CHAPTER I

INTRODUCTION AND RESEARCH DESIGN

1.1 INTRODUCTION

Liberalization, Privatization and Globalization are the most spoken words in the
world. These have thepaved way for all-round reforms, especially in developing
economies like India. There are many countries that haverealizedthat the efficient
means of communications and information technology is important to push them into
the path of development. The growth in the telecommunication sector in India during
post-liberalization has been extraordinary. This chapter aims to presents the factors
that contributed to the growth of the segment, an insight into the present status of the
industry and research design of the study.

1.2TELECOMMUNICATION IN INDIA
1.2.1 GROWTH OF TELECOMMUNICATION INDUSTRY IN INDIA
In 1880, The Oriental Telephone Company Limited and the Anglo-Indian
Company Limited approached The Indian Government to establish telephone
exchanges in India. But the permission was not granted to start the sameso as
tomaintain Government monopoly and that the Government itself would undertake
the work. However, it has been reconsidered in the forthcoming years and the
Government agreed to issue license to the Oriental Telephone Company Limited of
England for starting telephone exchanges at Bombay, Calcutta, Madras and
Ahmadabad. This was the first telephone exchange that was established in India on 28
January, 1882. The exchange in Calcutta named “Central Exchange” and Central
Telephone Exchange had 93 numbers of subscribers. The Department of Telecom
(DoT) was separated in 1975, from India Post and Telecommunication Accounts and
Finance Servicethe DoT was responsible for all telecom services in the entire country
until 1985. Mahanager Telephone Nigam Limited (MTNL) was impressed out of DoT
to run the telecom services of Mumbai and Delhi. In the year 1990s the telephone
industry was opened by the Government for private investment as a part of
Liberalization-Privatization. 1

1
http://en.Wikipedia.Org/wiki/Communications in India.
 2

The pre-liberalization period of 1990, witnessed the evolution of telephones

and the strengthening Government presence in telephony along with the introduction
of private capital into the manufacturing of telecom equipment. A significant step for
the industry was started the Department of Telecommunications (DoT) in 1985.
Government of India also established the Videsh Sanchar Nigam Limited (VSNL) in
1986 for international telephony and Mahanager Telephone Nigam Limited (MTNL)
for telephony in metropolitan areas.

The new telecom policy of 1994 proved a landmark step, as it permitted the
entry of private telephony operators into the market. In 1994, the government set up
the Telecom Regulatory Authority of India (TRAI) to regulate the growing telecom
sector in India. In 2000 Department of telecommunication establishes the Bharat
Sanchar Nigam Limited (BSNL). The most remarkable achievements of the Indian
Telecom industry at the turn of the 21st Century have the tremendous growth of the
wireless telephony market. The DoT is the first formal set up by the Government with
the responsibility of handling issues relating to policy, coordination and licensing of
various forms of telecommunication, including telephone, telegraph, wireless, data,
telematics, facsimile, services and others. The Government of India facilitated to
smoothfunctioning of BSNL by allowing a speedier decision-making process,
facilitated by minimal Government intervention.

1.2.2 Privatization of Telecommunication in India

The Government of India is composed many parties, which had different

ideologies and to open the market for foreign players wanted the Government to
regulate infrastructure and restrict the involvement of foreign players. In this
background, it was very difficult to bring about Liberalization in telecommunications.
When a bill was in parliament a majority vote had to be passed and such a majority
was difficult to obtain, given to the number of parties having different ideologies.

The Prime Minister of India signed contracts, in the year 1981 with Alcatel
CIT of France to mergethe state-owned Telecom Company (ITI), in an effort to set up
5,000,000 lines per year. Indira Gandhi invited Sam Pitrodaas a Non-resident Indian
(NRI) to set up a Center for Development of Telematics (C-DOT); however, the plan
failed due to political reasons. After that many public sector organizations were set up
 3

like the Department of Telecommunication (DoT), VSNL and MTNL. The

technological developments tookplace in this regime but still, foreign players were not
allowed to participate in the telecommunications business. The National policies
relating to telecommunications in 1994 changed the ownership, service and regulation
of telecommunications infrastructure. Theestablishment of joint ventures between
statetelecom companies and international players‟facilities was restricted only to the
government-owned organizations. Foreign firms were eligible to 9 percent of the total
stake. The international companies involved in technology transfer and not
policymaking. During this period, the World Bank and ITU had advised the Indian
Government to liberalize long distance services in order to release the monopoly of
the state-owned DoT and VSNL; and to enable competition in the long-distance
carrier business which would help to reduce tariff‟s and better the economy of the
country. The liberalization of services and assuring foreign involvement in the long
distance business circles for basic telephony and 18 circles for mobile services and
these circles were divided into category A, B and C depending on the value of the
revenue in each circle and the service providers are allowed per circle and a 15 years
license was given to each provider and these improvements, the government did face
oppositions from ITI, DoT, MTN, VSNL and other Labor Unionsmanaged to keep
away from all the hurdles. The first ever mobile phone call was made by the Chief
Minister of West Bengal, Mr. JothiBasu from Calcutta (Now Kolkatta) to Union
Communication Minister Mr. Sukh Ram in Delhi. After 1995 the government set up
TRAI (Telecom Regulatory Authority of India) which reduced the interference of
Government in deciding tariffs and policymaking. The DoT opposed this. They split
DoT in two-one policy maker and the other service provider (DTS) which was later
renamed as BSNL. The proposal of raising the stake of foreign investors from 49
percent to 74 percent was rejected by the opposite party and Leftist thinkers.
Domestic business groups wanted the government to privatize VSNL. Lastly, in April
2002, the government decided to cut its stake of 53 percent to 26 percent in VSNL
and to throw it open for sale to private enterprises. TATA finally took a 25 percent
stake in VSNL. 2 This was the gateway to many foreign investors to get entry into the
Indian Telecom Markets and the Government became more liberal in making policies

2
Dash, Kishore, “Veto Players and deregulation of State-owned Enterprises: The case
of Telecommunications in India”.
http://www.thunderbird.edu/www/filws/publications/magazine/fall 2005 /pdf.files
 4

and issuing licenses to private operators. The Government further reduced license fees
result in the reduction of service fees and the call costs were cut greatly enabling
every common middle-class family in India to afford a cell phone and nearly 32
million handsets were sold in India. It shows the real potential for growth of the
Indian mobile market.3

1.2.3 Evolution of Cellular Telephony in India

Initially, the Department of Telecommunication (DoT) was the only monopoly

operator in the country. This sector has recognized by the Government of India as one
of the few basic infrastructure sectors for the country. The Government policy of
economic liberalization, privatization and competition in India, private sectors have
been allowed to enter the public telecommunication field and telecommunication
sector in India bridge the gap between spending to provide additional resources for
the nation‟s telecom target. The goal of telecommunications within the reach of all
thereby achieving universal service, covering all villages and bringing the
telecommunication services to world standard and security needs of the country.

In 1993 the telecom industry got an annual foreign investment of 20.6 million.
In 1994 license for providing cellular mobile services was granted by the Government
of India for the Metropolitan cities of Delhi, Mumbai, Kolkata and Chennai. Initially,
Cellular mobile services were a duopoly. Under a fixed license fee, in 1995, the
government opened up 19 more telecom circles and issued mobile licenses. 4

Telecom Regulatory Authority of India was set up in 1997 and in 1999

National Telecom Policy was announced by the Government of India to regulate and
settle disputes. To speed up the development of the telecom sector, all telecom
services are opened by private sector participation. Unrestricted entry is allowed in
the basic personal communication by satellite (GMPCS) service, VSAT and Public
Mobile Radio trunked Service (PMRTS). The telecommunication is handed over to
new public sector undertaking viz, Bharat Sanchar Nigam Limited (BSNL) which was
registered under Company‟s Act on 1st October 2005. BSNL covers the entire

3
http://www.trai.gov.in.
4
http://www.dot.gov.in/annual Report
 5

country except for Delhi and Mumbai Metros which are under Mahanagar Telephone
Nigam Limited (MTNL).

1.2.4 Mobile PhoneGenerations

The General Manager of MotorolaMartin Cooper is the inventor of the first

modern portable handset and the Bell Laboratories introduced the idea of cell phone
communications in 1947 with police car technology. Motorola is the first to
incorporate the technology into a portable device that was designed for use outside an
automobile in 1977, AT&T and Bell Laboratories had constructed a prototype cellular
system. After a year the new system started in Chicago with over 2000 trial
customers. The first commercial mobile phone system started its operation in Tokyoin
1979 and the second mobile phone radio-telephone system started to test in the
Washington /Baltimore by Motorola and American Radio-Telephone. In 1982the
slow-moving FCC finally authorized commercial cellular service for the USA. A year
later, the first American commercial analogue cell phone service or AMPS (Advanced
Mobile Phone Service) was made available in Chicago by Ameritech. The
implausiblerequirement, it took 37 years for cell phone services to become
commercially available in the United States. Consumer demand quickly outperformed
in 1982 system standards and 1987, cell phone subscribers exceeded one million and
the airways were crowded.

1.2.5 First Generation (1G):

The first generation (1G) wireless telephone technology and mobile

telecommunications introduced in 1980′s, used analogue signals. The vice calls in the
first generation networkwere simply modulated to a higher frequency and the first
commercially available cellular network using 1G standard was introduced by NTT
(Nippon Telegraph and Telephone) in 1979 in Japan and NTT is also a shareholder
and technology provider for TATA Docomo in India.

1.2.6 Second Generation (2G):

The second generation (2G) launched in 1991 by Elisa Oyj, in Finland. The
second generation allowed for enhanced data services and also introduced a short
messaging service (SMS). Because of the introduction of 2G voice communications
 6

were digitally encrypted. This allowed greater privacy, efficient data transfer and also
less expensive equipment. The introduction of General Packet Radio Servicesand the
usage of CDMA one networks collectively came to be known as 2.5G. GPRS
provided data services like WAP (Wireless Application Protocol) and MMS
(Multimedia Messaging) are introduced, along with Internet services. 2.75G was the
name given to the evolution of EDGE (Enhanced Data rates for GSM Evolution) or
Enhanced GPRS (EGPRS). This facilitates higher data transfer rates, almost triple of
the previous rates and it is widely used generation of mobile telecommunication
networks, which is using now most mobile phones in India.

1.2.7Third Generation (3G)

The third-generation mobile communication was introduced in Japan, in 2001

and initially limited in scope, it was a leap forward. Third generation completely
different radio frequencies are used from second generation, so it required different
equipment to achieve the new high data transfer rates and enormous licensing fees for
additional spectrum delayed the introduction of 3G in many countries. 3G data
transfer rates are 384kbits/s to 2Mbits, so it allows for previously unavailable services
like video calls, video conferencing, online conference call, mobile television, online
gaming etc. speed up the broadband equivalent, so the applications and capabilities
are enhanced greatly. The 3G service provides greater security and privacy compared
to 2G, minor evolution of the standards resulted in 3.5G and 3.75G and it is allowed
for higher data transfer rates, exceeding 2Mbits, reaching about 14Mbits.

1.2.8Fourth Generation (4G):

The 4G mobile phones are all set to provide data transfer is mind-boggling to
say the least. These speeds are not even present in wired networks commercially. 4G
has just been launched in India and is available on selected mobile operators.
 7

1.3THE GROWTH OF TELEPHONE USERS IN INDIA

1.3.1 Growth of Telephone Users
The industry witnessed a tremendous growth of 1206.22million wireless users
and wireline users by the end of the year 2018.The growth of telephone users given in
the below Table 1.1.
Table 1.1
Growth of Telephone (Subscribers in Millions)

Year Wireline Subscriber Wireless Subscriber Total

2003 - 04 41.85 33.69 75.54
2004 - 05 46.19 52.22 98.41
2005 - 06 50.17 98.77 148.94
2006 - 07 40.75 165.11 205.86
2007 - 08 39.42 261.07 300.49
2008 - 09 37.96 391.76 429.72
2009 - 10 36.96 584.32 621.28
2010 - 11 34.73 811.59 846.32
2011 - 12 32.17 919.17 951.34
2012 - 13 30.21 867.80 898.01
2013 - 14 28.49 904.51 933.00
2014 - 15 26.59 969.89 996.48
2015 - 16 25.22 1033.63 1058.85
2016 - 17 24.40 1170.18 1194.58
2017 - 18 22.81 1183.41 1206.22
CAGR -4.24 28.94 21.88
Source: TRAI Reports

The above table explores the growth of telephone continuously increasing

from 2005-06 to 2017-18. The trend in the growth rate of the subscriber base depicted
in 2005-06, 75.54 million increased to 1206.22 million as on 31st March 2018. The
wireline subscriber base of 41.85 million in 2003-04 increased to 50.17 million in
2007-08 and afterwards it continuously declined to 22.81 million in 2017-18.
However, the wireless subscriber base was increasing from 33.69 million to 1183.41
 8

million for the period from 2003-04 to 2-17-18 with a low of 867.80 million in the
year 2012-13.
1.3.2 Growth of urban subscribers
The growth of urban subscribers in wireless users and wireline users by the
end of March 2018 is given in the below Table 1.2.
Table 1.2
Growth of Urban Subscribers (in Millions)
Wireline Wireless
Year Total
Subscriber Subscriber
2009 - 10 27.16 393.34 420.47

2010 - 11 26.04 538.05 564.08

2011 - 12 24.62 595.90 620.52

2012 - 13 23.50 525.30 548.80

2013 - 14 22.53 532.73 555.26

2014 - 15 21.47 555.71 577.18

2015 - 16 20.90 588.79 609.69

2016 - 17 20.56 672.42 692.97

2017 - 18 19.43 662.18 681.61

CAGR -4.10 6.73 6.22

Source: TRAI Reports
The above table explores the growth of urban wireless subscribers has
increased whereas the wireline subscribers has continuously decreased during the
above period from 2009-10 to 2017-18. The wireline subscriber base shows 27.16
million in the year 2009-10 decreased to 19.43 million as on 31st March, 2018. The
wireless subscriber base continuously increased from 393.34 million in 2009-10
increased to 595.90 million in 2011-12 and decreased to 525.30 million in 2012-13
and afterwards it continuously increased to 662.18 million in 2017-18. However, the
total subscriber base was increasing from 420.47 million is increased to 681.61
million for the period from 2009-10 to 2017-18 with a high of 681.61million in the
year 2011-12.
 9

1.3.3 Growth of urban subscribers

The growth of rural subscribers in wireless users and wire line users by the
end of March 2018 is given in the below Table 1.3.
Table 1.3
Growth of Rural Subscriber (in Millions)
Wireline Wireless
Year Total
Subscriber Subscriber
2009 - 10 9.80 190.98 200.81

2010 - 11 8.69 273.54 282.23

2011 - 12 7.55 323,27 330.82

2012 - 13 6.71 342.50 349.22

2013 - 14 5.96 371.78 377.73

2014 - 15 5.12 414.18 419.31

2015 - 16 4.32 444.84 449.17

2016 - 17 3.85 497.76 501.61

2017 - 18 3.38 521.23 524.61

CAGR -12.46 13.37 8.06

Source: TRAI Reports
The above table shows the growth of rural wireless subscribers has
continuously increased whereas the wireline subscribers have continuously decreased
during the above period from 2009-10 to 2017-18. The trend in the growth rate of the
wireline subscriber base is 9.80 million in the year 2009-10 and decreased to 3.38
million as on 31st March, 2018. The wireless subscriber is 190.98 million in 2009-10
increased to 521.23 million in 2017-18. The total wireline and wireless subscriber
base also increased from 200.81 million to 524.61 million for the period from 2009-
10 to 2017-18.
 10

1.3.4 Growth of Mobile Phone

The growth of mobile phone users in India are given in the Table 1.4.

Table 1.4
Growth of Mobile Services

Year Subscriber Base(in millions) Growth Rate (%)

2003-04 33.69 100.00

2004-05 52.22 55.00

2005-06 98.77 89.14

2006-07 165.11 67.17

2007-08 261.07 58.12

2008-09 391.76 50.06

2009-10 584.32 49.15

2010-11 811.59 38.89

2011-12 919.17 13.26

2012-13 867.80 -5.59

2013-14 904.51 4.23

2014-15 969.89 7.23

2015-16 1033.63 6.57

2016-17 1170.18 13.21

2017-18 1183.41 1.13

CAGR 28.94
Source: TRAI Annual reports

The Table 3.4 explains the growth of mobile phones in terms of subscriber
base for the years 2003-04 to 2017-18. The trend in the growth rate of the subscriber
base depicted an increasing trend over the years. The mobile services in 2003-04,
33.69 million increased to 1183.41 million as on 31st March, 2018 and registering a
decline of 867.80 Million during the year 2012-13. The decline in Wireless
connections is mainly due to deactivation of inactive connections. The maximum
 11

growth of subscriber base was 89.14 percent during the year 2005-06. It could also be
said that mean compound annual growth rate of mobile phones in subscriber base was
28.94 percent during the period. Though the growth trend was fluctuating over the
years, there was consistency in the growth of mobile phones subscriber base. The
growth of mobile is represented in the below graph,
Graph 1.1
Growth of Mobile Phone Services in India
(Rs. in millions)

1400
1206.22
1194.99
1200
1059.33
996.15
1000 919.17
811.59
800
584.32
600
391.76
400
261.07
165.11
200 90.14
52.22

1.3.5 The Growth of Cellular Service Providers in India

The mobile phone services provided in India mostly dominated by the private
players of Aircel, Airtel, Vodafone, Reliance, Tata docomo and Idea cellular service
providers. The table 1.5 depicts the growth of mobile phone service providers in
India.
 12
Table 1.5
Growth of Cellular Service Providers
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Service Providers
-04 -05 -06 -07 -08 -09 -10 -11 -12 -13 -14 -15 -16 -17 -18
Bharti Airtel 6.50 10.98 19.58 37.14 61.98 93.92 127.62 162.20 181.28 188.20 205.39 226.02 251.24 273.65 304.19
Hutch/ Vodafone 5.15 7.80 15.36 26.44 44.13 68.77 100.86 134.57 150.47 152.35 166.56 183.80 197.95 209.06 222.70
Reliance
7.26 10.45 17.31 28.01 45.79 72.67 102.42 135.72 153.05 122.97 110.89 109.47 102.41 83.50 0.19
RCL/RTL
Spice 1.21 1.44 1.93 2.73 4.21 4.13 - - - -
Idea/ Spice/
2.73 5.07 7.37 14.01 24.00 38.89 63.82 89.50 112.72 121.61 135.79 157.81 175.07 195.37 211.21
Escotel
BSNL 5.53 9.90 17.65 30.99 40.79 52.15 69.45 91.83 98.51 101.21 94.65 77.22 86.35 100.99 111.68
Tata 0.63 1.09 4.85 16.02 24.33 35.12 65.94 89.14 81.75 66.42 63.00 66.32 60.10 48.99 31.19
Aircel 1.29 1.76 2.61 5.51 10.61 18.48 36.86 54.84 62.57 60.07 70.15 81.40 87.09 90.90 74.15
Reliance JIO (*) 108.68 186.56
Unitech
(Telewings) 4.26 22.79 42.43 31.68 35.61 45.62 52.45 50.49 37.98
Telenor
Sistema 0.39 3.78 10.06 15.80 11.91 9.04 8.86 7.69 4.91
MTNL 0.46 1.08 2.05 2.94 3.53 4.48 5.09 5.47 5.83 5.00 3.37 3.51 3.56 3.63 3.56
BPL/ 1.88 2.58 1.34 1.07 1.29 2.16 - - - - - -
Loop(#) - - - - - - 2.84 3.09 3.27 3.01 2.90
Videocon (@) - - - - - - 0.03 7.11 5.95 2.01 4.99 7.13 6.56
HFCL/ 0.03 0.05 0.06 0.15 0.30 0.60 0.33 1.47 1.33
Quadrant ($) - - - - - - 1.37 2.17 2.73 3.16
S Tel - - - - - - 1.01 2.82 3.43
Escotel 0.99 - - - - - - - - -
Etisalat - - - - - - - 0.97 0.78 -
Shyam 0.03 0.03 0.03 0.10 0.11 - - - - -
Total 33.69 52.23 90.14 165.11 261.07 391.76 584.32 811.59 919.17 867.81 904.51 969.89 1033.63 1170.18 1183.41
(*) M/s RelianceJioInfocomm Ltd launched their commercial services in 2016-17
(#) M/s Loop services were discontinued since 2014-15 (@) M/s Videocon Ltd. Discontinued their commercial service since May 2016.
($) M/s Quadrant Televentures Ltd. discontinued their commercial service on 15 th February 2017
 13

The Table 1.5 displays growth of Bharti Airtel subscribers 6.50 million in 2005-06
increased to 304.19 million in 2017-18. Vodafone subscribers 5.15 million in 2005-06
increased to 222.70 million in 2017-18. Reliance subscribers 7.26 million in 2005-06
increased to 153.25 million in 2011-12 and afterwards it continuously decreased to
0.19 million in 2017-18. Idea subscribers 2.73 million in 2005-06 increased to 211.21
million in 2017-18. BSNL subscribers 5.53 million in 2005-06 increased to 101.21
million in 2012-13 and decreased to 94.65 million in 2013-14 and afterwards it
increases to 111.68 million in 2017-18. Tata subscribers 0.63 million in 2003-04
increased to 89.14 million in 2011-12 and afterwards it continuously decreased to
31.19 million in 2017-18. Aircel subscribers 1.29 million in 2003-04 increased to
62.57 million in 2011-12 and decreased to 60.07 million in the next year of 2013-13
and again it increased to 90.90 million in 2016-17 and decreased to 74.15 million in
2017-18. Reliance JIO launched their commercial services in 2016-17 and in the
launching years it added the customer base of 108.68 million and increased to 186.56
million in million in 2017-18. The percentage share of service providers in India
2017-18 is shown in the below graph.
Graph 1.2
Share of Service Providers in 2017-18

Bharti Airtel
3.21 0.30

Hutch/
15.76 25.70
2.64 Vodafone

6.27 Reliance

RCL/RTL
9.44
18.82
Idea/ Spice/
17.8 Escotel
BSNL
0 0.02
Tata
 14

From the above graph represents the Airtel is one of the leading mobile
subscriber base of 25.70 percent, followed by Vodafone 18.82 percent, Idea
17.80 percent, BSNL 9.44 percent, Aircel 6.27 percent, Unitech 3.21 percent,
Tata 2.64 percent, and MTNL 0.30 percent in the year 2017-18.
Table 1.6
List of Cellular Mobile (GSM and CDMA) Service Providers Currently
Providing Service (As On 30th March 2018)
S. Number Area of Operations
Service Providers
No. of SAs Service Area (SAs)
1 Bharthi Airtel Limited 22 All India
2 Aircel Group 22* All India
Reliance All India (except Assam and & North
3 20
Communications Ltd. East)
Kolkata, Madhya Pradesh, West Bengal,
4 Reliance Telecom Ltd. 8 Himachal Pradesh, Bihar, Odisha, Assam
& North East
5 Vodafone Ltd 22 All India
All India except Assam, North East &
6 Tata Teleservices Ltd 19
Jammu & Kashmir
7 IDEA Cellular Ltd 22# All India
Delhi, Kolkata, Gujarat, Karnataka,
Tamil Nadu (incl. Chennai), Kerala,
8 Sistema ShyamTelelink 9
Uttar Pradesh (West), Rajasthan, West
Bengal
Bharat Sanchar Nigam
9 20^ All India (except Delhi & Mumbai)
Ltd.
Mahanagar Telephone
10 2^ Delhi and Mumbai
Nigam Ltd.
Telenor Maharashtra, Gujarat, Andhra Pradesh,
11 Communication (India) 6 Uttar Pradesh (West), Uttar Pradesh
Pvt. Ltd. (East), Bihar
RelianceJioInfocomm
12 22 All India
Ltd
Source: TRAI Report 2018
(*) TN and AP – CMTS
(#) Delhi, HP and UP (E) – CMTS
(^) BSNL/MTNL – CMTS in all LSAs In the remaining LSAs the TSPs have either
UASL, UL or UL(AS).
 15

1.3.6 RELIANCE JIO

The Reliance JIO services were launched for all users on 5th September, 2016
with a „Welcome offer‟ originally introduced in beta for only „Reliance staff‟ on 27th
December, 2015, to mark the 83rd birthday on remembrance of DhirubhaiAmbani,
founder of Reliance Industries. Reliance Industries Ltd‟s (RIL) providing free
services from 5th September, 2016 to thirty-first December, 2016; again the
commercial launch free services extended the next 3 months from 31st March, 2017
onwards. The company has stated an unselfish objective for Reliance JIO Infocomm
limited that of putt India on the worldwide map for Mobile Broadband internet Access
there is no denying that this announcement has shaken the Telecommunication
network across the country. Reliance‟s JIO has start with free to the low subscription;
it might attract more customers and create a strong customer base. Customer
satisfaction can act as the advertising tool for the company without any additional
cost.
The Telecom Sector witnessed that now-a-days, no one is living without
mobile phone services. There are so many network services are available in this
world. The present study focuses on „Reliance JIO‟ network Company commercially
launched its service on 5th September, 2016. It is a Voice over Long-Term Evolution
(VoLTE) mobile network operator in India. It is the own subsidiary of Reliance
roughed quartered in Mumbai which provides wireless 4G LTE service network and
is the only 100 percent volte operator in the country. It covers all 22 telecom circles in
India. The Reliance JIO has appointed „Sahrukh Khan‟ as their brand Ambassador.
JIO have to issue 15 billion new shares at Rs.10each to existing shareholders.
India is now the second largest Telecommunications market and this sector
witnessed a rapid increase of subscribers from 54.62 million (both wireline and
wireless) in 2003-04 increased to 1206.22 million in 2017-18. Of which the number
of urban telephone subscribers 681.61million and rural telephone subscribers
524.61million in India at the end of March 2018.The total wireless subscribers
1183.41 million and wireline subscribers 22.81 million at the end of March, 2018. In
Tamil Nadu the overall wireless subscribers are 82183024 in September, 2018 but it
has increased to 82395112 in October, 2018. The wireless subscriber in Reliance JIO
is 16296598 in September, 2018 it has increased to 16953120 in October, 2018.
Similarly, the overall wireline subscribers in Tamil Nadu are 2244857 in
September,2018 but it has increased to 2239313 in October, 2018. The wireline
 16

subscriber in Reliance is 76665 in September, 2018 is increased to 76452 in October,

2018.

1.4CUSTOMER SATISFACTION

The customer satisfaction is the main objective of every business organization.

In this competitive business environment, each and every activity starts and ends with
the customer. In the present scenario, the Telecommunication is the lifeblood for
every business activities, even though in this industry there is stiff competition
prevailing between the service providers. The increasing competition and dynamic
environment, every firm need to identify, anticipate and satisfy customers to
maximise profit. Customer satisfaction is one among the most vital problems
regarding business in any form of organization that is even by the customer-oriented
philosophy and also this principle is needed to continuous improvement. Customer
satisfaction is a collective outcome of perception, evaluation, and psychological
reactions to the consumer expectation with a product or a service. It‟s a customer‟s
overall evaluation of the performance of an offering. The overall satisfaction has a
strong and positive effect on customer loyalty intentions across a wide range of
product and service categories.Customer satisfaction is a person feeling of pleasures
or disappointments from examination a product perceived performance in regard to
his/her expectation while not the customer. It's not possible for any business to sustain
itself. Achieving the specified results is often a result of customer actions.Therefore,
any business without a focus on customer satisfaction will remain irrelevant in the
market place; observe low customer patronage, poor customer retention, and loyalty.
As a result of the rapid increase of all nocks and corners of our society, it's pertinent
for companies to imbibe the concept of customer satisfaction in their operation to
achieving customer loyalty, retention, patronage, recommendation, and an increase in
sales volume. This analysis work shall try and examine the relationship between
customer preference and satisfaction quality of services towards the JIO network
provider.
 17

1.5CUSTOMER PREFERENCES
Customer preferenceis the expectations of the consumer likes and dislikes,
motivations and inclinations that drive the buying decisions. They complement
customer desire in explaining customer behavior. If a customer desire in
telecommunication and they prefer the quality of services, data network, schemes and
offer particular style, brand name etc.,
Consumer preference is defined as the subjective tastes of individual
customers, measured by their satisfaction with these items once they have purchased
them. This satisfaction is commonly referred to as utility.
Consumer preferences are measured by the satisfaction of a particular item,
compared to the opportunity cost of that item since whenever you purchase one item;
you forfeit the opportunity to buy a competing item.

Why Consumer Preference is Important?

Consumer preference is important because of what type of products people

can purchase within their budget, understanding consumer preference will provide an
indication of consumer demand. This information can help to make sure that you have
enough products to satisfy demand and will help you confirm the price for your
products. For example, in dressmaking company must know what women prefer in a
dress will help determine which colours and fabrics will sell better than others. The
products are also comparable to more expensive brands will be able to sell them at a
higher profit. On the other hand, if your competitors provide similar dresses for less
money that is also preferable to yours, you may need to reduce production, change the
design or reduce your profit to ensure that you are not left with too much inventory at
the end of the season. The preference for one product over anotherproduct increase,
one product may outsell the other even if the price is much higher. However, once the
preference is negligible, and the price and availability become the determining factors
over that one will sell higher.

1.6 CONCEPT OF THE STUDY

Consumer preferences and satisfaction hold importance for managers of both
the profit and non-profit organization for policymaking. In modern marketing, the
firm‟s success depends on customer satisfaction.Therefore, the knowledge of “what
the customer thinks” and “what consequently would contribute to his satisfaction” is
 18

the requirement of the marketer. Information Technology has changed the present
socioeconomic environment enormously. The expanded horizon of
telecommunication has led to a substantial increase in cellular services.

The fast-changing information system and high-tech technological products

have affected the business activities of the country. The telecommunication services
in India have witnessed a phenomenal change over the last few years and cellular
service sector has increased. The present study assesses the customers‟ preferences
and satisfaction towards Reliance JIO network service providers in Chennai city.

1.7 NEED FOR THE STUDY

The customer satisfaction is the core objective of every business. In this

competitive business scenario, each and every activity starts and ends with the
customers, within the present state of affairs, the telecommunication is that the
lifeblood for every business activity; even in this industry is in stiff competition
between the service providers. In spite of a swellestablished network and
infrastructure support, certain net workservice providers were not able to root their
footsteps in the market due to lack of customer service and satisfaction for the reason
that of, their promotional initiatives not yielded fruitful results and there is a minor
difference between the services offered and service rendered, there's more possibility
for the subscriber is to change from one service provider to another based on their
satisfaction. Hence, it's very essential for the service provider to know the preference
of the subscribers and the satisfaction level to win the hearts of the shoppers.

The present study has some innovative aspects towards the customers‟
preferences such as their sensitive reactions in the form of shifting the other network
in to the JIO network. The study brings out the factors influence to select the present
network of JIO subscribers. The study also reveals the customers' influence and
satisfaction towards Reliance JIO network service providers in Chennai city.

1.8 SCOPE OF THE STUDY

A major stimulus in this shift is the movement to information age spurred by

the invention of the computer and the advancement of telecommunications. Many
countries are having a base for service oriented; the demand for service further holds
 19

enormous potential. The factors are contributing to the growth of the service sectors
are higher per capita income, increased time pressure, advanced in technology,
increasing competition from globally, greater life expectancy and cost-effectiveness
drives the growth of service chains network and service quality movement. Thus,
tremendous growth of service sector implies the role of marketing in terms of infinite
opportunities and implications, marketing opportunities arising from new technology,
in franchising from fewer regulations and professional restrictions in servicing
physical goods and international markets. The various factors that lead to the
satisfaction level of customers are speed, connectivity, customer care, getting new
connections, compatibility by using these factors to measure the preference and
satisfaction towards Reliance JIO network service providers in Chennai city.

1.9 STATEMENT OF THE PROBLEM

Telecommunication sector is an emerging reality in the market that becomes a
multi-polar consumer universe. There are many more customer segment than before
and they behave much more differently than before. The big challenge for telephone
operators would be not just to differentiate from their competitors but to deliver
differentiated products and services so, that different audience gets a relevant
solution. Customers are increasingly exercise informed choices and information
technology/ advanced platform will be the key to this „interactivity‟ with the
customers in the modern world. Service providers should continue to play a vital role
in providing assurance of quality services to the customer in this highly competitive
scenario. Since, customer engagement with service is continuous; survival providers
near in future will be possible only if they can maintain consistency and quality on
many dimensions rather than just one. While selecting the service provider the
customer considers, the network, price, value addition, relevant innovation, brand and
service support that has become important and necessary. The rapid growth of the
mobile industry in India is led by join forces again and redirects their energies to see
the sector through to the next phase.
At present, the demands for mobile phones network services are increasing.
There are many players providing network services to the customers. To market their
services every company is adding many new features and the subscribers are provided
with various schemes for their services. The market for mobile phone has become
very competitive. The cut-throat competition among the network providers they must
 20

to satisfy the customers and get their loyalty through innovative products. The
innovative technology is primarily considered as orientation towards customer
satisfaction, loyalty and to gain market potential that increases the market share of the
company. In addition to the signal quality, price structure, and network coverage is
always an essential criteria for selecting service providers. If any problems in the
above criteria it is very important for any customer to know where he can address his
complaints which will be given the proper consideration. Currently, this study is to
undertake to study Reliance JIO network are providing valuable service to promoting
customer satisfaction. This study is the concern for assessment of customer preference
and satisfaction on the basis of several factors like service preferences,
innovativeness, service consistency, and quality of the network, pricing, and offering,
fulfillment of customer demand, value-added service and brand value.
Now-a-days customers are more dynamic as compared to the previous days
and their wants, taste, desire and preferences are changing depends upon trend
available in the market. Hence, the development of the mobile industry is mainly
based on customer satisfaction. In this backdrop, an attempt is made to study the
Reliance JIO network service throws insight into the customer preferences, factors
influencing to select the services and satisfaction of the services and in addition, may
suggest enhancements inappropriate measures for better functionality and/or
serviceability. Such a study may also manifest the opportunities and puts forward
possible corrective and control measures to be taken in future. Thus, it has been felt
by the researcher to carry out the current study on customers‟ preference and
satisfaction towards Reliance JIO network service providers in Chennai city.
In this context, the following questions were raised:
1. Which is mostly preferred by the JIOcustomers?
2. Whichfactors influencing of the RelianceJIO network services?
3. Whether the service provided by the JIO Network is satisfiedare not for the
customers?
4. Is there any problems faced by the customers about RelianceJIO network
services in Chennai city.

1.10 OBJECTIVES OF THE STUDY

The following are the objectives of the present study:
1. To study the growth and performance of mobile industry in India.
 21

2. To measure thecustomer preferences towards Reliance JIO

Telecommunication services.
3. To examine the factors influencing the RelianceJIO network services in
Chennai city.
4. To analyse the level of customer satisfaction towards Reliance JIO network
services in Chennai city
5. To identify the nature of problemsof the customers about the Reliance JIO
network services in Chennai city.
6. To understand and offer valuable suggestions to improve the Reliance JIO
network connections about service providers.

1.11 TESTING OF HYPOTHESES

Based on the objectives, the following hypotheses are concerned with the
personal (demographic) variables in relation to the research variables and the
following null hypotheses are formulated and tested:
H01: There is no significant difference betweenthe demographic
variablesand customer preferencestowards JIO network services.
H02: There is no significant difference between the demographic profile of
the respondents and factor influencing to select JIO network services.
H03: There is no significant difference between the demographic profile of
the respondents and customer satisfactionin the JIOnetwork services.
H04: There is no association between purpose using mobile phone and
satisfaction in the JIO network services.
H05: There is no significant difference between period of using mobile
phone and satisfaction in the JIO network services.
H06: There is no significant difference between demographic profile of the
respondents and customersproblemsin the JIO network services.

1.12 METHODOLOGY
The present study is aims to understanding and exploring characteristics of
customers particularly JIO network preferences and customer satisfaction. The present
study is both explorative and descriptive in nature. This study is aims to obtaining the
answers relating to the research questions. The data selected for the study are
 22

questionnaire, literature, Government reports and TRAI reports. Initially, qualitative

research was adopted to identify the factors contributing to customer preferences and
satisfaction of JIO network service subscribers.This research work on mobile service
customer satisfaction was reviewed to initially determine the variable, worked as a
guideline for conduct in-depth questionnaire with 45 respondents who were using
Reliance JIO network serviceproviders.
A well-structured questionnaire was developed based on the finding of the
interview. The schedule inquired about the actual perception of performance on each
item. A five-point Likert scale was used to measure the preferences and satisfaction in
each item, where I represented very poor/highly dissatisfied to 5 for excellent/highly
satisfied. The questionnaires also included demographic and research variables.

1.13 COLLECTION OF DATA

Primary Data
Primary data have collected through individuals using structured
questionnaires. Primary data are the original sources from which the researcher
directly collected data, in the other words they are first-hand information collected
through various methods such as interviewing customers, circulation of questionnaires
to respondents of Reliance JIO service providers and observation. The questionnaires
were pre-tested wherever possible and the questions were structured to facilitate the
speedy completion.

Secondary Data
The secondary data has required for the study tocollect from the annual reports
of Telephone Regularity Authority of India (TRAI). The secondary data has also been
collected from Journals, year book of statistics, Indian Telecom Policy, Department of
Telecommunication, published a report of World Telecommunications Development,
Books and various websites of the cellular operators.

Sampling Procedure
The sample for the main study includes the customers who use the JIO
network connection in Chennai city. The target population for the data collection
included individuals who are using JIO network and currently residing in various
parts of Chennai city (North Chennai, South Chennai and Central Chennai,). The
samples of 800 customers have been selected from the study area of Chennai city. The
 23

selected JIO customers have been distinguished into different stages. The
classification is done on the basis of geographical area and administration factors in
Chennai city. In the first stage, the Chennai city has divided into three areas of North,
South and Central places. In the second stage, 16 Taluks have been taken for the
study. In the third stage, 50 respondents are randomly selected from each Taluk in
Chennai city. All the respondents are contacted directly and the researcher explains
the purpose of the study. Almost more than eighty-five percent of the respondents
helped with willingness and provided the necessary information as given in the
Questionnaire. Therefore, the sample consists of 800 JIO network users in Chennai
city has selected for the study. The area sampling method is used to collect the datas
from Chennai city.

1.14 SAMPLING DESIGN

The present study is an attempt to analyze the customer‟s preference and
satisfaction towards the JIO network connection in Chennai city. To collect enough
data to test hypotheses, a survey was conducted to collect data from the sample.
Totally, 800 questionnaires were distributed randomly to customers of JIO network
connection of sixteen Taluks in Chennai city. Equal numbers of customers wereasked
to fill the questionnaires for each chosen Taluks. Subjects were asked to assess their
perceptions of various items representing service preference and satisfaction.
Assessments were based on A Five-Point Likert scale ranging from “strongly disagree
(1) to “strongly agree (5) was used to measure the customer preference, motivating
factors and satisfaction. A total of 676 of these questionnaires were completed and
used in the data analysis representing a response rate of 84.50 percent. The sampling
distribution of the respondents in Chennai city has presented in Table 1.1.
 24

Table 1.7
Sample Respondents in JIO Network
S. Revenue Number of
Total
Taluk Name Respondents Rejected Percentage
No, division selected
Sample

1 Thiruvottriyur 50 9 41 6.07
2 Tondiarpet 50 11 39 5.77
Chennai
3 Madhavaram 50 9 41 6.07
North
4 Perambur 50 7 43 6.36
5 Purasawalkam 50 9 41 6.07
6 Ambattur 50 6 44 6.51
7 Ayanavaram 50 7 43 6.36
8 Chennai Aminjikkarai 50 9 41 6.07
9 Central Madhuravoyal 50 8 42 6.21
10 Mambalam 50 7 43 6.36
11 Egmore 50 7 43 6.36
12 Guindy 50 6 44 6.51
13 Mylapore 50 7 43 6.36
Chennai
14 Velachery 50 5 45 6.66
South
15 Alandur 50 8 42 6.21
16 Sholinganallur 50 9 41 6.07
Total 800 124 676 100.00

1.15 STATISTICAL TOOL ANALYSIS

The data would be collected through the well-structured questionnaires were
classified and tabulated for analysis in accordance with the outline laid down for the
purpose of justifying the objectives framed at the time of developing a research
design. To analyse the data and to draw inference the following statistical tool, Data
collected through primary and secondary data are classified and grouped with the help
of frequency tables. The data collected from the stores and respondents were analysed
through simple percentage, Mean, Standard Deviation (SD), Chi-Square test, One-
Way Analysis (ANOVA), T-test, Correlation Analysis, and Factor Analysis. The
reliability and validity analysis of the data in this study were analysed using the
Statistical Package for Social Sciences (SPSS v 20.0).
 25

1.16 OPERATIONAL DEFINITIONS

1.16.1 RelianceJIO Network
Reliance JIO network is owned by Reliance Industries Limited and
headquartersof Navi Mumbai, Maharashtra. Reliance JIO operates a national LTE
network with coverage of 22 telecommunication circles. JIO does not offer 2G or 3G
servicebut instead uses voice over LTE to produce voice service on its network.
JIO offer High-Speed Internet service is a fourth generation (4G) of mobile
technology that enables the delivery of high-speed internet services. LTE denotes that
Long Term Evolution of telecom technology that gives High Definition Voice and
High-Speed Internet Access.
The logo of Reliance‟s JIOis a „mirrorreflection‟ of the word OIL and
the logo throws light on the Reliance's journey from Oil and Petroleum exploration to
the world of Telecom & Data Mining.

1.16.2 Network Quality

The network quality indicates the excellent signal for indoor coverage as well
as outside coverage, voice clarityand no connection breakdowns.

1.16.3 Price
Price is the amount paid for obtaining to access the usage of network services.

1.16.4 Customer care

Customer care refers to the standard of the information exchanged between
customer and supplier or network provider in response to enquiries and alternative
activities initiated by the network provider, for instance, presentation of invoices.

1.16.5 Personal Benefits

Personal benefits are the level of perception of the benefits of mobile
communicationservices by individual customers.

1.16.6 Perceived Value

Perceived value is a customer “the advantages or benefits”has received in
relation to total price (which include the amount paid and also alternative cost related
to the purchase) or the customers assessment on the overall benefit received in
relation to what is given”
 26

1.16.7 Service
“A service is a package of specific and implicit advantages performed with a
supporting facility and using facilitating goods”. Service isrelating to primary or
supplementary activity that does not directly produce a physical product - that is, the
non-goods a part of the transaction between customer and provider" (Payne, 1993)

1.17 PRE AND PILOT STUDY

The pre and pilot test check the reliability and appropriateness of the
questions. A sample of 45customers is selected from RelianceJIOservice users. The
variables reliability on each construct was confirmed through the pilot study. On the
basis of the resultsfor the pilot study, a certain modification in the statements or
variables was made. The final questionnaire was prepared for data collection.
Accordingly, the questionnaire has been modified and restructured give meaningful
results of the study.

1.18 QUESTIONNAIRE DEVELOPMENT

The structure of the questionnaire has been designed to achieve the objectives
of the study as follows:
The questionnaire consists of six important parts. In the first part, the personal
information of the customers and the profile of the customers towards Reliance JIO
network services were discussed. In the second part, the customer preferences of JIO
telecommunication services the following factors in the selection of the particular
service render factors were examined at eleven different dimensions. In the third part,
the customers‟ satisfaction factors were discussed at eleven different dimensions. In
the fourth part factors influencing of the particular services discussed at two
dimensions. In the fifth part, customer behaviour factors were discussed at seven
different dimensions. In the final part the nature of the problems faced by the
customers were discussed at six different dimensions and were analyzed.

1.19 VARIABLES OF THE STUDY

Variables of the study are identified with the help of literature and usage
pattern of the customers with respect to the Reliance JIO network services. In social
science studies, two types of variables are used. They are personal information
variables and research variables.
 27

The first category of variables includes age, gender, educational qualification,

occupation, marital status, family income, monthly expenditure, expenditure and so
on.
The second category of variables includes the following:
1. Customer preferences oftowards JIOTelecommunication.
2. Factors influencing to select the JIO network services
3. Level of customer satisfactionofthe JIO network services
4. The Problem faced by the customers about RelianceJIO network services

1.20 MEASUREMENT AND SCALING TECHNIQUES

The present study measures the following aspects namely, customers‟
preferences and their satisfaction. Preferences and satisfaction of the customers is
measured with the help of five point-scale such as
 Highly satisfied
 Satisfied
 Neutral (neither satisfied nor dissatisfied)
 Dissatisfied
 Highly dissatisfied

1.21 PERIOD OF THE STUDY

The study of customerpreferences and satisfaction towards RelianceJIO
network service providers in Chennai city is made for the period of one year from
April2017 to March 2018.The primary data is covered six months from 1st April 2018
to 30th September 2018.

1.22 RELIABILITY STATISTICS TEST

The reliability test is denoted by the reliability coefficient. The reliability test
expressed as a number ranging between 0 and 1.00, with r = 0 indicating no
reliability, and r = 1.00 indicating perfect reliability. Generally, the reliability of a test
as a decimal, for example, r = .80 or r =.93. The higher reliability coefficient is highly
reliable the test scores.
 28

Table 1.8
Reliability Test
Cronbach's Alpha
Cronbach's Number
Factors Based on
Alpha Standardized Items of Items
Customer Preference on JIO
0.776 0.762 9
Telecommunication?
Consumers Preference with Brand
0.801 0.807 5
Name and Acceptance
Personal Factors influencing to
0.715 0.720 4
select the JIO services
Non-Personal Factors influencing to
0.773 0.776 5
select the JIO services
Purchase Decision based on service
factors influencing to select the JIO 0.861 0.863 9
services
Satisfaction level of Core Services
0.841 0.842 6
Offered by JIO Network
Satisfaction level of Supplementary
0.771 0.743 12
Services Offered by the JIO Network
Communication Problems 0.608 0.685 5
Problems in Price/Tariff Structure 0.651 0.652 4
Problems in Customer Care 0.791 0.799 4
Problems Faced in Value Added
0.657 0.660 5
Service
Call center Problems 0.922 0.921 7
Source: Computed from Primary Data
The Table 1.2 shows the Cronbach‟s alpha valueshows the maximum
level of internal consistency for all the variables of customer preferences on
JIOservices, consumers preference with brand name on JIOservices, personal factors
influencing to select the JIO services, non-personal factors influencing to select the
JIO services, purchase decision based on service factors influencing to select the JIO
services, satisfaction level of core services offered by JIO network, and satisfaction
level of supplementary services offered by the JIO network services on Chennai city.
Similarly, the variables of problems on JIO network communication problems,
problems in price/tariff structure, problems in customer care, problems faced in value
added service and call center problems.

1.23LIMITATIONS OF THE STUDY

The study focuses the customer preferences and satisfaction towards JIO
network service providers in Chennai city, the following limitations of the study as
under.
 29

1. The finding depends purely based on the opinion of the respondent, which
could be based on nature.
2. Due to time constraints, the researchers covered only Chennai city.
3. Mobile phone, cell phone and cellular service terms used interchangeably.
4. The study is mainly based on the random sampling method. Hence, the
findings of the study cannot be universal.

1.24CHAPTER ARRANGEMENT
The present study is organized into five chapters as follows:
The first chapter “Introduction and Research Design”, The introduction
includes the growth of telecommunication in India, privatization, mobile phone
generations, a growth of telephone users and cellular service providers in India and
RelianceJIO users.This research design includes concept, need for the study,
statement of the problem, review of literature, objectives of the study, hypotheses of
the study, operational definitions, methodology, scope of the study, period of study,
sampling design, study area, pilot study, data collection, tools used for analysis and
interpretation, limitations of the study and scheme of reporting.

The second chapter deals with “Review of Literature”in network service

industries, despite the fact that a lesser work has been done especially in the
telecommunication department in India and Abroad.

The third chapter contains “Analyse the CustomersPreferences and

Satisfaction Regarding RelianceJIO Network Service Providers” describes the
social and occupational background of the cell phone users as well as the customers‟
satisfaction regarding various services.

The fourth chapter, „Problems faced by the Customers on JIO Network

Services (Users)”, deals with the specific problems faced in the marketing as well as
using cell phones. It also suggests possible remedial measures to overcome difficulties
and challenges in the field of JIO services.

The fifth chapter presented the “Findings on Research Work, Suggestions,

and Conclusion”. Suggestions have been offered to solve the problems faced by the
cellular service industry. In the final chapter, certain areas have been identified and
recommended for the scope for future research.