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Related Books Free with a 30 day trial from Scribd. Related Audiobooks Free with a 30 day trial from Scribd. Pestle analysis — telecom sector 1. Political Analysis 6. Most of the service providers have covered majority of the urban population of India.
But the penetration of mobile phones in many far and interior villages is yet to be done. The rural population of India, which is untapped, is a huge proportion of the The economic reforms and proactive policies of the Government have further fuelled the growth of this sector in India. The huge potential in this sector has attracted a vast competition resulting in decreased costs to consumers and thereby making services more affordable.
In spite of huge demand matched up by the service providers there is a mismatch between demand and supply in the telecom industry. For example, the demand for 3G and 4G spectrum is more among mobile phone service providers in many states of India but the supply of spectrum by the Government is not meeting the demand of the service providers.
A very high percentage of total costs are fixed in telecom. The All infrastructure industries have costs borne by a tower company for safeguard and security of high fixed costs. However, telecom operating a tower are majorly fixed in nature. Also, ownership is the only infrastructure industry of telecom license contributes to a major proportion to the total that has zero variable costs for fixed costs and can represent a huge barrier to entry.
There are many of its outputs. Other heavy no variable costs for usage and only a small variable cost for a infrastructure industries have new access line. Marginal Cost MC is the cost of producing an major costs that fluctuate with additional unit of output e. In most of the telecom companies the MC is zero railroads and so on.
Telecommunications is a costly and dear business. The market players need to be big enough and produce sufficient cash flow to absorb the cost of expanding and conserving networks and services that become redundant overnight. Transmission systems need to be replaced as frequently as two years. For little operators, the financial challenges of keeping up with swift technological change and depreciation can be monumental.
Pricing The spectrum prices have increased considerably and as a result expansion requires huge capital investments. Though the subscribers are increasing year after year, due to bottleneck competition, the tariff rates in India are the minimal in the world. The call rates have dropped from INR Operators have been announcing new promotional schemes including reduction in tariffs for voice calls, slashing roaming charges and many more lucrative offers. Due to the fierce price wars, the profit margin and return on capital has been declining over the years.
The absence of major differentiation in the services has lead to a low brand loyalty among the users.
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