The Effectiveness of the Newly Executed Distribution Network Of Pacific Bangladesh Telecom Limited
PORTRAIT OF THE ORGANIZATION
2.1 The Company
Pacific Bangladesh Telecom Limited (PBTL) is the first mobile phone service provider in the Indian Subcontinent, with its inception in 1993. The address of the Head office: “Pacific Centre”, 14, Mohakhali C/A Dhaka 1212. PBTL was founded by Pacific Group Limited and Hutchison Whampoa Limited. “CityCell” is the brand name under which PBTL provides wireless telecom or mobile phone service and products to its customers. PBTL is one of the companies of the Pacific Group. The Pacific Group is involved in various businesses including:
Pacific Group of Companies (since 1967)
Fisheries
Banking
Automobiles
Tea
Pharmaceuticals etc
PBTL is also the only operator in Bangladesh supporting two mobile technologies – AMPS and CDMA, while providing, in addition, Cellular and Fixed wireless services.
Pacific Group Limited
The Pacific Group is a group of companies under common ownership. The group has interests in automobile service (Pacific Motors Ltd.), consumer electronics (Pacific Industries Ltd.), fisheries (Bengal Fisheries Ltd.), tea (Noyapara Tea Company Ltd.) and telecommunications (Pacific Bangladesh Telecom Ltd.). This group of industries was founded by the renowned industrialist and current honorable foreign minister – Mr. M. Morshed Khan.
Hutchison Whampoa Limited
Hutchison Whampoa Limited (HWL) is a Hong Kong based diversified, multinational company with origins dating back to the 1800s. As part of the Li Ka-Shing group of companies, HWL’s ultimate shareholder is Cheung Kong (Holdings) Limited, which has a 49.9 % interest in the Company. In terms of market capitalization, HWL is one of the largest companies listed on the Hong Kong stock exchange. With over 150,000 employees worldwide, the Group operates five core businesses in 41 countries.
The Company History
In October 1990, Hutchison Bangladesh Telecom Limited (HBTL) was formed as a joint venture between Bangladesh Telecom Limited (BTL) and Hutchison Whampoa Limited of Hong Kong. In March of that year BTL had been issued a license by Bangladesh Telegraph and Telephone Board (BTTB) for operating cellular, paging and other wireless communication networks. The joint venture agreement with Hutchison gave HBTL the right to use BTL’s cellular license while Hutchison would provide financial support to BTL. However, soon there was legal dispute between BTTB and BTL regarding the BTTB’s refusal to provide Public Switch Telecommunication Network (PSTN) channels, which ensured connectivity to the BTTB network. The Supreme Court then ruled in April 1993 that BTTB would have to provide PSTN connections to HBTL, and that BTL would have to transfer the cellular portion to the license of HBTL. Bangladesh Telegraph and Telephone Board gave HBTL the PSTN connections in August 1993 and HBTL began commercial operation of the first cellular telephone service in Bangladesh in the same month. The owners of HBTL, however, decided to sell their stakes in the company due to the legal war. HBTL’s shares were divided into two parts: Type A, which was held by BTL and Type B, held by Hutchison. Each type of share represented 50% title of HBTL. Pacific Motors Limited bought the type A shares while Hong Kong based financial investors Far East Telecom Limited bought the Type B shares. On 12th February 1996, HBTL was renamed Pacific Bangladesh Telecom Limited (PBTL). PBTL uses the brand name CityCell to market its cellular products. In order to boost the financial and also the managerial strength of PBTL, the shareholders of the company have completed the transaction under the agreements in which Fujitsu Limited, Japan and Asian Infrastructure Development Company (AIDEC), established in Cayman Islands, would acquire 10% and 20% equity shares in PBTL, respectively on June 2000. With this acquisition of 10% shares by Fujitsu Limited, a Global Fortune 500 company, they have further strengthened their presence in Bangladesh and have also demonstrated confidence as well as their commitment to the Bangladeshi market. Fujitsu has long been supplying Microwave links and telecommunications equipment to Bangladesh Telegraph and Telephone Board and is clearly a leading market player in providing telecommunication solutions in Bangladesh. Being 10% equity shareholder of the company Fujitsu is in a position to nominate 1 (one) Director to the Board of PBTL.
Mission, Vision, Objectives, Goals and Strategies
2.3.1 Mission
PBTL’s mission statement is “To be the most successful cellular, paging and other wireless service provider in Bangladesh by virtue of having greater operating expertise.” This mission statement puts into perspective a few points regarding CityCell. Their inherent emphasis is on quality, not cheapness of service. The first priority is to provide a high-end service that can be used for both commercial and personal use.
Vision
The vision of the company is “To continue to be the leader in the telecom industry in the region and provide a complete communication solution to our customers with a smile.” It may be noted that there is an emphasis on strong customer relations. This is important to CityCell especially as, until recently, they positioned their packages as high-end packages. This means that they need to promote their packages especially to corporate and business users. Such customers will require strong support for brand loyalty to develop.
Objectives
The business strategy of CityCell is focused around two objectives:
Qualitative Objectives
§ Increasing service offerings.
§ Expanding the network.
§ Creating innovative, unique, and cost-effective various products to customers.
§ Increasing loyalty by focused customer retention program.
§ Develop operational procedure for the fast deployment of service.
Quantifiable objectives
§ Increase subscriber base over 1 million on the network by December 31, 2006 with 99.8% overall network availability.
Goals:
The current strategic goal of the company is to occupy a unique position in Bangladesh in the telecom sector. One way to achieve this is to develop a strong subscriber base to be able to penetrate in the markets with other attractive products.
The ways to ensure a strong subscriber base is to:
Meet customer requirements
Establish technological leadership trough choice of appropriate technology
Establish service leadership through quality manpower
Expand the footprint of cellular coverage
Expand the customer base
Workforce
CityCell has currently 540 permanent employees under direct payroll. There are 146 part timers working currently. The Customer Care Division is the biggest department in CityCell at the moment with 112 employees.
Organizational Structure
CityCell has just recently introduced the post of the CEO and established the Human Resource Department (HRD). The name of the new CEO is Mr. Chai Hoon Pin, a Chinese executive with vast international experience in the telecom business. The CEO has taken over the activities that the former MD, the son of the owner of Pacific Group of Industries, Mr. Faisal Morshed Khan, used to perform. The Vice President (VP) of the Human Resource Department (HRD) joined in March of this year. The activities of the HRD have been defined. No Assistant Vice President (AVP) has yet been hired for this department.
The marketing and sales department makes up the office of the Chief Marketing Officer (CMO), who is also the VP of the department. The office of the CMO decides down into four sub departments with an AVP in charge of each. A senior VP is in charge of the whole engineering department while three other VPs are assigned for Switch, Base Transceiver Station and Planning & Development. There are AVPs for each section of the engineering department except Power, which is directly under the charge of Senior VP. It has to be mentioned that there are two other posts after the AVP: senior executives and executives who have managerial authority. There are also advisors assigned for various departments who are not direct employees but have directorial level status above the VPs and below the CEO. There are currently two advisors working in the Engineering and Marketing & Sales department. Further levels of employees exist under the executives, officers and senior officers.
To facilitate the overall process the ranks of drivers and peons also exist. The Charts below represents the organogram of the company:
Figure2.1: CityCell Organogram
Sales & Marketing
As the name implies, this division’s job is to conduct marketing promotion for CityCell. The job of its employees is to maintain a good distribution channel relationship, media, and corporate clients. This division also deals with value added services, brand and product design. In the Sales Division there are Channel Sales, Corporate Sales and Direct Sales. In the Marketing Division, there are Market Communications, Brand, VAS, Product Development and FWT & Backbone Departments. The Senior Vice President is the Chief Marketing Officer of this Sales & Marketing Division.
Customer Service Operation, Billing and IT:
This department deals with customer after the sale occurs. Main activities of this department includes maintaining a database of the customers, preparing, distributing, and collecting the bills, activating new connections, deactivating connections, helpline service, interchanging of the CDMA sets, collecting the faulty and repairable sets, returning repaired sets, changing CDMA sets and so on. This department is divided into two divisions:
1. Billing & IT and
2. Service Delivery
Figure 2.3 Service delivery
Finance and Commercial
This department is divided into two divisions, a) LC preparation and Purchase, and b) Fund Management. Here LC is opened for purchasing of sets and equipment, and all the funds collected are used and controlled for the maximum benefit of the company. This department is also responsible for the budgeting which takes place once a year for the next three years.
Figure 2.4: Finance and Commercial
Engineering
This department is responsible for the setting up and maintenance of the heavy equipment and the major telecom channels required for providing services to customers. This department is divided into 7 divisions. They are Switch, Central Base station, Microwave, Radio Frequency, Base Transceiver Station, Power, Planning and Development.
Accounts
This department is responsible for collecting direct cash or check or charging credit cards from the customers who are paying for the service and equipment. This department is also responsible for maintaining the balance of store where sets and equipments are gathered for future purpose and present operation.
Administration and Human Resource
As the name implies, this department has three major divisions. The Administration division is responsible for Contract, Legal and Protocol & Government affairs. The Purchase & General Maintenances is responsible for Purchase & Support and Estate & Properties, Maintenance & general security. The Human Resource department is responsible for procuring future employees according. This department is also responsible for maintaining the database of all employees, leaves, attendance, health care and related fields of employees.
Figure2.5: Administration and HR
Business Strategies of Citycell:
CityCell is a service-oriented company as it provides wireless telecom service. Their primary business according to CityCell is to sell wireless telecommunication packages to the customers and provide customers with comprehensive wireless telecommunication solutions. CityCell, since its inception in 1993, has targeted a niche market of the rich businessmen who would need information on the move or use it as a luxury item. It had a “Blue-Blood” image at that time by following a premium pricing policy. It was the right decision at that time and CityCell made a good bit of revenue by doing so. But with the emergence of GrameenPhone and AkTel, CityCell has had to change its business policy. It could not survive in the long run with the “Blue- Blood” appeal. It brought down the prices of its mobile packages from what was Tk.150,000 in 1993 to 15,000 at around the year 2000-01. And today, the lowest price of their package on offer costs around Tk 1399 only. CityCell has had to establish a mass-market strategy as it now targets every segment of the mobile telephony market. Some of these strategies are depicted below:
Functional Level Strategy
PBTL’s focus is on efficiency, quality, innovation, and customer responsiveness. CityCell’s functional level strategy deeply concentrates on being customer responsive. It wants to grow its business by providing superior customer service to the customers. And for that, as already stated, CityCell has a 99 member customer service team working for them 24 hours a day, on the Helpline or the front desk 7 days a week. Not only that, but CityCell has just recently introduced a slogan saying, “Because We Care”. The strategy suits the company since care is what they strive to provide, especially in the face of competition such as GrameenPhone , AkTel, Banglalink and Warid.
Business Level Strategy
The business level strategy of CityCell is that of differentiation. As CityCell targets everybody from small businessmen of a small town to the big corporate of the urban area, it has packages for everyone. There are the prepaid mobiles for the cost conscious people and those with monthly rents of Tk.500. It has prepaid mobile-to mobile packages and 24 hours BTTB connectable prepaid packages. The packages offered will be classified in depth in the marketing mix part of this section.
PBTL applies both cost leadership and differentiation strategies as their business level strategies. CityCell wants to increase market share by expanding the network by ensuring the lowest call rate within the industry.
Corporate Level Strategy
PBTL follows related diversification as their corporate level strategies. The management of PBTL is already involved in diversified businesses of automobiles, banking, tea gardens etc. But PBTL itself has no plans of any sort of backward integration, which would be creating technologies like CDMA or forward integration to make mobile sets themselves.
Global strategy
CityCell does not have any Global strategies as it is still in a growth stage within Bangladesh. But just to keep within reach, some of the mobiles do have ISD connections.
Marketing Mix of CityCell
CityCell now follows the mass-market strategy. It has long passed the days when it used to be the monopolistic cellular phone company selling its connections with sets at Taka150, 000. Now it wants to serve all segments of mobile users from low end users to corporate all over Bangladesh. The Marketing Mix or the 4Ps that CityCell follows are discussed below.
Product
CityCell’s products are the packages it offers. They offer both postpaid and prepaid packages for consumers since they wish to serve everyone.
Post Paid Packages1
The postpaid packages of CityCell are:
Jono Phone
CityCell 500
Shabar Phone
Aamar Phone
Citycell Premium
Prepaid Packages2
The prepaid packages are made for the cost conscious buyers who may be a student or even a businessperson. The user has total control on his mobile usage, because he knows how much money he is spending on making a call. The hassle of going to the bank to pay the bill is also easily avoided. But of course the rate is a bit higher than postpaid mobile call charges. It is currently the most effective tool for CityCell and other companies for growth in respect of gaining customers throughout the whole of Bangladesh. CityCell released its prepaid first in 2002, with the uniqueness of having TNT incoming facility. The pre-paid package of
CityCell is called “Aalap”.
The prepaid packages are:
Hello 0123
Mega Phone
Aalap Super Plus
Aalap Classic
Aalap Super
Aalap A
Aalap B
Aalap Call Me (with call2cash feature)
Hello Tomake
Set Classification
CityCell classifies its subscribers’ sets in two ways depending on where they buy it. The sets, which are brought by CityCell are called the “White Sets” and those which are not, are called “Grey Sets”.
Price
CityCell’s policy when it comes to pricing is to keep the lowest call rate possible per minute for the zonal calls. This is visible in their call rate policy compared to that of others.
When a customer brings his own set which is called “Grey Set”, he has to present a bank clearance to make sure that he/she has paid tax on the purchased set. The customer must also pay an additional charge of Tk.575 (including 15% VAT) to get the set programmed. This is for an existing number in a “Grey Set”. A new connection for a “Grey Set” requires the tax papers and an additional charge Tk.1675 either for a new prepaid or postpaid line. The customer has to pay a refundable fixed deposit for the postpaid packages. For any sort of connection the lowest price that CityCell has on offer at the moment for a set and connection is Tk.1,399 and the highest is Tk.8,999. The customer always has to pay 15% VAT for his/her bills (both pre-paid and postpaid) according to government regulations. The set price of CityCell includes the 15% VAT.
Place
The main emphasis of CityCell when deciding on place is convenience and proximity to customers. Dealers are not treated as the subordinate branches of the company. Instead, they are taken as partners in the endeavor to provide better services to customers. The primary marketing channel used is that of distributors who are at various locations. It is only natural, from a business point of view, that the density of dealers be highest in Dhaka. In other regions of the country, there are dealers in each main town of the various provinces where CityCell network exists. Network coverage has been increasing and so are the numbers of dealers. Logistics and transportation is handled primarily by the dealers. A certain amount of logistic support is provided to dealers for better supporting their activities for CityCell.
Promotion
The company that had once relied on its name to gain new market share now has to aggressively market their brand and packages among the Bangladeshi customers. The main advertising is done in newspapers. The advertisements have a general look targeted towards everybody. CityCell ads in the past used to emphasize on building a solid aristocratic image of the postpaid packages and a ‘light and happy’ image of the prepaid packages. But at the moment there is no differentiation in the ads because CityCell does not have any use of ‘aristocracy’ any more. It targets the general population. The ‘light and happy’ image is visible, however, on the advertisements in television and sometimes on newspapers. Overhead plastic billboard ads of CityCell are visible on every major and important roads of Dhaka. The slogan of these ads is the current theme of CityCell “More Than You Thought possible”.
Personal selling is done not just for phones but also for new data transfer services to corporate customers. This is done by the services marketing department under CSO and also by Corporate Sales department under Marketing and Sales.
The marketing department carries out public relations. It emphasizes on PBTL’s contribution to the development of the telecom industry in Bangladesh and the introduction of advanced CDMA technology. As part of their promotional activity the marketing department gives out banners, poster and calendars to its dealers. They dealers are also given a monthly allowance of around Tk. 2,500 for supporting CityCell activities. Notebooks and calendars are given out to corporate clients every year. For supporting sales activities CityCell had offered a free camera with every prepaid package brought. Then recently they offered “lucky” winner for all its packages. Prepaid customers could get free airtime ranging from Tk. 50 to Tk. 3000. Postpaid customers could get free rental ranging from a month to a year. Now CityCell is offering 15% discount on purchase of a single CityCell package and 50% on two. CityCell has probably carried out the most aggressive sales campaign recently than any of the other companies.
2.8 SWOT Analysis of CityCell
SWOT stands for Strength, Weakness, Opportunity, and Threat. This is a very important tool for a company to analyze its internal and external environment.
Strengths
Capital: CityCell has a huge amount of capital. As mentioned before, the Pacific Group, which is a well-established local organization of $1000 million, owned 90% shares of PBTL, and it was never required to borrow from banks or investors.
Competitive tariff structure: Price is a huge competitive advantage for CityCell. CityCell is the only organization selling CDMA mobile phones with both way T&T facilities at the lowest rate. For example, the lowest package rate of CityCell is Tk 1,399/= with T&T incoming and outgoing facilities (‘Hello Tomake’, pre-paid). With T&T facilities the other competitors are nowhere near CityCell. This package has a fantastic and a very innovative feature, Call2Cash, in which any subscriber of this package can ‘earn’ or collect Tk 0.25 per minute in his/her pre-paid account upon receiving a call from any CityCell mobile.
No ‘Busy Network’: Because of an enormous number of channels, access to CityCell mobile phones is very easy. The rate of call drops is very low. It possesses high quality voice and data transmissions.
Advanced technology: CDMA technology is the best technology for telecommunication. World class mobile operators and world class mobile phone manufacturers are advancing to this new technology. CityCell is one of the few mobile service providers which are using CDMA technology. The current CDMA 1X platform paves the way for easier migration to 3G technology.
Low Cost: CityCell follows low cost strategies that enable a greater profit margin for shareholders. It tries to cut cost in every possible way to maximize the strengths for future battle.
Centralization: PBTL is a centralized organization that helps in easier coordination of business activities.
Dedicated & professional management team: Dedicated core staff, willing to provide significant labor hours to accomplish targets.
Weaknesses:
Fewer staff: The number of staffs working for CityCell is not enough. Far fewer staff than actually required in terms of tasks to be completed.
New technology: CDMA is the latest technology but it is not widely used. A still more popular option is GSM. It is more difficult for CityCell to provide international roaming because of few number of CDMA operators around the globe.
Low network coverage: Though CityCell started to provide mobile telecommunication ten years back, it is still behind the other operators from the point of nationwide coverage. GrameenPhone was able to use the optical fiber network of Bangladesh Railway through strong lobbying with the past government for the next twenty five years. Therefore GrameenPhone’s expansion has been huge, whereas CityCell has covered roughly 58 districts all over the country with a poor infrastructure.
Lack of education: The subscribers are not educated enough to handle sophisticated CDMA mobile handsets effectively. Proper knowledge is essential to handle these mobile sets.
Opportunities
Advanced technology: Since CDMA technology is the latest in the wireless telecommunication industry and most effective one, it is likely to find even newer potential in the near future.
Secured data transfer: Secured data transfer means CityCell has the potential to be the leading player once more.
Leadership in telecommunication services: Bangladesh government has already started to provide license to private sectors to set up land phones. PBTL is the only mobile phone operator with nationwide mobile & fixed license. With full nationwide coverage and a huge capital investment from Singtel, it is possible to become the market leader.
Overseas expansion plan: The growing need for across border telecom services at lesser cost (e.g. with neighboring India, Burma, then onto Thailand, etc) can be an opportunity for CityCell.
Acquisition of Singtel: The acquisition of 45% equity stake of CityCell brings more opportunity. The company now has greater capital and more budget to invest on its network facilities. In fact, of the $118 million investment of Singtel in Pacific Bangladesh Telecom Limited, $90 million would be spent on network expansion plans 3.
Threats:
Technology factor: There is a high degree of acceptance of GSM technology over CDMA in local market.
Legal problems: Tough legislation against easy expansion into regional and international markets bypassing the state owned BTTB.
Newly imposed tax: In the fiscal budget proposed last year, the government imposed a Tk.1,200 tax on each and every SIM/RUIM card which would hurt the regional expansion plans, increase customer base in the lower segment and the profit motive for every operator including CityCell.
New competitors: If new, international competitors like ‘Airtel’ of India enter the local market with full coverage and low price, and then not only CityCell, but also other mobile operators would be in great trouble. Orascom (Banglalink) is already giving CityCell a run for its money and market share.
Global companies: In India, global companies like ‘AT&T’ of the United States and in Eastern Asia ‘Vodaphone’ of the United Kingdom is working well. They might wish to enter Bangladesh with higher capital. If so, it will be a huge threat for CityCell.
Company and Industry life cycle Stage
Although revenues appear to be steady, PBTL is losing customers steadily (declining market share) and, thus is predicted that within the next few months, revenues will also start to decline. This has happened in an industry which may be relatively low- growth currently but in which many believe that should prices of usage be decreased slightly and the telecom sector further liberized, it would grow significantly further.
Thus we may state the company to be having ‘question mark’ or ‘problem child’ status within the BCG matrix.
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If we consider the situation in terms of the life cycle scenario, we are forced to say that under current conditions, Citycell of PBTL is under the decline stage.
On the other hand, the industry life cycle stage may be declined as a shake out stage. The rate of growth has slowed as demand has approached saturation level under current conditions. Much of the demand for sets and packages are limited to replacement demand – both in terms of packages and also in terms of sets. This explains why PBTL is losing such a major portion of its customers many of them are leaving for more versatile and cheaper packages from other companies.
2.9 Unique Selling Proposition (USP) of CityCell:
The sources of these USPs are CDMA Technology, CDMA Operator, CityCell Company & CityCell Products. Please note that the basis for considering USPs is direct comparison with contrasting technology/companies (e.g. CDMA technology USP is derived by comparing it with GSM technology). Some USPs may be interpreted as beneficial, detrimental or neither, depending on the situation, customer & market approach.
This is a consolidated list of major USPs. It is up to the sales individual’s judgment which USPs to emphasize in a particular situation.
2.9.1 CDMA Technology USP:
Each frequency/channel is individually encoded for transmission: voice transmission is more secure, uninterrupted
Data transmission is much faster (2 MBPS) compared to GSM (384 kbps) and more secure
Due to high level encryption (1033 possible decryption combinations), BTS level snooping/cloning is virtually impossible
Background noise in voice calls can be more effectively suppressed compared to any other technology; voice quality is better
Soft handoff from one BTS to another BTS is possible – low risk of call drop while a person is moving from one place to another
CDMA became commercialized for mobile communication much later than GSM technology: later technology – better technology
More efficient network deployment & management, in terms of Cost
Technical maintenance
Scalability
Per customer resource usage (32 customers per BTS channel)
Least handset radiation level among all existing technologies
Ability to lock individual handsets
Average handsets are smaller
Handsets require a lot less power (depending on the state of network)
Programmable handset
RUIM based handset
Signal strength is more reliable across greater distances
Can accommodate progressively higher traffic (if necessary at a poorer voice quality) – risk of network overload is minimal
Network capacity & reach is better in wide open spaces (e.g. rural areas)
Instant connection upon dialing
Ability for faster incorporation of newer technologies into the existing network (e.g. upgrade to 3G)
Handset timer starts as soon as a number is dialed – PCOs use this to charge customers for longer duration than the actual call duration.
CDMA Operator USP
More cost efficient – have the ability to offer products at lower price
Only CDMA operator in Bangladesh – handset churn to other operator is virtually impossible
Network expansion to (especially) rural areas is easier/faster
A single source for both handset & connections – a complete communication solution
Little effect of handset tax imposed in National Budget’05-06
CityCell Company USP:
Pioneer mobile phone company in South Asia – most experienced
Established/longstanding backward & forward linkage & distribution channels
$118 million investment by SingTel – Possibility of high growth in near future (SingTel and its concerns are now the leading Telecom providers in Singapore, India, and Australia)
Wide spectrum band license – ability to introduce more services
Only company with Nationwide license for operating WLL based fixed phones
Loyal customers & channel partners
Own transmission network (E1)
Faster decision making – most market responsive
In-house service center
CityCell Product USP4:
Wide range of products/packages
Both Cellular and WLL operator
Longstanding high volume & high revenue postpaid portfolio
Low entry barrier products
Established product presence in the business segment
Market best/most competitive tariff
Very short lead time for product development/deployment
Pioneer/Innovator in many cases:
First 1 second pulse
First free handset package
First Group SMS
First Bangla SMS
Current State of CityCell’s operations:
CityCell packages are focused to follow the company’s differentiation strategy. There are a number of market segments into which CityCell’s potential and current 4 Product development is dynamic process. The above USPs may change over a relatively shorter period. Customer base can be divided. PBTL always strives to make each CityCell package released be unique and noticed above that of the competition. They also try to
attain distinctness in their sales and marketing strategy to make them seem like a unique, ‘blue-blooded’ mobile phone company. In order to do this, they have made a number of strategic choices, which, while setting them as being different from other companies; acts also as a handicap in certain areas.
The primary strategic choice that has affected PBTL is their choice of technology. Although CDMA technology is far in advance from other technologies, it has yet to gain a significant acceptability in Bangladesh. Therefore, there is a serious shortage of CDMA sets. Worse, many sets are simply lying around due to lack of spare-parts. Customers have to pay line rent for faulty or dead sets. Many customers are disconnecting their CityCell lines and buying cheaper packages from other companies. The detrimental effect this has had on operations is that PBTL is finding increasingly less room to maneuver and introduce new features in their service, which will help them combat competition. This also means that they have to fight for survival rather than for dominance. Inherently, PBTL’s strategies appear to be more reactive than proactive. A very important aspect of current operations is the severe effect that centralization of organization has on operations. The regional offices are responsible for handling phones only in that zone. There is a severe lack of coordination between the various regional offices, which has a detrimental effect on customer satisfaction. Worse, the entries for each zone are done all on one floor at the head office. Since the majority of customers are buying their sets directly from PBTL, they are also dependent on PBTL for repairs and spare part requirements. Thus the current staffs who work at repairs and servicing are severely overworked. This affects morale and employee satisfaction, reducing the efficiency of set-servicing process and thus resulting dissatisfied customers.
PBTL is a company with immense potential, but it remains to be seen whether management can fully harness this potential. The potential is present in all the factors of operations:
1. The technology is very advanced and has immense potential
2. The labor factor is strong with some very capable staff
3. PBTL has sufficient capital to undertake infrastructure investments
4. There is still a significant portion of goodwill towards the company from its stakeholders
What PBTL needs to do now is to harness all these positive factors, negate the detrimental ones and move forward.
2.11 Network Coverage of CityCell
Figure 2.6: Network coverage of citycell
2.12 Future Direction of CityCell
The Company appears to be moving towards a more customer oriented approach in its overall customer policy. Gone are the days when PBTL could dictate terms to its clients. These days PBTL has to spend an increasing amount of time covering its shortfalls and persuading customers to stay with them. This is especially worrying after what is perceived to be by many industry insiders, a concerted effort by GrameenPhone to make headway into the corporate market – a domain that was once almost exclusively under PBTL. What the company is really looking for is a way by which it can seriously bounce back into dominant position. The primary reason for choosing CDMA is that they hope to be able to introduce next generation (2G) mobile phone features such as voice conferencing, Internet, sending visual data, etc into their services. It remains to be seen how successful they will be in harnessing the full power of CDMA technology. There is also a proposal to decentralize their organization in order to be able to better serve their customers in the far-reaching regions of the country. This means that many major functions will be spread out throughout the country, divided according to customer regions. It is yet to be seen how much decentralization may occur, but it is a major issue under consideration. If the network expansion into North Bengal and then into Khulna region occurs soon, there is a real potential, by virtue of superior technology, to gain a significant competitive edge over GSM rivals.
There is also the sale of data link to corporate clients. This will gather significant revenue for the company as well as solidify its position with its corporate clients as their primary information transfer and telecom provider. The incongruities between the various tariff plans of the various packages are to be removed to make it much easier for customers to budget usage and also to increase the value for money of each package. There are no mergers or acquisitions in the future, but it is believed that Fujitsu may increase its holdings in PBTL and gain greater management control. If this happens, then the entire picture may change. This is especially important if we consider the fact that slowly boundaries are opening and technologies are improving. GSM will give way to more advanced technologies like CDMA and there will soon be no national boundaries as defined in the current telecom industry. If that happens and the telecom sector is further liberalized, then PBTL can look forward to increased growth and revenue.
2.13 Acquisition of SingTel
Singapore Telecommunications Limited (SingTel) recently announced that it has invested US$118 million for a 45% equity stake in PBTL. In addition, SingTel has a call option to increase its equity interest in PBTL to 60% for an additional US$65 million. The option can be exercised between 1 April and 30 June 2007 and it is still negotiable.
The recent investment made by SingTel has created a lot of options for the company. Everyone is expecting that network expansion and technology upgrade will occur at a faster pace. This is especially important if we consider boundaries are opening gradually and technologies are improving.
Figure 2.7: SingTel’s Group Structure
2.13.1Strengths & Opportunities from SingTel
Equity injection of $90M (in phase 1) will give necessary thrust in aggressive expansion strategy of PBTL.
A multinational corporate like SingTel as a major stakeholder will give enhanced access to funding.
SingTel, as an international player, will provide incremental leverage over vendors (handsets, equipment).
SingTel brings in 120 years of expertise – innovation, quality, efficiency, and corporate governance.
PBTL with SingTel is better poised to capture the market potential & become the market leader.
Benefit from seamless coverage across SingTel network in Asia and international access across the world for international roaming through its submarine & satellite network.
3.0 TECHNOLOGY IN CITYCELL
3.1 How Cell Phone Works:
Cellular telephones have revolutionized the communications arena, redefining how we perceive voice communications. Traditionally, cellular phones remained out of the hands of most consumers due to their high cost. As a result, cell phone carriers have invested time and resources into finding ways to give the systems higher capacity and thus lower cost. Cell systems are benefiting from this research and starting to develop into large-scale consumer products. Today, cellular phones are truly consumer electronics devices with over 580 million subscribers. The Nokia Bowl and Qualcomm Stadium are further evidence of the idea that cell phones are consumer electronics devices. Since cell phones have ceased to be an exclusive status symbol of high-powered lawyers and are now in the hands of millions of consumers, they are now incredibly cost sensitive. Specifically, it is not the cost of the device that counts, but the cost of using the device. As a result, the cellular phone infrastructure is being optimized to allow calls to be placed as inexpensively and reliably as possible. Today, more than ever, cellular companies are looking for ways to bring down the call cost to attain even higher market penetration, especially in metropolitan areas. It is common knowledge that Cellular Phones are wireless phones; however, many are confused about how a cell phone actually works. Essentially, cell phones use high-frequency radio signals to communicate with “cell towers” located throughout the calling area. Cell phones communicate in the frequency range of 806-890 MHz and 1850-1990 MHz. When the user wants to make a call, the cell phone sends a message to the tower, asking to be connected to a given telephone number. If the tower has sufficient resources to grant the request, a device called a “switch” patches the cell phone’s signal throughout to a channel on the “public switched telephone network” (otherwise known as the PSTN). This call now takes up a wireless channel as well as a PSTN channel that will be held open until the call is completed. The figure on the right side illustrates this process. This channel cannot be used for anyone else’s call until the cell phone call is discontinued. Given this simple description of how cell phones work, we will add technical details about various facets of cell phone systems
throughout the remainder of this section. As the name implies, cell phone systems are made up of many small “cells.” Each cell in a cell phone system represents the area served by one cell phone tower. The concept of cells is the key behind the success of cell phones because by spacing many cells fairly close to each other, the cell phones may broadcast at very low power levels (typically 200mw–1W, depending on system). Since the cell phones may broadcast at low power levels, they use small transmitters and small batteries, and thus are able to fit in a shirt pocket, unlike amateur radios, which can occupy a tabletop. Cells are typically spaced around 1-2 miles apart but can be spaced up to 20 miles apart in rural areas. In loaded areas or areas with many obstacles (such as tall buildings), the cell sites may be spaced closer together. Some technologies, like PCS (Personal communication System), require closer cell spacing due to their higher frequency and lower power operation. Additionally, buildings interfere with cell signals coming from outside, so many buildings have their own “Microcell.” The Kingdome and New York subway are two examples of where Microcells are used. Microcells may also be used to increase overall capacity within a heavily populated area such as a city’s core downtown area. In fact, homes may have “picocells” connected to the home’s PSTN connection to allow the cell phone to be used as a cordless phone. An example of typical microcell and Picocell environments is pictured in the following figure. With thousands of cellular phone calls going on at any given time within a city, it certainly would not work for everyone to talk on the same channel at once (as in CB and short-wave radios). Therefore, several different techniques were developed by cell phone manufacturers to split up the available bandwidth into many channels each capable of supporting one conversation. The following sections will discuss each technology and how it works.
3.2 Different Types of Cellular System
3.2.1 AMPS
The most commonly used cellular system in North America, the Advanced Mobile Phone System (AMPS) had also gained widespread acceptance in Asia (specifically in Korea, Hong Kong, Japan, Singapore, etc). An analogue system, this was introduced in the mid 80s and used a technique known as Frequency Division Multiple Access (FDMA) to allocate Channels. Thus it divides its entire allocation in sections of 30 KHz and uses each of these sections as channel. Thus AMPS is able to provide 30 channels per 1MHz of frequency allocated. The principal behind AMPS is analogous to dividing up a large hall room (the entire frequency allocated to the operator) into a number of smaller rooms (channel) once the first pair has completed their conversation and left the room (disconnected).
3.2.2 FDMA
FDMA stands for “Frequency Division Multiple Access”. Though it could be used for digital systems, is exclusively used on all analog cellular systems. Essentially, FDMA splits the allocated spectrum into many channels. In current analog cell systems, each channel is 30 kHz. When a FDMA cell phone establishes a call, it reserves the frequency channel for the entire duration of the call. The voice data is modulated into this channel’s frequency band (using frequency modulation) and sent over the airwaves. At the receiver, the information is recovered using a band-pass filter. The phone uses a common digital control channel to acquire channels. FDMA systems are the least efficient cellular system since each analog channel can only be used by one user at a time. Not only are these channels larger than necessary given modern digital voice compression, but they are also wasted whenever there is silence during the cell phone conversation. Analog signals are also especially susceptible to noise – and there is no way to filter it out. Given the nature of the signal, analog cell phones must use higher power (between 1 and 3 watts) to get acceptable call quality. Given these shortcomings, it is easy to see why FDMA is being replaced by newer digital techniques.
3.2.3 TDMA
TDMA stands for “Time Division Multiple Access.” TDMA builds on FDMA by dividing conversations by frequency and time. Since digital compression allows voice to be sent at well under 10 kilobits per second (equivalent to 10 kHz), TDMA fits three digital conversations into a FDMA channel (which is 30 kHz) By sampling a person’s voice for, say 30 milliseconds, then transmitting it in 10 milliseconds; the system is able to offer 3 timeslots per channel in a round-robin fashion. This technique allows compatibility with FDMA while enabling digital services and easily boosting system capacity by three times.
While TDMA is a good digital system, it is still somewhat inefficient since it has no flexibility for varying digital data rates (high quality voice, low quality voice, pager traffic) and has no accommodations for silence in a telephone conversation. In other words, once a call is initiated, the channel/timeslot pair belongs to the phone for the duration of the call. TDMA also requires strict signaling and timeslot synchronization. A digital control channel provides synchronization functionality as well as adding voice mail and message notification. Due to the digital signal, TDMA phones need only broadcast at 600 miliwatts.
3.2.4 CDMA
Code Division Multiple Access is a system in which a subscriber uses the entire frequency for the entire period that his phone is active. Installing of segregating users by frequency (FDMA) or time (TDMA) this technology segregates customers by coding the signals in such a manner that each customer decrypts only one signal at any one signal at any given time. Again using the previous example, this would be similar to allowing a large number of people into the hall room, but requiring each pair to converse in a different language. Thus while everyone would hear everyone else, this would just be more of background noise rather than interference. On the other hand, each person would be able to understand this partner, because they would be speaking the same language. One of major differences between CDMA and the other existing technologies is in terms of frequency reuse. Using CDMA an operator would use the entire allocated frequency in every cell. The reuse pattern, therefore, is in effect a ‘one cell reuse pattern’. Therefore, the operator can serve may more customers per unit of allocated bandwidth compared to either AMPS of GSM. In general, CDMA capacity is rated to be 10 to20 times higher then analogue techniques such as AMPS, and 3 to 5 times higher than other digital cellular technologies such as GSM.
CDMA has been likened to a party: When everyone talks at once, no one can be understood, however, if everyone speaks a different language, then they can be understood. CDMA systems have no channels, but instead encode each call as a coded sequence across the entire frequency spectrum. Each conversation is modulated, in the digital domain, with a unique code (called a pseudo-noise code) that makes it distinguishable from the other calls in the frequency spectrum. Using a correlation calculation and the code the call was encoded with, the digital audio signal can be extracted from the other signals being broadcast by other phones on the network. From the perspective of one call, upon extracting the signal, everything else appears to be low-level noise. As long as there is sufficient separation between the codes (said to be mutually orthogonal), the noise level will be low enough to recover the digital signal. Each signal is not, in fact, spread across the whole spectrum (12.5 MHz for traditional cellular or 60 MHz in PCS cellular), but is spread across 1.25 MHz “pass-bands.” CDMA systems are the latest technology on the market and are already eclipsing TDMA in terms of cost and call quality. Since CDMA offers far greater capacity and variable data rates depending on the audio activity, many more users can be fit into a given frequency spectrum and higher audio quality can be provide. The current CDMA systems boast at least three times the capacity of TDMA and GSM systems. The fact that CDMA shares frequencies with neighboring cell towers allows for easier installation of extra capacity, since extra capacity can be achieved by simply adding extra cell sites and shrinking power levels of nearby sites. CDMA technology also allows lower cell phone power levels (200 miliwatts) since the modulation techniques expect to deal with noise and are well suited to weaker signals. The downside to CDMA is the complexity of deciphering and extracting the received signals, especially if there are multiple signal paths (reflections) between the phone and the cell tower (called multi path interference). As a result, CDMA phones are twice as expensive as TDMA phones and CDMA cell site equipment is 3-4 times the price of TDMA equivalents.
3.2.5 GSM
GSM stands for “Global System for Mobile Communications.” GSM is mostly a European system and is largely unused in the US. GSM is interesting in that it uses a modified and far more efficient version of TDMA. GSM keeps the idea of timeslots and frequency channels, but corrects several major shortcomings. Since the GSM timeslots are smaller than TDMA, they hold less data but allow for data rates starting at 300 bits per second. Thus, a call can use as many timeslots as necessary up to a limit of 13 kilobits per second. When a call is inactive (silence) or may be compressed more, fewer timeslots are used. To facilitate filling in gaps left by unused timeslots, calls do “frequency hopping” in GSM. This means that calls will jump between channels and timeslots to maximize the system’s usage. A control channel is used to communicate the frequency hopping and other information between the cell tower and the phone. To compare with the other systems, it should be noted that GSM requires 1 Watt of output power from the phone.
3.3 Advantages of CDMA
In the global mobile arena, CDMA (Code Division Multiple Access) is widely recognized as the most advanced digital wireless technology, offering many more features and benefits than GSM technology. As the only CDMA operator in Bangladesh who will be offering next generation CDMA1x technology from the end of 2004, CityCell consequently has the edge to provide customers with state of- the-art services which are currently not available here, such as multimedia messaging, streaming video and push to talk – all over your mobile phone.
However, even at the ‘grass root’ voice service level, CDMA is superior to GSM technology. Providing much better voice quality in the form of less call drops, reduced background noise, minimal interference with other electronic devices, a larger spectrum, greater coverage and capacity are all on clear benefits over GSM technology today. And the steady increase in customers choosing CDMA technology seems to be the best proof for its superiority. Nearly 13.5 million subscribers signed up with CDMA providers in the first quarter of 2004 alone, taking the total number to 202 million users worldwide.
CDMA will reshape the communications landscape in Bangladesh by helping to raise tele-density and thus growing the country. CDMA’s advanced voice services as well as data services that are completely new to Bangladesh – and in fact still are to a lot of other developed countries worldwide – will enable CityCell to deliver affordable prices and efficient services to customers now and into the future.
There are numerous advantages of using CDMA technology, the most important of which are:
a. Higher Capacity: Since CDMA makes more efficient use of the available spectrum; it can provide greatly increased capacity. CDMA capacity is rated to be 10 to 20 times higher than other analogue techniques such AMOPS, and 3 to 5 time higher that other digital cellular techniques such as GSM. With higher capacity, CDMA accommodates higher demands and supports new digital services such as data transmission and mobile fixing.
b. Simplified Planning: CDMA allows system planning to become much easier through the use of the same frequency in every sector of every cell. Because the entire frequency is used in each cell, operators do not have to retune base stations, thus capacity expansion is quicker and simpler.
c. Better Voice and Call Quality: The unique encoding scheme used foe each different CDMA conversation virtually eliminates cross-talk and dramatically reduces the impact of interference from other sources. Also, The larger bandwidth of CDMA signals (the signals use the entire frequency versus only a portion for competing technologies) means that they are less prone to fading compared to the narrower bandwidths of AMPS and GSM.
d. Enhanced Security and Privacy: Since the signals are coded, it is very difficult to intercept and decode a CDMA signal. This prevents eavesdropping and prohibits cloning and other types of fraud. Also, due to the wider bandwidth, such phones are difficult to jam.
3.4 CDMA vs. GSM: A Technical Comparison
3.4.1 Advantages of CDMA include:
Increased cellular communications security.
Simultaneous conversations, less call drops, strong network.
Increased efficiency, meaning that the carrier can serve more subscribers.
Smaller phone sets.
Low power requirements and little cell-to-cell coordination needed by operators.
Extended reach – beneficial to rural users situated far from cells.
3.4.2 Disadvantages of CDMA include:
Due to its proprietary nature, the engineering community for solving does
not know all of CDMA’s flaws.
CDMA is relatively new, and the network is not as mature as GSM.
CDMA cannot offer international roaming, a large GSM advantage.
3.4.3 Advantages of GSM include:
GSM is already used worldwide with over 450 million subscribers.
International roaming permits subscribers to use one phone throughout Western Europe. CDMA will work in Asia, but not popular European destinations.
GSM is mature, having started in the mid-80s. This maturity means a more stable network with robust features. CDMA is still building its network.
GSM’s maturity means engineers cut their teeth on the technology, creating an unconscious preference.