A

PROPOSAL

ON

PRICING STRATEGY OF CG NET COMMUNICATION PVT. LTD.

SUBMITTED TO:

DR. Rashmee Manandhar

SUBMITTED BY:

PRAVEEN DEESAHR( 78341020 )

SUNIL BHATTARAI(78341007)

AMAN RANA(78341071)

BIBEK KHATIWADA( 78341077 )

TILAK BDR. G.C. ((78341006 )

MD HASAN ANSARI ( 78341024)

DEPARTMENT OF MANAGEMENT AND LAWS

NEPAL OPEN UNIVERSITY

MANBHAWAN , LALITPUR
Acknowledgment
The success and final outcome of this term paper required a lot of guidance and assistance
from many people. We are extremely fortunate to have got this all along, the completion of
our term paper with the supervision of our supervisor. Whatever we have done is only due to
such supervision and we would not forget Dr. Rashmi Rajkarnikar madam.
We thank Nepal Open University and Dr. Rashmi Rajkarnikar madam for giving us an
opportunity to do the term Paper on the topic “Pricing Strategy of CG Net Communication
Pvt. Ltd” and providing for all support and guidance which helped to complete the project on
time. I am extremely grateful to all the respondents who participated in the research and
provided us the required information based on which the term paper is based upon. I would
also be thankful for providing time to fill up the questionnaire despite their busy schedule.
Lastly, we would also like to thank all my classmates and friends who helped me during
research and while preparing the term paper in various ways. We would also like to thank
them for all the encouragement and their constant motivation.

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Table of content

ACKNOWLEDGEMENT ii
LIST OF TABLES iii

LIST OF FIGURES iv

ABSTRACT v

1. INTRODUCTION 1
2. RESEARCH GAP 2
3. OBJECTIVES OF STUDY 3
4. RATIONALE OF STUDY 4
5. RESEARCH METHODOLOGY 5
5.1. RESEARCH INSTRUMENT 5
5.2. SAMPLE DATA COLLECTION 5
6. RESULT AND DISCUSSION 6
7. CONCLUSION 13
8. RECOMENDATION 14
APPENDIX 15
REFERENNCES 21

iiIII
 List of Tables:
Table 1: Different age group of Internet users 15

Table 2: Occupation of Internet users 15

Table 3: Income of Internet users 15

Table 4: No. of Internet users in a family 16

Table 5: Internet company 16

Table 6: Internet package 16

Table 7: Price of Internet package per month 17

Table 8: Bandwidth of Internet 17

Table 9: Price satisfaction 18

Table 10: Service Satisfaction Status 18

Table 11: Comparison of ISPs 18

Table 12: ISPs Internet Users number 19

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III
 List of Figures:
Figure 1 : Based on different age group 6

Figure 2 : Based on occupation 6

Figure 3: Based on income of the user 7

Figure 4: Based on number of users in the family 7

Figure 5: Based on internet company 8

Figure 6: Based on Internet package 8

Figure 7: Based on price of internet package per months 9

Figure 8: Based on Bandwidth of internet 9

Figure 9: Based on price of internet package (satisfactory and unsatisfactory 10

analysis)

Figure 10: Based on overall services provided by internet company 10

Figure 11: ISPs User percentages according to secondary data Source (table 11
no 12)

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IV
Abstract
The purpose of this research is to study how the organization decides the price of the products.
As price is considered as a very highly sensitive factor of an organization. In this study we
are going to see the role of pricing, different methods of pricing and effects of pricing on
organization and consumer behavior.

The pricing is explained with literature review followed by critical evaluation and ends with a
solution with valid recommendation.

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V
1. INTRODUCTION

Due to technology development the Internet now becomes available more or less
“everywhere” and people get used to be able to access the Internet at “any” location
(Werding et. al.) Today’s Internet is a confederation of thousands of service providers. As no
provider presently has the complete end-to-end coverage, they have to work together, i.e.
forward each other’s traffic, to offer Internet services. This inter-dependency makes pricing
of Internet services a very complex issue (Kelly et. al.).

As the Internet makes its transition from a partially subsidized service to a commercial
service, there is a pressing need for effective pricing and a cost recovery method (Clark,
1995).

The over 60% overall broadband internet penetration rate and 12% fixed broadband rate (as
of March 2019) of Nepal (NTA) indicates that there is still sufficient space for Nepalese
network service providers to expand their services throughout the country, while the
government has to pave the way through effective policy to enhance information and
communication technology (ICT) penetration across the country.

In Nepal, currently there are 40 Internet Service Providers (ISPs). Some have their customers
in 6 digits, while others in thousands. Due to limited resources, dependency on other ISPs for
bandwidth, and lack of capital and marketing, many of those ISPs will never surpass the top
ones.World link boasts a market share of 38.6% presently, followed by NTC fiber broadband
which boasts about 23% market share. Vianet, Subisu, and Classic Tech also have a healthy
customer base that keeps them afloat. However, they have lots of years in the making to come
into this position. ( https://www.nepalitelecom.com/2021/06/will-cg-net-120-mbps-
sustain.html)

But CG Net Communication Pvt. Ltd. is the latecomer in the business. It was launched on
June 1, 2021. It was started from 3 locations in Lalitpur District namely Jawalakhel,
Jhamsikhel, and Harihar Bhawan. It is primarily inspired by its affordable offering to appeal
to the masses and it has been ridiculously successful so far. Its eye-popping internet solution
at a cost-friendly range has already drawn attention in and beyond the capital. Currently, CG
Net is aggressively expanding its fiber in Kathmandu valley and will tap into other markets
soon (https://ipokhabar.blogspot.com/2021/06/cg-communications-has-started-internet.html).

1
2. RESEARCH GAP

1. Much research has been carried out on internet service providers of Nepal but no
research has been carried out on the CG Net Communication Pvt. Ltd.
2. Past researches didn’t examine the relationship between internet price with internet
bandwidth, internet packages, users age group and overall services provided by the
company

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3. OBJECTIVES OF THE STUDY

1. To understand the pricing strategy of CGNet.

2. To examine the relationship between internet price with internet bandwidth, internet
packages, users age group and overall services provided by the company.

3
 4.RATIONALE FOR THE STUDY

According to traditional pricing, in microeconomic theory pricing depends heavily on the

market structure for a certain product or service (Varian, 1993). In the classic case of
perfectly competitive markets with a variety of economic agents on each side, sellers are
price takers and cannot influence prices (Kreps, 1990).

The internet service providers association of Nepal (ISPAN) was set up in 1998 with a
mission to develop and promote the internet for everyone. ISPAN had originally started
activities when ISPs like Worldlink, HTP and ENET came together with a purpose of making
the internet affordable to local communities and penetrate in rural areas. ISPN has been
fighting and exercising the right to obtain timely and quality infrastructure and resources to
enable high high quality service to be by internet service licensees.

Bitner & Hubert (1998) examined the moderating role of switching costs in the customer
satisfaction-loyalty link and identified customer segments and then analyzed the
heterogeneity in the satisfaction-loyalty link among different segments.

In 1996, Breker [1996] conducted a survey of computer network pricing schemes that
covered a few of the known protocols of the time. While these surveys mention similar
concerns as those faced today–e.g., the need to manage network congestion– since then,
researchers have proposed several new schemes for pricing data and some variations of these
plans have been adopted by wireless ISPs for their consumers.

More recently, Gizelis and Vergados [2011] provided a detailed overview of the literature on
pricing schemes for wireless networks, while Sen et al. [2012b] considered pricing in the
context of time-shifting data demand. An annotated bibliography of several papers related to
various aspects of Internet economics, including pricing, was compiled by Klopfenstein
[2009].

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 5.RESEARCH METHODOLOGY

5.1. RESEARCH INSTRUMENT

A structured questionnaire will be prepared for the survey based on literature review and
objectives of the study.To know about how pricing strategy is established by different
internet service providers (IPS) , a quantitative research method with the help of structured
online questionnaire through the help of Google forms has been conducted.The questions
were organized into two sections as follows: To obtain personal background of the
respondents, the first section of the questionnaire were asked regarding their age and income.
The second section of the questionnaire asked respondents about which internet
provider services they are using at what price, bandwidth,number of users,internet
package,price for the internet package and customer satisfaction to overall services provided
by the internet company.

5.2. SAMPLE DATA COLLECTION

This research will be based on the analysis of primary data and secondary data.To know
about the effectiveness of different internet service provider (IPS) quantitative and qualitative
research methods will be conducted. A total of 95 questionnaires are distributed among
different consumers of different internet service providers.

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 6.RESULT AND DISCUSSION

Total 99 responses through google form survey has been used for discussion and analysis for
this research.

Figure 1 : Based on different age group

The pie chart shows that mostly respondents (i.e. 50.5%) of the internet users involved in the
survey were between the age of 20-30 i.e. either students or working class or both. They were
followed by the internet users between the age of 30-40 i.e. mostly working class. While, the
internet users below 20 and above 40 were few. This shows the target population to be
targeted belongs to the age from 20-40 who in this busy and technically active world needs
24/7 good internet access

Figure 2 : Based on occupation

6
Most respondents (i.e. 57.6%) of the internet users involved in the survey were involved in
the service field working at different organizations at different levels. Followed by self
employed or people having self business. Students and people involved in other occupations
were found less. This shows that people involved in any type of service or business needs a
continuous supply of good and reliable internet service for performing different activities for
their good output or development.

Figure 3: Based on income of the user

From the figure the highest percentage of respondents is 37.4% with the income range of 30k
to 50 k and lowest percentage is 7.7% with the income range above 100k. Similarly, 29.7%
and 7.7% of the respondents were found to be with the income range of Rs. 50k-100K and
above 100K respectively. Additionally, 11% of the respondents were found to be with an
income below 20k. So the people were found using the internet regardless of their income.

Figure 4: Based on number of users in the family

Maximum respondents (i.e. 33.3%) of the internet users involved in the survey had 4 family
members. Which is followed by 5 family members (24.2%) and 3 family members (21.2%).
So 3,4 & 5.

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Figure 5: Based on internet company

Maximum respondents (i.e. 53.5%) of the internet users involved in the survey were found to
be using the internet of Worldlink communications followed by Telecom. Users of CG Net
were found to be only 1% of total respondents. This shows most of the people enjoy the
services provided by Worldlink Communications as compared with others.

Figure 6: Based on Internet package

Maximum respondents (i.e. 45.5%) of internet users use the package including internet
service and 1 TV service. However, people using only the internet without any packages were
found to be 33.3%. This data shows dependence on the other variable “Number of Users in
the family”, as the members of most families were found to be 4 either internet service alone
or internet service with a TV package was found to be enough for most families.Only 7.3% of
the respondents were found to be using the internet with more than 2 TVs.

8
Figure 7: Based on price of internet package per months

Maximum respondents (i.e. 47.5%) of the internet users use the internet package within the
price range of Rs. 1000- Rs. 1500. Similarly, 32.3% were found to use the internet package
within the price range of Rs. 1500- Rs. 2000 and 19.2% were found to use the internet
package below Rs. 1000. We could assume that 19.2% of respondents were using only the
internet, 47.5% of the respondents were using the internet with 1 TV and 32.3% of the
respondents were using the internet with 2 Tvs.

Figure 8: Based on Bandwidth of internet

This pie-chart shows a mixed result of the internet users concerning the bandwidth of the
internet . 60.6% of correspondents were found to be using the internet with bandwidth below
50mbps, 32.3% using the internet with bandwidth in the range of 50-150 Mbps. This shows

9
that mostly the participants think the internet service of below 50 Mbps would be enough for
smooth operation of their day to day jobs and also for entertainment purposes.

Figure 9: Based on price of internet package (satisfactory and unsatisfactory analysis)

This survey result shows that 65.7% of the internet users were fully satisfied with the prices
of the internet packages they were using whereas 34.3% were found unsatisfied. Satisfaction
of the majority of internet users might be due to optimal prices of internet packages provided
by major shareholders ISPs line Worldlink in the market. And the cause of dissatisfaction
might be due to the higher prices of internet packages of the minor shareholders ISPs in the
market.

Figure 10: Based on overall services provided by internet company

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This survey result shows that 68.7% of internet users were fully satisfied with the overall
services provided by the internet company they were using whereas 31.3% were found
unsatisfied. Satisfaction of the majority of internet users might be due to the price, internet
speed, low service outages and good response from the service providers at any time. And the
reasons for dissatisfaction might be one or combination of factors like price, internet speed,
high service outages and low responses from the service providers.

Figure 11: ISPs User percentages according to secondary data Source (table no 12)

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From Table 12, Vianet charges Rs 15,000 per year for 175 mbps broadband, which includes
free internet and TV installation. For Wifi Device, a payment of Rs 500 is required, and for
Dual Band Wi-Fi, a deposit of Rs 1,000 is required. There are two television services
available. Vianet's renewal fee is Rs 16,950. The overall cost of a new installation with one
set top box is Rs 19,080, including tax.

For CG Net, a 120 mbps internet connection costs Rs 11,988 per year, with no installation
fees. A deposit of Rs 500 is required for the Wi-Fi Device, and there is no price for Dual
Band Wi-Fi. CG Net currently does not offer any television services. The cost of renewing
CG Net is Rs 13,547. The overall cost of a new installation with one set top box is Rs 14,047,
including tax.

Worldlink charges Rs 14,400 per year for 150 Mbps broadband, which includes free internet
and TV installation. A deposit of Rs 500 is required for the WiFi Device, and there is no price
for Dual Band WiFi. One Net TV service has been supplied by Worldlink. The cost of
renewing Worldlink is Rs 14,400. The overall cost of a new installation with one set top box
is Rs 19,530, including tax.

Subisu charges Rs 26,549 per year for 150 mbps internet, which includes free internet and
one TV installation. For a Wi-Fi device, a deposit of Rs 500 is required, but there is no
payment for Dual Band Wifi. One NetTV service has been supplied by Subisu. Subisu's
renewal fee is Rs 26,549. The overall cost of a new installation with one set top box is Rs
31,999, including tax.

DishHome charges Rs 18,499 per year for 100 mbps internet, which includes free internet
and TV installation. For a Wi-Fi device, a deposit of Rs 500 is required, but there is no
payment for Dual Band Wifi. 1 Dish IPTV service has been supplied by DishHome. The cost
of renewing DishHome is Rs 20,904. The entire cost of a new installation with one set top
box is Rs 20,904 plus VAT.

From the table, it can be seen that, in comparison to other ISPs, CG Net has a low cost of
installation and monthly/quarterly/annual service payment. The major strategies that enable
CG Net compete in the industry are loss leading strategy and low infrastructure costs. And
the price has become a promotional component in and of itself.

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For CG Net, a 120 mbps internet connection costs Rs 11,988 per year, with no installation
fees. A deposit of Rs 500 is required for the Wi-Fi Device, and there is no price for Dual
Band Wi-Fi. CG Net currently does not offer any television services. The cost of renewing
CG Net is Rs 13,547. The overall cost of a new installation with one set top box is Rs 14,047,
including tax.

6.CONCLUSION:

As the survey was intended to purpose a pricing strategy for new player in the ISP business
i.e. CG., the following conclusions were obtained:

1) Firstly , people to be targeted as the internet users were found to be of 20-40 years age.

2) People working in any service sector were to be targeted.

3) Apart from a small population, people have good enough income to pay for the internet
services.

4) Internet service should be designed for families with more than 3 members who must all
be presumed to be the users.

5) Worldlink among the other service providers had a standout market presence. So in order
to flourish in the market its services were to be challenged so as to lure the users.

6) Most people were found to have around 4 people in the family and an internet service
alone or with a TV package was found to be enough so packages similar to that must be taken
into consideration.

7) The most important factor that attracts customers in internet service is price and bandwidth
supplied at that price. So,as per the survey, a price between Rs. 1000-2000 per month for 30-
50 Mbps internet service was found to be satisfactory for the users.

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7. RECOMMENDATION

 CG net should expand internet services outside kathmandu valley too

 CG net should lunch the internet packages like TV along with internet services

 CG net provides internet of two bandwidth 50\mbps and 120mbps. It would be better if
CG net provide the internet service below 50mbps too since more than 60% of users are
using internet service of bandwidth of 50mbps

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Appendics
Table 1: Different age group of Internet users

Age of the user Number of respondent

Below 20 years 4

20 yrs - 30 yrs 49

30 yrs -40 yrs 39

40 yrs- 50 yrs 3

Above 50 yr 0

Table 2: Occupation of Internet users

Occupation No. of respondent

Service 53

Self Business 21

Student 12

Others 9

Table 3: Income of Internet users

Income No. of respondent

Below 20k 10

20k-30K 13

30k-50k 32

50k-100k 25

Above 100k 7

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 Total 87

Table 4: No. of Internet users in a family

Number of User in family No. of respondent

2 8

3 21

4 30

5 24

above 5 12

Table 5: Internet company

Internet company No. of respondent

World link 50

Telecom 18

Subisu 7

Vianet 6

Classic tech 4

CG net 1

Others 9

Table 6: Internet package

Internet package No. of respondent

Internet onlyStaff package 32

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 Internet + 1 TV 43

Internet + 2 TV 13

Internet + 3 TVs 4

Internet + more than 4 TVs 0

Staff package 1

Internet+Telephone 1

Nepal telecom 4G 1

Table 7: Price of Internet package per month

Price per months No. of respondent

Below Rs. 1000.. 17

Rs.1000- Rs. 1500 Rs 47

1500- Rs. 2000Rs 30

2000- Rs. 2500 1

Above Rs. 2500 0

Table 8: Bandwidth of Internet

Bandwidth No. of respondent

Below 30 Mbps 30

30-50 Mbps 30

50-100 Mpbs 13

100-150 Mbps 17

Above 150 Mpbs 5

17
 15Mbps 1

300 Mbps 1

Table 9: Price satisfaction

Satisfactory Unsatisfactory

66 29

Table 10: Service Satisfaction Status

Satisfactory Unsatisfactory

66 29

Table 11: Comparison of ISPs

Vianet CGNET Worldlink Subisu DishHome

Speed 175 120 150 Mbps 150 100 Mbps

Mbps Mbps Mbps

Price (12 Rs. Rs. Rs. 14,400 Rs. Rs. 18,499

Months) 15,000 11,988 26,549

Price Per Rs. 7 Rs. Rs. 8 Rs. Rs. 15.42

Month Per 8.325 14.75
Mbps

Internet Free Free Free Free Free

Installation
Charge

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 WiFi Device Rs. Rs. 500 Rs. 500 Rs. Rs. 500
Deposit 500 500

Dual Band Rs. Free Free Free Free

WiFi ONU 1,000.

TV No TV Free Free (1 Free

Installation TV)
Charge

TV Service 2 No TV 1 NetTV 4 TV 1 Dish

ViaTV IPTV

Renewal Rs. Rs. Rs. 14,400 Rs. Rs. 20,904

Cost 16,950 13,547 26,549

Total Cost of Rs. Rs. Rs. 19,530 Rs. Rs. 20,904

New 19,080 14,047 31,999
Installation +
1 Set-Top-
Box
(Inclusive of
Tax)

Source: Nepal Telecom, MIS report, Mangsir, 2078 (17 November 2021– 15 December 2021)

Table 12: ISPs Internet Users number

S.N Company Name Wireless Cable Fiber Total

1 WorldLink Communications (Pvt.) Ltd. 528 696 562546 563770

Jawalakhel, Lalitpur

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2 Vianet communications Pvt. Ltd., Jawalakhel, 158650 158650
Lalitpur

3 Subisu Cablenet Pvt. Ltd. Baluwatar, 10,431 25,718 167,858 204,007

Kathmandu

4 Broadlink Network & Communication 176 44,418 44,594

Pvt.Ltd., Kathmandu

5 Classic Tech Pvt. Ltd., Baneshwor, 1,067 142,262 142,262

Kathamandu

6 CG Communications Ltd 8634 8634

Source: Nepal Telecom, MIS report, Mangsir, 2078 (17 November 2021– 15 December 2021)

QUESTIONNAIRE DEVELOPED FOR THE RESEARCH

1. Based on different age group

2. Based on occupation

3. Based on income of the user

4. Based on number of users in the family

5. Based on internet company

6. Based on Internet package

7. Based on price of internet package per months

8. Based on Bandwidth of internet

9. Based on price of internet package (satisfactory and unsatisfactory analysis)

10. Based on overall services provided by internet company

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REFERENCE

Bitner, M.J., & Hubert, A.R. (1998),“Encounter Satisfaction versus Overall Satisfaction
versus Quality.” In R.T. Rust & R.L. Oliver (eds.), Service Quality: New Directions
in Theory and Practice, 72-94

Breker, L. P. 1996. A survey of network pricing schemes. In Proceedings of the 8th

Symposium on Computer Science. University of Saskatchewan.

Clark, D. D. (1995), 'A Model For Cost Allocation and Pricing in the Internet', Presented at
MIT Workshop on Internet Economics, Cambridge, Massachusetts, USA.
http://www.press.umich.edu/jep/works/ClarkModel.html.

Gizelis, C.& Vergados, D. 2011. A survey of pricing schemes in wireless networks. IEEE
Communications Surveys & Tutorials 13, 1, 126–145.

Kelly, F. P., Maulloo, A. K., and Tan, D. H. K. “The Rate Control for Communication
Networks: Shadow Prices, Proportional Fairness and Stability,” Journal of the
Operational Research Society, pp. 237-252, vol.49, 1998.

Kreps, D. (1990), 'A Course in Microeconomic Theory', Princeton University Press, USA.

Nepal Telecommunications Authority. MIS Reports. 2019. Available online:

https://nta.gov.np/en/misreports/ (accessed on 17 July 2019).

Werding J, Markendahl J, Mäkitalo Ö, “Drivers Of Novel Access Provisioning – Re-Use

Aspects And Operator Cooperation” Proc. PIMRC 2006, Helsinki, September 2006

Varian, H. R. and MacKie-Mason, J. (1993), 'Pricing the Internet', Public Access to the
Internet Conference, JFK School of Government, USA, May 26-27, 1993.

Dinesh, (https://www.nepalitelecom.com/2021/06/will-cg-net-120-mbps-sustain.html)

(https://ipokhabar.blogspot.com/2021/06/cg-communications-has-started-
internet.html)
MIS report, Mangsir, 2078 (17 November 2021– 15 December 2021). Nepal Telecom,

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