions of consumers for different operators under study on the basis of Value Added
Services. This test identifies homogeneous subsets of means that are not different from each
other at an alpha level of 0.05.
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TABLE 5.32a: ANOVA: VAS with respect to the Operators
Sum of df Mean F Sig.
Squares Square
Between 22.105 3 7.368 6.284 .000
Groups
Features
Within Groups 1235.915 1054 1.173
Total 1258.020 1057
Between 19.546 3 6.515 6.382 .000
Groups
Reliability
Within Groups 1075.997 1054 1.021
Total 1095.542 1057
Between 2.184 3 .728 .754 .520
Groups
Comfort
Within Groups 1017.108 1054 .965
Total 1019.292 1057
Between 9.165 3 3.055 2.037 .107
Personal Groups
Attention Within Groups 1580.741 1054 1.500
Total 1589.906 1057
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Table 5.32b highlights that statistically customers perceive no difference between Airtel and
Vodafone in terms of Features of VAS offered by them and rate them higher than the other
two players, i.e. BSNL and Reliance, which are perceived to offer low Features of VAS.
TABLE 5.32b: Tukey’s HSD Homogeneous Subsets for Features of VAS
Subset for alpha = 0.05

Operator N
1 2
BSNL 260 4.7885
Reliance (GSM) 230 4.7930
Vodafone 269 5.0364
Airtel 299 5.1104
Sig. 1.000 .863
Means for groups in homogeneous subsets are displayed.
a. Uses Harmonic Mean Sample Size = 262.193
In terms of Reliability of VAS (table 5.32c), here again Airtel and Vodafone are perceived to
offer equal and higher reliability of value added services than the other two operators.
Tables 5.32d and 5.32e clearly reconfirm the findings of ANOVA table that in terms of
Comfort in use and Personal Attention by operator, all the four operators are perceived similar
to each other.
204
TABLE 5.32c: Tukey’s HSD Homogeneous Subsets for Reliability of VAS

Operator N
1 2
BSNL 260 4.7936
Vodafone 269 5.0589
Airtel 299 5.0686
Sig. 1.000 1.000
TABLE 5.32d: Tukey’s HSD Homogeneous Subsets for Comfort in Usage of VAS

Operator N
1
Vodafone 269 4.2230
BSNL 260 4.2962
Airtel 299 4.2983
Sig. .603
205
TABLE 5.32e: Tukey’s HSD Homogeneous Subsets for Personal Attention given by
Operator
Operator N Subset for alpha = 0.05
BSNL 260 4.1404
Vodafone 269 4.2742
Airtel 299 4.3930
Sig. .085
5.6.2 ANOVA for Perceived Service Quality, Perceived Value of Services and
Table 5.33a depicts the results of analysis of variance among the consumers of the select
operators with respect to their perceptions regarding Service Quality, Perceived Value of
Service and Satisfaction. It can be seen that there is significant variation between the groups
in terms of all the three parameters, hence application of Post hoc test would help in
identifying the homogeneous subsets of the operators.
206
TABLE 5.33a: ANOVA: SQ, PV of Services and CS with respect to the Operators
Squares Square
Between 49.254 3 16.418 14.18 .000
Groups 0
Service Quality Within 1220.303 1054 1.158
Groups
Total 1269.557 1057
Between 25.904 3 8.635 6.498 .000
Groups
Perceived Value Within 1400.561 1054 1.329
Groups
Total 1426.465 1057
Between 47.258 3 15.753 15.71 .000
Groups 3
Customer
Within 1056.671 1054 1.003
Satisfaction
Groups
Total 1103.929 1057
Post hoc Test
It is very much clear from the tables 5.33b that the customers perceive Airtel and Vodafone to
offer similar Service Quality which is of relatively higher quality than that offered by
Reliance and BSNL.
207
Similar results have been seen in case of Perceived Value of service (table 5.33c) offered by
the operators. Customers of Airtel and Vodafone perceive that they are getting relatively
higher Value service, whereas customers BSNL and Reliance perceive that they get
relatively lower value service from the operators.
TABLE 5.33b: Tukey’s HSD Homogeneous Subsets for Service Quality

Operator N
1 2
BSNL 260 4.9490
Vodafone 269 5.2454
Airtel 299 5.4457
Sig. .999 .144
TABLE 5.33c: Tukey’s HSD Homogeneous Subsets for Perceived Value of Service

Operator N
1 2
BSNL 260 4.8029

Vodafone 269 5.1236
Airtel 299 5.1405
Sig. .984 .998
208
In terms of Customers’ Satisfaction (table 5.33d), the customers of Airtel are the most
satisfied ones followed by those of Vodafone. The customers of Relaince and BSNL are the
least satisfied with the offered services among all four selected operators.
TABLE 5.33d: Tukey’s HSD Homogeneous Subsets for Customer Satisfaction

Operator N
1 2 3
BSNL 260 4.7513
Vodafone 269 4.9827
Airtel 299 5.2453
Sig. .998 1.000 1.000
5.6.3 ANOVA for Customer Loyalty
Table 5.34a clearly depicts that there is significant difference between the Loyalty intentions
of the customers of the select operators.
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TABLE 5.34a: ANOVA: Customers’ Intention to Use Services in Future and
Intention to Recommend Services to others with respect to the Operators
Squares Square
Between 72.642 3 24.214 18.158 .000
Groups
Intention to use Within 1405.567 1054 1.334
Groups
Total 1478.209 1057
Between 61.186 3 20.395 15.774 .000
Groups
Intention to
Within 1362.768 1054 1.293
recommend
Groups
Total 1423.954 1057
Post hoc Test
From the table 5.34b it can be interpreted that the customers of Airtel have the highest
intention to continue to use services in future followed by Vodafone. Moreover, the customers
of Reliance and BSNL are relatively least likely to continue using the services of current
operator in future. Tukey’s HSD test for identification of homogeneous subsets (table 5.34c)
with regards to customers’ intention to recommend services to others revealed that the
customers of both Airtel and Vodafone have rated higher intentions for the same as compared
to the customers of Reliance and BSNL.
210
TABLE 5.34b: Tukey’s HSD Homogeneous Subsets for Customers’ Intention to Use
Services in Future

Operator N
1 2 3
BSNL 260 4.8827 4.8827
Vodafone 269 5.1115
Airtel 299 5.4900
Sig. .983 .106 1.000
TABLE 5.34c: Tukey’s HSD Homogeneous Subsets for Customers’ Intention Recommend
Services to others

Operator N
1 2
BSNL 260 4.8058
Vodafone 269 5.0967
Airtel 299 5.3211
Sig. .821 .108
211
REFERENCES
Gaur, A. S. and Gaur, S. S. (2011) ‘Statistical methods for practice and research: a guide to
data analysis using SPSS (2nd Edition)’. Response Books; SAGE Publications.
Malhotra, N. K. and Dash, S. (2009) ‘Marketing research: an applied orientation (5th
edition)’. Pearson Education, India.
5(2): 45-54.
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CHAPTER 6
SUMMARY, CONCLUSIONS
AND SUGGESTIONS
This chapter presents a synoptic view of the study, followed by summary of key findings
which have been supplemented by conclusions and suggestions. The discussion that follows
may provide useful inputs to practitioners of marketing and telecom companies. The
conclusions drawn are based on the data analysis conducted and presented in the earlier
chapter.
6.1 SYNOPTIC VIEW
With the advancements in new technologies like telecommunications, information based
technologies and continuous innovations in performing business functions; a radical change
has taken place in the living-habits, tastes, preferences, needs and requirements of people. In
response to this, the corporate sector has been developing multi-faceted services to deliver the
best to the society, leading to a phenomenal growth of this sector. Telecommunication has
emerged as a primary support service needed for the rapid growth of any developing country.
Even the advanced economies depend heavily on communication technologies and the
internet based industries. A similar trend has been observed in Indian services sector, where
telecommunication services have recorded a phenomenal growth. The cellular technology,
which is one of the major components of telecommunications sector, has impacted the
economies at both structural as well as economic level so much so that it has emerged as the
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complex new industry with advanced technologies, organizational and human capabilities to
deliver the services to the final user on the one hand and on the other with large multiplier
effects in terms of investments, income and employment. Even, it is to further mention that
many aspects of production and distribution systems have changed since the advent of
mobiles contributing towards the enhanced productivity. It has shrunk the boundaries of the
world. Moreover, roaming the world with an access to information and communication has
been possible due to the mobile telephony, developments in its technology and the global
standards. Without such developments, globalization as a phenomenon would not have taken
place as fast as it has over the recent years, suggesting a key role of mobile communications
in economic growth.
The Indian cellular services market is growing at a rapid pace and the competition has also
increased many folds. It has become imperative for the service providers to adopt such
technologies and strategies which ensure their success in such a dynamic situation. As a
result, the service providers are trying to develop an understanding about the customers in
terms of enriching their experience by providing quality services resulting into a higher
satisfaction and ultimately loyalty. With constantly decreasing Average Revenue Per User
(ARPU) per month in a low tariff regime, the cellular operators in India are looking towards
value added offerings for their customers in order to increase their ARPUs and survive in the
coming tough times as they are unable to rely solely on the conventional voice services. The
fact that the majority of cell-phone users are prepaid customers indicates towards a tendency
for higher customer churn rate and thin profit margins to the mobile service providers despite
a phenomenal increase in subscriber base. However, the situation has further been
complicated with the invocation of number portability, as it is going to enhance the customer
churn rate due to the intense competition being faced by the operators in this market on the
one hand and on the other very demanding customers. In such a scenario, the challenge for
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Indian cellular operators is to understand the preferences of their customers better and then to
successfully offer the services that foster greater customer retention, as the entry of new
global players in telecom market has further resulted in ever-increasing customer acquisition
and retention costs.
factor responsible for developing satisfaction and loyalty among the customers.
The present research study attempts to study the effects of Value Added Services (VAS) on
Service Quality vis-à-vis Customer Satisfaction and Customer Loyalty in wireless
telecommunication market. The findings of the present study convey that the service
providers must concentrate their efforts not only on improving the core services but also the
quality of Value Added Service (VAS) offered, as they have a potential to act as a strategic
tool in order to enhance the customers’ satisfaction which will ultimately result in higher
customer loyalty.
The framework of the study conducted is as follows:
In Chapter I an overview of Services sector is given, followed by the discussion on
importance of Telecom services in an economy. The service has further been discussed with
regards to its evolution in Indian economy.
Value Added Services (VAS) as a concept has been deliberated in detail in this chapter,
further highlighting its role as a strategic tool for building customer loyalty. Further, the key
constructs which have been used to conduct the study have also been discussed.
Chapter II focuses on the review of related literature. The review has been presented under
following broad heads:
215
1. Research Papers and Articles in Journal
2. Published Books
3. Industry Reports
4. Thesis and Dissertations
5. Other Miscellaneous Articles
Chapter III describes the profiles of the companies under the study which are: Bharti Airtel
Limited; Vodafone Essar Limited; Reliance Communications Limited and Bharat Sanchar
Nigam Limited (BSNL). The chapter focuses on the market shares, major achievements of the
companies selected for study and the respective Value Added Services offerings.
In Chapter IV a detailed discussion on the research methodology adopted for the study is
given followed by deliberation on formulation of research hypotheses and scope of the study,
research area, sampling, questionnaire designing, pilot survey, final data collection and
tabulation.
The chapter also highlights the various statistical tools used for the analysis and
interpretations of the data for the study.
Chapter V is about analysis and interpretations of the results derived from applying various
relevant statistical tools and techniques to the data. The main tools that were used are: Factor
Analysis; Reliability Analysis using Cronbach’s Alpha method; Regression Analysis and
ANOVA.
Chapter VI, the last chapter of the study gives the summary of the research findings and
highlights the conclusion and suggestions emerging from the discussion.
216
6.2 OBJECTIVES OF THE STUDY AND THEIR ACHIEVEMENT
The following four main objectives were set forth for the present research work. In the section
below, a discussion on how the objectives set forth were achieved.
Objective 1: To study the impact of Value Added Services (VAS) offered on the Perceived
Service Quality.
In the first stage as a part of the study, the underlying factor structure of Value Added
Services (VAS) was assessed using a exploratory factor analysis. The findings as presented in
Chapter 4 suggested that the value added services can be analyzed on the basis of four factors
namely: Features of VAS; Reliability of VAS; Comfort in Usage of VAS; and Personal
Attention given by Operator. These factors have also been identified by Dabholkar et al.
(2000). This finding was a prerequisite for assessing the objectives of the study.
The regression analyses indicate that the Value Added Services have a significant and
positive impact on the Perceived Service Quality of the operator. The R square value of
0.332 suggests that the variation in Perceived Service Quality to the tune of 33% is caused by
the Value Added Services Offered.
The β coefficient indicated that out of all four factors, the Reliability factor (β=0.404;
p=0.000) of Value Added Services has the major influence on the Perceived Service Quality
followed by Features (β=0.236; p=0.000) and Comfort (β=0.051; p=0.042) factors. It is
pertinent to mention here that in case of cellular services, the Personal Attention (β=0.027;
p=0.293) factor has no significant impact on Perceived Service Quality of operator.
Objective 2: To analyze the relationship between the Perceived Service Quality and
Perceived Value of the Services.
217
The results of regression analysis clearly point out that the Perceived Service Quality
(β=0.437; p=0.000) has a positive correlation with Perceived Value of service. The R square
value of 0.191 further specifies that the variation in Perceived Value of Service to the tune of
19.1% is caused by Perceived Service Quality. Although the impact is not very high but it is
significant in nature. Hence any effort to improve service quality would definitely result in
positively affecting the Perceived Value of services.
Objective 3: To Evaluate the relationship between the Perceived Value of Services and
Customer Satisfaction.
The Perceived Value of Service (β=0.377; p=0.000) is positively correlated with the
Customer Satisfaction. The relationship between the two variables is of moderate level. The R
square value (0.142) indicated that the Perceived Value of Service has a significant positive
impact on Customer Satisfaction.
Objective 4: To examine the relationship between Customer Satisfaction and Customer
Loyalty.
As mentioned in earlier chapters, Customer loyalty has been measured on two distinct
dimensions viz:
• Intention to Use Services in future
• Intention to Recommend services to Others
Therefore this objective, examination of the relationship between Customer Satisfaction and
Customer Loyalty, has been done in two parts as follows:
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Part 1: Relationship between Customer Satisfaction and Customers’ Intention to Use
services in Future.
The analysis clearly highlights that Customer Satisfaction (β=0.717; p=0.000) has a high
positive correlation with Customer’s Intention to Use Services in future. This means that if
customer is satisfied then he/she is most likely to continue using the services of the current
operator after the current contract expires.
Part 2: Relationship between Customer Satisfaction and Customers’ Intention to
Here again the results clearly indicate that Customer Satisfaction (β=0.705; p=0.000) and
Customers’ Intention to Recommend Services to Others are positively correlated to a very
high degree. Therefore it can be concluded that if a customer is satisfied, he/she is most likely
to recommend the services of current operator to others.
Besides the above mentioned objectives and hypotheses of the study, relationships of Value
Added Services with other variables have also been analyzed so as to get a complete
understanding of the entire relationship structure between the various variables analyzed in
the study. These are discussed in the following sections:
Relationship between Value Added Services (VAS) offered and the Perceived Value of
Service.
In terms of the direct impact of Value Added Services on Customers’ Perceived Value of
cellular services, the R Square value of 0.937 indicates that variation in Value Added Services
cause a variation of around 94 percent in customers’ Perceived Value of offered service.
219
Further, the analysis reveal that ‘Features of VAS’ (β=0.987; p=0.000) is the most
significant contributor towards increasing the perceived value of service, followed by
‘Reliability of VAS’ (β=0.032; p=0.001). Hence any effort to improve on reliable features of
VAS offered would result in almost proportionate increase in customers’ perceived value of
service.
Relationship between Value Added Services (VAS) offered and Customer Satisfaction.
The regression results clearly depict that 24% of variation in Customer satisfaction is due to
the direct influence of Value Added Services offered. Further, Reliability (β=0.337; p=0.000)
and Features (β=0.214; p=0.000) of VAS are the two factors which significantly impact the
customers’ satisfaction.
Hence, it can be said that quality Value Added Services offered is positively correlated with
Customer Satisfaction in cellular telephony.
Relationship between Value Added Services (VAS) offered and Customers’ Intention to Use
Services in Future.
Results indicate that Reliability of VAS (β=0.342; p=0.000) and Features of VAS (β=0.157;
p=0.000) positively impact the customers’ intention to continue using the services of current
operator in future.
The R Square value of 0.204 suggest that around 20 percent of variation in Customers’
Intention to Use services in future is explained by variation in Value Added Services.
Therefore, it can be said that value added services (VAS) also play a direct role in building
customer loyalty.
220
Relationship between Value Added Services (VAS) offered and Customers’ Intention to
Recommend Services to others.
As in the case of Customers’ intention to use services in future, customers’ intention to
recommend services to others has also been found to positively affected by Reliability
(β=0.352; p=0.000) and Features (β=0.169; p=0.000) of VAS to the tune of up to 21.8%
variation. From the above, it can be deduced that Value Added Services directly affects the
loyalty of the consumers, thus validating the strategic role of such services in building
customer loyalty.
In addition to the above analysis of value added services with other variables, the extent of
relationships between other variables has also been studied.
Relationship between Perceived Service Quality and Customer Satisfaction
The analysis shows that Perceived Service Quality has a high correlation with Customer
Satisfaction. Further, β value of 0.631 (p=0.000) for Service Quality, suggest that Perceived
Service quality positively impacts Customer Satisfaction.
Relationship between Perceived Service Quality and Customers’ Intention to Use Services
in Future.
Results of regression analysis regarding impact of Perceived Service Quality on Customers’
Intention to Use services in future indicate that Perceived Service Quality (β= 0.584;
p=0.000) has a positive impact on Customers’ Intention to use services in future. Moreover,
R-square value of 0.341 points towards the fact that around 34 % of variation in customers’
intention to use services in future is due to the impact of Perceived Service Quality.
221
Therefore, the results suggest that Customers are more likely to continue using services the
services of their current operator in future if they perceive that they are being offered a high
service quality because of high positive correlation between the two variables.
Relationship between Perceived Service Quality and Customer’s Intention to Recommend
Services to others
As in the case of Customers’ Intention to Use services in future, their Intentions to
recommend services of their operator to friends and relatives is positively affected by the
perceived Service Quality (β= 0.565; p=0.000) of the operator. In other words, if a customer
perceives the service of a high quality then he/she is most likely to recommend the services to
his/her friends, family etc.
Relationship between Perceived Value of Service and Customers’ Intention to Use Services
in Future
The relationship between these two variables has been found to be of relatively very low
degree but Perceived Value of Service (β=0.320; p=0.000) has a positive impact on
Customers’ Intention to use services in future. Hence, any effort to increase value of services
from customers’ point of view would definitely contribute towards making customers loyal.
Relationship between Perceived Value of Service and Customer’s Intention to Recommend
Services to others
Perceived Value of service (β=0.338; p=0.000) positively impact customers’ intention to
recommend services to others up to a level where around 11% of variation in Customers’
Intention to recommend services to others is caused due to Perceived Value of service
222
6.3 VALIDITY OF HYPOTHESES TESTED
Two main hypotheses were set up to be tested. The data generated from the present research
has been used to test the hypotheses and see whether they have been accepted or not.
H1: Value Added Services (VAS) has a positive impact on Perceived Service Quality.
This hypothesis corresponds with the first objective of the present study therefore, results of
regression analysis is used for its testing. As discussed above and in earlier chapter, the β
coefficients of all four factors of VAS [i.e., Reliability of VAS (β=0.404; p=0.000), Features
of VAS (β=0.236; p=0.000), Comfort in usage of VAS (β=0.051; p=0.042), Personal
Attention given by operator (β=0.027; p=0.293)] prove that Value Added Services have a
positive impact on Perceived Service Quality of operator. Further, the correlation coefficient
between VAS and SQ (r=0.576) indicates a high positive correlation between the two.
Therefore it can be said that the Value Added Services have a positive impact on the
Perceived Service Quality of the operator. Accordingly, the Hypothesis H1 stands
VINDICATED and ACCEPTED.
As discussed in earlier chapter, this hypothesis was further segregated into two sub-
hypotheses H2a and H2b for the purpose of conducting the study.
H2a: Customer Satisfaction is positively correlated to Customer’s Intention to use services
in future.
Here, the correlation coefficient between Customer Satisfaction and Intention to Use has been
measured to 0.717 indicating a highly positive correlation between the two. Further, the β
coefficient of Customer Satisfaction (β=0.717; p=0.000) indicated its positive impact on
223
Intention to Use services in future. Therefore, the hypothesis H2a stands VINDICATED and
ACCEPTED.
H2b: Customer Satisfaction is positively correlated to Customer’s Intention to recommend
services to other.
The correlation coefficient between Customer Satisfaction and Intention to recommend has
been measured to 0.705 indicates a highly positive correlation between the two. Further, the β
coefficient of Customer Satisfaction (β=0.705; p=0.000) indicated its positive impact on
Intention to Recommend services to others. Therefore, the Hypothesis H2b stands
VINDICATED and ACCEPTED.
As both the sub-hypotheses H2a and H2b are accepted therefore, Hypothesis H2 automatically
stands ACCEPTED as a whole.
6.4 ANALYSIS OF VARIANCE OF MEANS
As the literature indicated, researchers may analyse consumers’ perceptions about service
quality, satisfaction and loyalty in GSM services market in India. Also, comparing and
contrasting customer loyalty among consumers of various service providers was indicated in
literature. Hence, the data was further subjected to ANOVA testing for analyzing the variance
in perceptions of the consumers with respect to their operators. These can be summarized as:
Customers’ Perceptions regarding Value Added Services (VAS) Offered
The application of ANOVA and Tukey’s HSD Post Hoc test indicated that statistically
customers perceive no difference between Airtel and Vodafone in terms of Features of
VAS offered by them and rate them higher than the other two players, i.e. BSNL and
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Reliance, which are perceived to offer lesser Features of VAS. In terms of Reliability of
VAS, again Airtel and Vodafone are perceived to offer equal and relatively more reliable
value added services than the other two operators.
In terms of Comfort in use and Personal Attention by operator, all the four operators are
perceived similar to each other. In other words, no operator is able to distinguish their service
offerings from competitors on these two parameters.
Customers’ perceptions regarding the Value of Service provided by cellular operators
The customers of Airtel and Vodafone attach higher perceived value to the services offered by
their operators which are statistically equal to each other, whereas the customers of both
Reliance and BSNL feel that they are getting less value for their time and efforts spent for the
same. Hence, Reliance and BSNL really need to address this issue of increasing the perceived
value of their service offerings from their customers’ point of view.
Customers’ perceptions regarding the overall Service Quality provided by cellular operators
The customers perceive Airtel and Vodafone to offer similar Service Quality which is of
relatively higher quality than that offered by Reliance and BSNL. Hence, Reliance and BSNL
need to work on improving the overall service quality of their offerings.
Customers’ Satisfaction levels with respect to the services provided by the cellular
operators.
In terms of Customers’ Satisfaction, the customers of Airtel are the most satisfied ones
followed by those of Vodafone. The customers of Reliance and BSNL are least satisfied with
the services offered among all four selected operators.
225
Customers’ Loyalty towards the cellular service providers.
The customers of Airtel have shown the highest intention to continue to use services in future
followed by that of Vodafone. Moreover, the customers of Reliance and BSNL are relatively
least likely to continue using the services of their current operators in future.
With regards to customers’ intention to recommend services to others, the results indicate that
the customers of both Airtel and Vodafone have rated higher intentions for the same as
compared to the customers of Reliance and BSNL. In other words, customers of Airtel
followed by Vodafone are most likely to recommend the services of their respective operators
to others, whereas the customers of both Reliance and BSNL are least likely to recommend
the services of their respective operators to others.
6.5 CONCLUSION AND SUGGESTIONS
The data analysis has further pointed out that Value Added Services in telecom sector have a
significant role in ascertaining the performance and position of telecom companies in the
market. Analysis of the customers’ perceptions has led to the conclusion that these are
specific antecedents of service quality in telecom sector and in order to improve upon service
quality, they are the key drivers.
The key assumption of this study is that the value added services in mobile telephony are
critical determinant of service quality, which in turn has an impact on firm’s performance not
only in terms of increasing profits but also enhancing customer loyalty and customer
retention. Therefore, the main objectives of this research focused upon analyzing the causal
effects as well as relationships of VAS with Service Quality, Perceived Value, Customer
Satisfaction as well as Customer loyalty. The approach of the research was customer centric
226
as it focused on the various customer related outcomes e.g., customer satisfaction, retention
etc.
The data analysis above indicates that till now operators have failed to distinguish their
services in terms of Personal Attention given by them to their customers and as such
customers generally have an indifferent attitude towards this factor. It is pertinent to mention
that as the markets get saturated, the value added services would also get customized on mass
scales and as such, the companies that give special personal attention to their customers would
definitely be able to strategically differentiate their services from that of competitors. Further,
results clearly indicate that some of the operators are able to differentiate their services by
offerings vibrant and reliable Value Added Services. Hence, the key factors to be kept in mind
by service providers in current scenario, while strategizing the VAS offering for customers,
are ‘reliability’ followed by ‘features’, as reliability has emerged as the key driver of VAS in
mobile value added services.
Although new services are being introduced at all times the important issue that has emerged
from the current research is that Indian cellular operators should try to make the use of value
added services customer friendly and comfortable for all the subscribers. This is so due to the
fact that the urban markets are already becoming saturated and the major growth in telecom
services is expected from semi-urban and rural markets which typically are characterized by
low income and low educational levels. With such characteristic features, these markets need
to be catered in a significantly different manner. The regional content besides the ease of use
of such services has a potential to be accepted widely in such markets. The product
developers also need to focus on voice-based value added services for such distinct markets.
Further, as the TRAI reports suggest that more than 90% of cellular subscribers in India are
pre-paid customers, this indicates that given a slightly better offer and persuasion, the
227
subscribers may switch to competitors unless there is some strong reason for not doing so, as
all the cellular operators offer more or less the same services. Further, as noted by Grepott et.
al (2001) that once customer has been acquired and connected to the network of a particular
operator, their long term relations with the operator are of greater importance for the success
of the company in the competitive markets than they are in any other industry. Personal
Attention, an area that till now has been neglected by Indian cellular operators, can be used to
build strong relationships with the customers and hence give them strong reason to stick onto
their current operator. As such, the marketing people in the cellular services need to provide
more flexibility to their customers and offer customized services to enhance loyalty.
The study has clearly pointed out the fact that on the basis of age, the subscribers can be
categorized into two distinct groups, i.e. up to the age of 35 years, who are the main users of
value added services and the other above the age of 35 years, who are light users of value
added services due to lack of awareness about the availability of such services and complex
usage process. Hence, it is imperative for the organizations to formulate distinct marketing
approaches for these groups. The managers need to develop such loyalty programs for the first
group which, not only help in retaining the customers but also enhance the usage of these
services. For the other group, companies are advised to carry out such marketing efforts that
aim at educating the consumers about the usage and utility of such services to the subscribers.
Therefore keeping in mind the discussion above, it can further be of critical importance for
the cellular operators that besides strategizing the VAS component of their offers, they should
also focus upon their respective brand positioning in the market in such a manner that these
innovative services are highlighted effectively. This would not only help the operators to
differentiate themselves on the basis of value added services but also, create a distinct image
228
and value proposition for themselves in customers’ mind. This strategy has been successfully
adopted by Vodafone, Aircel and Reliance in Indian cellular market.
Besides these, acquiring new customers is both costly and difficult in terms of marketing for
GSM operators when the number of subscribers has reached its peak levels especially in
urban markets. Hence the best marketing strategy will be ‘retention of existing customers by
heightening customer loyalty and value. The operators should take appropriate steps to reduce
to reduce the price sensitivity among their customers by enriching their perceived service
quality and trust on the existing service providers (Vanniarajan and Gurunathan 2009). VAS
has the potential to act as the differentiator for the service providers and therefore increase the
revenues for them by just not only retaining the customers but also playing an important role
in enhancing the usage of services provided.
6.6 LIMITATIONS OF THE STUDY
• Data collection using survey technique may have included errors. Although great care was
taken to ensure that the respondents understood the statements in the questionnaire exactly
as the researcher desired them to be understood. However, error due to misunderstanding
or simply data entry cannot be ruled out.
• Data was collected over a short period of time. Findings and conclusions are really only
relevant to consumer responses in the four cities of Northern India during the time period
ranging from May 2010 to November 2010. Findings do not determine how these factors
change over a period of time.
• Low awareness level of consumers regarding the use and availability of Value Added
Services offered by their operators. The situation is worst in case of subscribers in the age
group of 35 years and above, who rarely use such services for lack of understandability.
229
6.7 RESEARCH CONTRIBUTION, MANAGERIAL IMPLICATIONS
AND DIRECTION FOR FUTURE RESEARCH
A number of studies have been undertaken in cellular services in different countries so as to
identify the level and extent of customer satisfaction as a phenomenon. Hardly any research
exists that has attempted to take into account an in-depth analysis of Value Added Services
(VAS) offered by operators with respect to their impact on satisfaction and behavioural
intentions of the customers. The Indian cellular services market is growing at a rapid pace and
the competition has also increased many folds. It has become imperative for the service
providers to adopt such technologies and strategies which ensure their success in such a
dynamic situation. As a result, the service providers are trying to develop an understanding
about the customers in terms of enriching their experience by providing quality services
resulting into a higher satisfaction and ultimately loyalty. The findings of the present study
convey that the service providers must concentrate their efforts not only on improving the
core services but also the quality of Value Added Service (VAS) offered as a strategic tool in
order to enhance their customers’ satisfaction which will result in higher customer loyalty.
The importance of this study can be highlighted from the fact that none of the previous
researches have tried to quantify and measure the quality of service in terms of Value Added
Services offered, an area that has attracted huge attention and investments in the cellular
industry. However, most of such researches are too technical in nature and inwardly focused
i.e. they only serve the purpose of developers of these services and are not customer centric.
Their focus has been upon overall service quality where value added services are just another
minor component hence, they have failed to highlight the importance of using Value Added
Services (VAS) as a strategic tool for enriching service quality. Apart from this, all the
industry reports and measures have focused only upon delivery channels of the value added
230
services and not on the measurement of its effect on the customers’ satisfaction and
behavioural intentions. Although new services are being introduced at all times, the important
issue for telecom service providers is whether these are appealing to consumers and can
induce positive post-purchase intention, so as to effectively increase revenue and sustainable
development. The present study is likely to act as one of the pace-setters to make up for the
deficiency in this regard and position Value Added Services(VAS) as a key strategic tool for
differentiation of cellular services.
It is one of the first studies that have attempted to quantify and measure Value Added Service
(VAS) in depth from consumers’ point of view. This research has identified major dimensions
related to the measurement of quality of mobile Value Added Services (VAS), concentrating
upon which the operators can improve and enrich the quality of their service offerings from
consumers’ perspective leading to customers’ satisfaction and ultimately loyalty. These
dimensions are: Reliability of VAS offered; Features of VAS offered; Comfort in Usage of
VAS and Personal Attention given by operator. The study also attempted to measure
customers’ perceptions for service quality, satisfaction and loyalty among the customers of
select cellular service providers.
Thus, it has contributed to the services sector literature, a sector of continually increasing
importance and in particular to the mobile telephony sector literature, where until now, little
investigations have taken place.
Besides its academic contribution to the service literature, the study has brought to light a
number of critical issues which can be of immense utility for the practising managers as an
aid to decision making. The issues discussed highlight a number of areas that have been
shown to have significant impact on customers’ retention. Therefore, it is important for
manager to focus on such areas and develop appropriate service strategies. This is so because
231
this study had shown that there is a strong relationship between customers’ perceived service
quality level and customer satisfaction. That is if customers’ perceived service quality level is
high, satisfaction will also be high. Evidently, customers’ service is at the core of customers’
retention efforts. The study has shown that customers’ retention is achieved only when the
customers believe that customers services offered are effective and high.
The present study is a base for future research in the same field. The future studies may
extend their scope. The data was collected from the customers of four major cellular service
providers from the four cities of Northern India, therefore, it is suggested that the future
studies may consider data collection from customers of other service providers also or from
more cities/states so as to provide a more holistic view of relationship between Value Added
Services (VAS), Service Quality, Customers’ Satisfaction and Loyalty. The future researches
can also explore the relationship among perceived service quality, switching costs and trust,
corporate image and customer loyalty among the customers in mobile telephony market.
Further, researchers can undertake a comparative analysis regarding the effect of value added
services on customer loyalty among different services like hospitality, banking, financial
services etc as Value Added Services are one of the key parameters for enhancing customer
value and also the effectiveness of different loyalty programs offered by telecom services
providers with respect to Value Added offerings and service quality.
This research has been conducted over in consumer market only and corporate market has not
been covered. As service providers engage in both markets and share resources, therefore,
detailed study in corporate consumer market might lead to findings where common resources
can be optimized.
232
Academically, further research based on these findings can add to the present pool of
knowledge by examining the influence of other factors on the customers’ repurchase
intentions in mobile telephony.
233
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ANNEXURE
Building Customer Loyalty through Value Added Services: A Case of Telecom Sector
Questionnaire
Dear respondent, a Ph.D. research is being undertaken at University of Jammu on the above mentioned topic and is
aimed at evaluating the quality of Value Added Services offered by the Mobile Telephony Companies and the
Customer Satisfaction. Value Added Services (VAS) are the services that are offered by operators over and above
basic voice services. As such you are requested to kindly spare few minutes out of your precious time to answer the
following questions. The information is collected purely for the above mentioned academic purpose.
 General Profile {Please tick (√) the appropriate choice}
1. Mobile Service Provider 2. Type of Connection

a. BSNL ______ a. Postpaid _______
b. Airtel ______ b. Prepaid ________
c. Vodafone ______
d. Reliance (GSM) ______
3. Type of usage 4. State
a. Business/official _______ a. J&K _______
b. Personal ________ b. Punjab _______
c. Both ___________ c. Himachal Pradesh _______
5. Payment of Bill/ Recharge
a. By Self _________ b. By Other (Specify)_______
6. VAS currently availed {Please tick (√)}

Using at present
Value Added Service
Yes No
Caller Tunes/Ring Back Tones
Normal SMS
Missed Call Alerts
WAP/ GPRS
Music/ Ringtones Download
Premium SMS Services (Astrology/News/ Stock Alerts etc.)
********************************************************************************************************
Keeping the Value Added Services availed by you in mind, please answer the following questions on the scale of 1 to 7, where 1
represents Strongly Disagree (SD) and 7 represents Strongly Agree (SA) (Please Encircle ® the appropriate choice):
1 The value-added services offered provide complete content/ information SD 1- 2 - 3- 4 - 5 - 6 -7 SA
2 SD 1- 2 - 3- 4 - 5 - 6 -7 SA
Operator provides full information related to the use and charges of Value Added Service.
3 The Value Added Services provided are easy to understand. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
4 The employees/ Customer Care Executives (CCE’s) handling VAS requests are professional and SD 1- 2 - 3- 4 - 5 - 6 -7 SA
courteous in their dealings.
5 SD 1- 2 - 3- 4 - 5 - 6 -7 SA
I feel I am getting good mobile value-added services for a reasonable price.
6 Value-added service provides appropriate content. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
7 The Value-Added Service System of the operator is error free. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
8 It is easy to activate or deactivate a given Value Added Service. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
9 Service provider is interested in feedback. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
10 Tariffs for Value Added Services offered made me select this operator SD 1- 2 - 3- 4 - 5 - 6 -7 SA
11 Value-added service availed by me provides important content. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
12 The operator provides Value Added Services at the promised time. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
13 The Value Added Services offered are very appealing and user friendly. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
14 SD 1- 2 - 3- 4 - 5 - 6 -7 SA
Staff is friendly and helpful if I need to subscribe/unsubscribe or change a value added service.
15 SD 1- 2 - 3- 4 - 5 - 6 -7 SA
The employees/ CCE’s of company tell customers exactly when services will be performed.
16 Value Added Services are reasonably priced by the operator. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
17 Value-added services offered by operator provide fashionable content. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
18 I feel safe as to hidden charges when I use Value Added Services offered. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
19 Value Added Service availed is available/ accessible 24 hours a day and 7 days a week. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
20 SD 1- 2 - 3- 4 - 5 - 6 -7 SA
The employees/ CCE’s show a sincere interest in solving the problems of customers.
21 Using the value-added services provided by this telecom company is worth for me to sacrifice SD 1- 2 - 3- 4 - 5 - 6 -7 SA
some time and efforts.
22 Value-added service provides regularly-updated content. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
23 SD 1- 2 - 3- 4 - 5 - 6 -7 SA
The company provides its value added services efficiently from the very first time.
24 SD 1- 2 - 3- 4 - 5 - 6 -7 SA
I can get prompt access to Value Added Service(s) desired/ activated.
********************************************************************************************************
Please answer the following questions, keeping in view the overall service quality of your mobile operator, on the scale of 1 to 7,
where 1 represents Strongly Disagree (SD) and 7 represents Strongly Agree (SA) {Please Encircle ® the appropriate choice}:
1. My mobile telephony operator provides Excellent overall Service. SD 1- 2 - 3- 4 - 5 - 6 -7 SA

2. Services provided by my current operator are of very High Quality. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
3. The operator has a very High Standard of Service Delivery. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
4. My operator provides the services that are Superior in every way. SD 1- 2 - 3- 4 - 5 - 6 -7 SA
Keeping in view the services that you get, please rate your satisfaction level for operator on the following 7-point scale:
 Completely Dissatisfied 1--------- 2 --------- 3 -------- 4 ------- 5 ------- 6 ------- 7 Completely Satisfied
 Very displeased 1--------- 2 --------- 3 -------- 4 ------- 5 ------- 6 ------- 7 Very Pleased
 Absolutely Terrible 1--------- 2 --------- 3 -------- 4 ------- 5 ------- 6 ------- 7 Absolutely Delighted
I intend to use the services of my current operator in future:

 Very Unlikely 1--------- 2 --------- 3 -------- 4 ------- 5 ------- 6 ------- 7 Very Likely
 Definitely Would Not 1--------- 2 --------- 3 -------- 4 ------- 5 ------- 6 ------- 7 Definitely Would
I would recommend the services of my operator to others

 Very Unlikely 1--------- 2 --------- 3 -------- 4 ------- 5 ------- 6 ------- 7 Very Likely
 Definitely Would Not 1--------- 2 --------- 3 -------- 4 ------- 5 ------- 6 ------- 7 Definitely Would
 Demographic Profile {Please tick (√) the appropriate choice}

1. Gender 2. Age 3. Education Level
a. Male ______ a. 18-24 years ________ a. PG & Above _________
b. Female ______ b. 25-34 years _________ b. Graduate (Bachelors’ Degree) ________
c. 35-45 years _________ c. Professional Qualification (Specify) ______
d. Above 45 years _______ d. School ________
4. Occupation
a. Businessperson/ Consultant ______ b. Private Sector employee ________
c. Central/State Govt. Employee ______ d. Retired Person _______ e. Student __________
Thanks for your kind Cooperation!

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BUILDING CUSTOMER LOYALTY

THROUGH VALUE ADDED SERVICES:

UNDER THE SUPERVISION OF

DR. ALI(A SHARMA

FACULTY OFBUSINESS STI]DIES

THROUGH VALUE ADDED SERVICES: A CASE OF TELECOM SECTOR'.

and worthy of consideration for the award of Degree of DOCTOR OF PHILOSOPHY in

I further certify that:

t. The thesis embodies the work of the candidate himself;

Statutes Governing Doctor of Philosophy in Management; and

d?r 0? -oV *Zon

TOYALTY THROUGH VALUE ADDED SERVICES: A CASE OF TETECOM SECTOR,,

Dated: J"iU.7\ )ott Mandeep Singh

I express my deepest gratitude to respected Prof. Neelu Rohmetra, Director of The

I would also like to thank Directorate of Distance Education, University of fammu

I humbly express my gratitude to the editorial team of lournal of Services Research

in any way. My heartfelt thanks to them all!

List of Acronyms Used

Chapter 1: Introduction 1-47

Chapter 3: Profile of Companies 98-144

3.3 Vodafone Essar Limited 115-123

3.4 Reliance Communications Limited 123-135

3.5 Bharat Sanchar Nigam Limited (BSNL) 136-140

Chapter 4: Research Methodology 145-167

4.5 Pretesting and Final Instrument 156-159

4.6 Sampling 159-161

Chapter 5: Data Analysis and Findings 168-212

5.4.2 Relationship between Perceived Service Quality and

5.4.3 Relationship between Perceived Value of Services and

5.4.4 Relationship between Customer Satisfaction and Customer Loyalty

5.4.4.2 Relationship between Customer Satisfaction and Customers’

5.4.5 Relationship between Value Added Services (VAS) offered and

5.5 Hypotheses Testing 200-201

5.6 Analysis of Variance (ANOVA) 201-211

Chapter 6: Summary, Conclusion and Suggestions 213-233

Figure 1.1 Mobile Network 6

Figure 1.2 Evolution of Value Added Services in India 13

Figure 1.3 Categories of Value Added Services 14

Figure 3.1 Composition of Indian Telecom Subscribers 99

Figure 3.2 Composition of Indian Cellular Subscribers 101

Figure 3.3 Group-wise market share (in terms of subscribers) of Indian

Figure 3.4 Proportion of Pre-Paid & Post-Paid Subscribers in Indian

Figure 3.5 Global Presence of Airtel 104

Figure 3.6 Global Presence of Vodafone 116

Figure 5.1 Respondents of Select Operators 170

2.5G 2.5 Generation cellular networks

2G Second Generation cellular networks

3G Third Generation cellular networks

3GPP Third Generation Partnership Project

3GPP2 Third Generation Partnership Project 2

4G Fourth Generation cellular networks

AMPS Advanced Mobile Phone Service

ANOVA Analysis of Variance

ANSI American National Standard Institute

ARPU Average Revenue Per User per Month

BSNL Bharat Sanchar Nigam Limited

CAGR Compound Annual Growth Rate

CDG CDMA Development Group