CITY CAMPUS

Strategic Management

Project Report: Developing a Strategic VoIP Plan

Instructor : Sir Adnan Anwar

Class ID :

Group Members:

Syeda Hira Warsi (5194) Mohammad Rashid Ali (5337)

Table of Contents

Executive Summary of Issues:.....................................................................................................................4

Discussion Points.....................................................................................................................................4

Introduction: What is VoIP (Voice over Internet Protocol)..........................................................................5

Evaluation of VoIP:..................................................................................................................................5

Figurative Representation:......................................................................................................................6

The Business Planning Process....................................................................................................................6

Vision and Values........................................................................................................................................7

Internal and External Assessments..............................................................................................................7

Characteristics of a Good Strategic Business Plan.......................................................................................8

Strategic Plan Recap ........................................................9

SWOT Analysis:..........................................................................................................................................10

Strength:........................................................................................................................................10

VoIP Service Weaknesses..............................................................................................................10

Competitive Advantage:................................................................................................................10

Threats:..........................................................................................................................................10

ACKNOWLEDGEMENT

As the students of.Strategic Management course – CID: and all the preaching and guidance of our course teacher Mr. Adnan Anwar. I hereby

present my final project as required on firm belonging to telecom sector. i.e Procomm Pakistan Limited

One of the leading VoIP service provider alongwith value added service and business strategies. We also hereby present all the facts and

figures which I gather aboutProcomm Pakistan are from newspapers, websites and from Procomm’s annual

report. Due to my job and other secular activities I couldn’t be able to approach the firm directly, however with the help of my group

members we researched closely over Procomm Pakistan. We prepared this project for consideration of approval of our

learning and understanding about the subject.

Mission Statement:“Our aim is to introduce people to the concept of VoIP and allow people to experiment with VoIP by of having innovative facilities for almost free for both inbound and outbound calling from Pakistan”.

VoIP = Voice over Internet Protocol (the mix of Telecommunication and Internet)

Industry:Telecommunication based projet.

Product or Service:VoIP = Voice over Internet Protocol (the mix of Telecommunication and Internet)

Vision and Values

“To be the best in providing Cheaper and Good Quality Services in Telecommunication sector of Pakistan”

“Steps to get Telecommunication Service free of cost in Pakistan”

Vision

What I/we can be best in the world at!

What I/we will be best in the world at!

Values

What’s important

What we feel best being

What we like to do best

Slogan:“4th Dimension in technological era”

LOGO Of the Company:

Partner’s profile:

Partner # 1: Syeda Hira WarsiM.B.AC.E.O of Voip24

Partner # 2:Mohammad Rashid AliM.B.A C.F.O of Voip24

Idea Generation:As we are all aware the telecommunication usage and technology is increasing time by time. VoIP (Voice over IP) which intiates the voice over the Internet to communicate for free remote computer to computer. the technological revolution is now increasingly on mobile phones that are equipped with features more impressive especially the internet and all its services. the mobile phone is becoming a more mobile computer. also, the internet service on mobile next generation reached a remarkable level of connectivity.

The goal of our project is to introduce VoIP service in Pakistan. This will allow two or more corresponding with the internet service on their mobile phones, PCs and Landlines to communicate for

almost free. The quality of communication will depend, of course the flow of the corresponding connection.

Business Description:Here is the description about this business. This business will be operated in Karachi and in future expansion will be made on favorable conditions. Currently such kinds of business are not been operated as we are introducing an innovation in Telecom Services sector from here and we will operate in an innovated way. A New company with Innovation Services is conceptually difficult to operate but there is general market for each and everyone who wants to have cheaper telecom services in Pakistan.

Recently there are no competitors we are providing business awareness and creating demand so then there will be tough competition in market. But we are going to avail opportunities by Cost Leadership strategic plan for achieving competitive advantage over others.

Well our plan for segmentation is untouched because telecommunication needs are equally important for lower to upper class so that our target is to cover 80% audiences of Pakistan.

Technological Description:

VoIP is a technology that allows telephone calls to be made over computer networks like the Internet. VoIP converts analog voice signals into digital data packets and supports real-time, two-way transmission of conversations using Internet Protocol (IP).

VoIP calls can be made on the Internet using a VoIP service provider and standard computer audio systems. Alternatively, some service providers support VoIP through ordinary telephones that use special adapters to connect to a home computer network.

VoIP offers a substantial cost savings over traditional long distance telephone calls. The main disadvantage of VoIP is, like cell phones, a greater potential for dropped calls and generally lesser voice quality.

Hierarchy:

The Business Planning Process

CEO (VoIP24) CFO

Technical Support Team

Vision and Values

Vision

What I/we can be best in the world at!

What I/we will be best in the world at!

Values

What’s important

What we feel best being

What we like to do best

Internal and External Assessments

Internal Assessment

What does it cost our business to do different types of business in different markets?

What are we equipped to do?

What will it take and cost to support the intersection of excellence, passion and profitability?

External Assessment

What will it take and cost to establish us and our company’s unique brand/image of excellence in the marketplace? (as there is no competition in Pakistan yet)

How will competing services and other external forces impact our ability to sustain excellence and profitability?

How do I ensure that our business works the Best?

Set the Direction

Market Plan

Sales Plan

Technology Plan

Budget

Turn the Business Plan into Reality

Execute the Plan

Adjust the Plan

Execute the Adjusted Plan

Characteristics of a Good Strategic Business Plan

Unique and appropriate to your business

Right level of detail for your business

Easy to deploy throughout organization

Roadmap to align resources

Roadmap for decision-making and culture

Easy to use

Results-focused

Strategic Plan Recap

Company Profile:

Features; Benefits Streamline business processes across

the enterprise saving time and money.

Take advantage of low total cost of

ownership.

Manage customer revenue streams

Voice over Internet Protocol (Voice over IP, VoIP) is a family of technologies, methodologies, communication protocols, and transmission techniques for the delivery of voice communications and multimedia sessions over Internet Protocol (IP) networks,

VALUES Integrity

Act with integrity, honesty and ethics in

all that we do

RespectTreat every individual

with respect and dignity

Customer FocusCreate premium value

for our clients

OpportunityHelp people achieve their full potential

BUSINESS PLAN OBJECTIVES (By End-of-Year 2006)

Achieve sales of at least $8M annually

Double number of major clients ($500k+) to at least six

Enter at least two new market segments

Have integrated business/marketing plan in place

Expand staff to meet needs

Implement Process and Organization improvements

Improve operations in key areas

Develop customer service strategy

Restructure sales organization & compensation plan

Expand facilities

VISION STATEMENTOur Company is dedicated to serving the community by

providing client-focused, superior quality, and comprehensive services.

effectively and efficiently.

Exploit existing revenue streams to the

fullest.

Identify and exploit new sources of

revenue ahead of the competition.

Reduce costs by collaborating over the

Web with key business partners.

Win new customers in established and

new market segments.

Increase customer loyalty and revenue per customer by delivering personalized products and services.

Achieve greater cost transparency and control.

Reduce the number of expensive legacy applications and their interfaces.

Cost Savings

Saving money is the number-one reason most businesses and households make the switch to a VoIP  system. You can realize cost savings in a few ways: First, your charges will be lower than they would be using a traditional phone line. Why? Because VoIP calls can’t be routed geographically- they use the internet to send call data instead of a traditional phone line- no long distance charges can be added to your bill.

VoIP systems don’t require a phone cabinet or on-site routing equipment- just phones. No on-site equipment means no need for on-site maintenance, as well. VoIP can save the typical small business thousands of dollars or more in phone bills, equipment charges, and maintenance fees.

Features

VoIP also allows users to take advantage of advanced features only available on internet-based phone systems. Features like online call monitoring, and online phone system access to add or configure extensions are also available with VoIP systems.

Flexibility

VoIP  allows people to go mobile and call directly from their cellphone and be charged at low voip rates. You can visit the page mobile voip to learn more.

Tracking Options

Since VoIP is an internet-based system, you can track and manage your system from your computer. Most VoIP systems allow you to track call volume and call time fairly easily- a feature that can be especially helpful for businesses that bill clients hourly or for time spent on the phone.

Advantages

Operational cost

VoIP can be a benefit for reducing communication and infrastructure costs. Examples include:

Routing phone calls over existing data networks to avoid the need for separate voice and data networks.[12]

The ability to transmit more than one telephone call over a single broadband connection.

Secure calls using standardized protocols (such as Secure Real-time Transport Protocol). Most of the difficulties of creating a secure telephone connection over traditional phone lines, such as digitizing and digital transmission, are already in place with VoIP. It is only necessary to encrypt and authenticate the existing data stream.

Introduction:1. Definition of VoIP

VoIP is broadly used term to describe: The delivery of voice services

over an IP network The ‘convergence’ of voice and

data over a single IP network infrastructure

Plugging a desktop phone into the LAN

Using your computer to make phone calls

Traditional voice service becomes an application on an IP network

Uses a WAN/LAN to deliver voice services or…

Uses the Internet… or a combination of both…

• RoadRunner, DSL, etc. from home

• VPN

Challenges:

Quality of service

Communication on the IP network is inherently less reliable in contrast to the circuit-switched public telephone network, as it does not provide a network-based mechanism to ensure that data packets are not lost, and are delivered in sequential order. It is a best-effort network without fundamental Quality of Service (QoS) guarantees. Therefore, VoIP implementations may face problems.

By default, network routers handle traffic on a first-come, first-served basis. Network routers on high volume traffic links may introduce latency that exceeds permissible thresholds for VoIP. Fixed delays cannot be controlled, as they are caused by the physical distance the packets travel; however, latency can be minimized by marking voice packets as being delay-sensitive with methods

Emergency callsThe nature of IP makes it difficult to locate network users geographically. Emergency calls, therefore, cannot easily be routed to a nearby call center. Sometimes, VoIP systems may route emergency calls to a non-emergency phone line at the intended department; in the United States, at least one major police department has strongly objected to this practice as potentially endangering the public

Lack of redundancy

With the current separation of the Internet and the PSTN, a certain amount of redundancy is provided. An Internet outage does not necessarily mean that a voice communication outage will occur simultaneously, allowing individuals to call for emergency services and many businesses to continue to operate normally. In situations where telephone

services become completely reliant on the Internet infrastructure, a single-point failure can isolate communities from all communications.

Number portability

Local number portability (LNP) and Mobile number portability (MNP) also impact VoIP business. Number portability is a service that allows a subscriber to select a new telephone carrier without requiring a new number to be issued. Typically, it is the responsibility of the former carrier to "map" the old number to the undisclosed number assigned by the new carrier. This is achieved by maintaining a database of numbers. A dialed number is initially received by the original carrier and quickly rerouted to the new carrier. Multiple porting references must be maintained even if the subscriber returns to the original carrier.

SWOT Analysis:

Strength:

Requires up front credit card payment

Assumes user has a high speed Internet service in place

It’s easy to beat a tariff rate…

VoIP Service Weaknesses

Typically residential and small business

Usually at a monthly flat rate for local & LD

Competitive Advantage: Reduced costs High availability & reliability Enhanced services Efficiency Better product support Improved manageability

Threats: IP Telephony Vendors Telecom Vendors Targets medium

to large business Telecom Vendors Use existing data

network (LAN) to provision IP telephones

Telecom Vendors enterprise features & applications time by time

Telecom Vendors use Packaged appliance

Telecom free Licensing per port /seat

Telecom Vendors are Secure / Encrypted

Comparative Review: Competitive Advantage

The primary Benefits of a VoIP System are:

One Wiring system Instead of separate wiring for telephones and separate wiring for data, all data and voice are on the LAN. There is usually plenty of bandwidth available on a well designed LAN.

Web based administration With a VoIP system, all system administration functions are performed on the network usually through a browser based administration program. This means that the system can be modified from anywhere if required.

Leveraging the Internet for telephone calls When calls flow over the Internet, long distance charges are avoided. This is great for remote workers who can stay logged into the office all the time without incurring any additional charges.

Private Instant messaging Instant Messaging is a great corporate tool when used properly. With a VoIP system, Instant Messaging can be limited to corporate business eliminating some of the security issues associated with public Instant Messaging sites and provides complete control to management.

Peer to Peer phone calls All calls are Peer to Peer. This is a big advantage over the traditional PSTN. The call is set up by the VoIP server then the call flows between the two endpoints. All of the voice or video traffic is direct between the two endpoints reducing the congestion at the server.

Peer to Peer Video Video sessions can be set up between endpoints.

Remote users Everyone who is logged into the system is capable of receiving and originating calls. If an employee is at a remote office in Seattle and a call comes into the corporate headquarters in Chicago, the call can be directed to the employee in Seattle just as if that person were in Chicago. The use of the corporate communication resources such as voice mail, automated attendant and email are all centralized simplifying all support and maintenance.

Presence Management VoIP applications can take advantage of presence management. This is a function of the system that allows users to set how other users view their presence on the system. Most systems have tremendous flexibility. This is not too different from using the “do not disturb” button on your legacy PBX telephone, but it really comes into its own when using a soft phone.

Reduced Costs Cost reduction in operating a VoIP system covers just about all areas of the business.

Investment Protection VoIP and in particular SIP based VoIP products offer investment protection. While the industry is moving toward IP communications technologies, users are adopting these technologies at a gradual rate. This trend is nothing new.

Questionnaire Analysis

Telephony issues for start-upsStart-up businesses often face the following telecoms-related issues when moving into commercial property for the first time:

Residential phone numbers: residential telephone numbers often get associated with a business if a start-up works from their home. When it’s time to move the business to new premises, many find that the residential number cannot be transferred to a business line, and in many cases, a business or residential number cannot be transferred at all – even when the new line is supported by the same exchange. It is extremely rare to be able to transfer a phone number from one line to another.

Lock-in contracts: Start-ups do not know that there are many more options available to them than offered by BT. BT offer very good deals for install of new lines etc, but do so because their contract periods are long (three to five years). While this helps cost-wise, it may lock the start-up into options that will be restrictive when they want to adapt their telecoms systems to changing business needs.

Scalability issues: as numbers of staff increase start-ups usually have more than one home office associated with the business, so this can mean that there are multiple contact numbers that become associated with the business and communications between staff are not cost-free. Call transfer and diversion are also relatively expensive, as all outgoing calls of any nature are charged to the subscriber.

Expensive call diversions: Many businesses also set up call diversions from their business numbers to mobiles. This means that the business ends up paying for calls to them, by their customers. A call diversion from a landline to a mobile can cost between 10 and 20 pence a minute.

How do VoIP technologies benefit start-ups?VoIP technology will allow a start-up company to generate phone numbers that will stay with them forever, no matter how many times and to where the company relocates.

Numbers for any UK geographic area code can be applied to a VoIP system and therefore, a start-up can advertise phone numbers that indicate their presence in the area(s) that they wish to work in.

Direct Dial Inward (DDI) numbers can be allocated to VoIP systems that allow a call to be directed to one or a group of telephone extensions. This also makes it possible to have more phone numbers than lines – which is useful if you want to direct certain types of calls, and certain types of customers, to particular staff in the company.

A VoIP system can make the start-up appear bigger than it is, due to the ease that its customers find in accessing the different parts of that business. Even if the same staff are handling calls, it will make a big difference if a call to e.g. customer support is greeted differently to a call to the sales line.

A single analogue line with broadband can act as the communications path for the start-up company,

providing up to 12 virtual lines within that one physical line. This means that as the company expands, the per-head costs to add telecoms services actually decrease.

VoIP systems can be deployed extremely quickly onto existing broadband services. Therefore, set up and changes are done as the business requires them without delay.

What are the cost savings that can be made for start-ups?Initial cost savings are not so apparent, as a single phone on the end of a BT line will be cheaper than the line, broadband and a VoIP phone. Also, setting up a VoIP class local network is a bit more expensive than throwing a cheap router and network switch together.

However, as soon as that business starts to grow to two, three or more people, the cost savings are immediately apparent, as additional lines or extensions can be added to a VoIP system at much lower cost than installing further analogue lines. Situations occur where start-ups have taken the cheap option for telecoms, but found themselves contractually tied even three years later - to the extent that they cannot change their telecoms equipment and lines without large penalty payments.

A traditional analogue phone line will take around two to four weeks to install, with an installation cost of around Rs.12000, and cost roughly Rs.1400 per month. A typical SIP trunk line (a bonded line that can transmit multiple voice calls) can be installed in 24 hours, with zero install cost, and rental of just £2 per month.

Decisions have to be made at an early stage, regarding the nature of the business over the next few years, such as staff numbers, staff location, and markets that the business want to appear in. These will all affect the start-up’s telecoms strategy.

VoIP pushes a start-up down the direction of setting ICT systems up correctly from the beginning, rather than buying a lot of low-cost IT that will have to be replaced in a year.

It is possible to start off with hosted VoIP extensions, and later migrate those to an IP-PBX (see our guide to VoIP for more information on the difference between hosted VoIP and IP-PBX). So choice of one technology does not block the use of the other.

What kind of installation process is there and how long does it take?Installation differs between hosted VoIP and an IP-PBX install – but timescales are still similar. Hosted VoIP extensions can be installed in in around three days. A simple IP-PBX system could be generated and installed in around five working days for a start-up company.

The latter would involve installation of a server PC and a voice-aware network switch, and the configuration of a single router to prioritise voice on the Internet connection. During install, incoming call plans would be generated to ensure that calls are routed and answered as the company needs them to be both inside and outside of business hours. Additional services such as voice-mail and auto-attendant can be configured during install, or later as the company develops its communications strategy.

IMPLEMENTATION:

VoIP: Acceptance and GrowthWhat are the forces driving the transition to VoIP? In a few words, they are cost and market liberalization.

This section explains how these powerful drivers have turned VoIP from a niche market to a newfound status of acceptance and growth in many economies.

2.1 The Cost Factor

The high costs of maintaining legacy networks are a key force driving the growing adoption of IP-based networks, alongside the need to upgrade to intelligent networks with inherent monitoring and adaptive capabilities. Transmission over IP-based networks can cost as little as a quarter of equivalent PSTN transmission. Moreover, it can save 50-60 per cent in maintenance costs, because an IP call can require just 10 per cent of the bandwidth required for a PSTN call. As they review these cost advantages, many operators realize that they have to respond to competitors (domestic and foreign) and position themselves in a truly global communication industry. IP-based networks often appear to be the best foundations for business-critical applications, as operators integrate voice and data networks.

Consumer VoIP applications can run over a range of devices, offering flexibility in the first step towards seamless communications. For some operators, IP-based transmission is the first step in implementing an NGN strategy, although true NGN is a broader concept that involves specific QoS guarantees and generalized mobility not offered by most types of VoIP. Still, some incumbent operators may be reluctant to introduce VoIP, because they already offer voice services over the PSTN. Perhaps understandably, they do not wish to cannibalize their higher-margin international service offerings (particularly if tariff rebalancing has not been fully implemented). They perceive a quandary:

introducing VoIP could enhance their brand and portfolio of services, but it also could be interpreted as a concession to competitors. However, the reality is that convergence, in the form of VoIP services, is redefining markets and blurring boundaries between networks and content. VoIP is eliminating barriers to entry (because competitors no longer need to own a network) and bringing facilities-based providers under direct competition from service-based competitors. The market transition, meanwhile, is redefining the role of telecommunication regulators.

Benefits:

Voice over IP (VoIP) was developed in order to provide access to voice communication in any place around the world. In most places, voice communication is quite costly. Consider making a phone call to a person living in a country half the globe away. The first thing you think of in this case is your phone bill! VoIP solves this problem and many others.

There are of course a few drawbacks attached to the use of VoIP, as is the case with any new technology, but the advantages largely outbalance these. Let's explore below the benefits of VoIP and see how it can improve your home or business voice communication.

Save a lot of money

If you don’t use VoIP for voice communication, then you are most certainly using the good old phone line (PSTN – Packet-Switched Telephone Network). On a PSTN line, time is really money. You actually pay for each minute you spend communicating on the phone. International calls are much more expensive. Since VoIP uses the Internet as backbone, the only cost you have when using it is the monthly Internet bill to your ISP. Of course you need broadband Internet access, like ADSL, with a decent speed. In fact, unlimited 24/7 ADSL Internet service is what most people use today, and this causes your monthly cost to be of a fixed amount. You can speak as much as you wish on VoIP and the connection cost will still be the same.

Studies have shown that, compared to using a PSTN line, using VoIP can potentially make you save up to 40 % on local calls, and up to 90 % on international calls.

More than two persons

On the phone line, only two persons can speak at a time. With VoIP, you can setup a conference with a whole team communicating in real time. VoIP compresses data packets during transmission, and this causes more data to be handled over the carrier. As a result, more calls can be handled on one access line.

Cheap user hardware and software

If you are an Internet user wishing to use VoIP for voice communication, the only additional hardware you require besides your computer and Internet connection are a sound card, speakers and a microphone. These are quite cheap. There exist several software packages downloadable from the Internet, which you can install and use for the purpose. Examples of such applications are the well-known Skype and Net2Phone. You do not actually need a telephone set, which can be quite expensive, along with the underlying equipment, especially when you have a phone network.

The Market Liberalization FactorProgress in VoIP adoption and legalization is closely connected with market liberalization. VoIP can be seen as a technology for introducing competition -- and gaining a competitive advantage -- in liberalized national and international telecommunication markets. Ironically, this is not always welcome. Countries seeking to market second national operator licences may resist introducing VoIP in order to maintain the

value and attractiveness of the second licence. This may be a contributing factor, for example, in Egypt’s delay in fully legalizing VoIP for residential use – despite VoIP’s growing popularity there.

1. Market Overview Of Mobile Companies in Pakistan

The Pakistan market has nearly 97 million subscribers as of  Nov2009 (PTA data).The growth slowed

down in 2009 but has picked up again gradually. See more about the recent competition among

mobile network providers.

For those interested in the change from last year, the chart below shows the market share of mobile

phone companies of Pakistan, as of September 2011. Compared with July, the market share changed

little. Mobilink lost 1% share (35%), picked up by Zong which is cash rich and has a ready-to-invest

attitude.

The ARPU in Pakistan remains low and is not projected to go up. The year 2011 was marked by

changes in SIM sales and registration process, enforced by PTA, the government regulator.

If you are interested in the actual numbers and analysis, leave a comment for me.

Now let’s review some recent history. At 2009 year end the total subscribers were 48.2 million. In June

2010 the total mobile users reached over 63 million. Based on numbers published at PTA website for

2010, the total number of subscribers (technically it is the number of SIMs issued) was 76.6 million, a

teledensity of nearly 49%. In 2010 the average growth rate was about 2.5 million new subscribers

each month! After second half of 2010 it seemed as if the growth had slowed down but overall it was

fine. One remarkable achievement was by Zong (formerly Paketl) which launched very successful

campaigns towards 2010 end completed rebrand launch in April of 2011. See this chart for a

breakdown of market share by mobile companies at the end of Q1 of 2010.

For detailed one-page tariff information for all the packages (pre-paid and postpaid) offered by

the mobile companies, refer to the consumer notice from PTA below - posted as of August 4, 2011.

Here’s a brief description of the top mobile companies in Pakistan.

At the top is Mobilink, the Pakistani unit of Egypt-based telecom company

Orascom. It has been operating in Pakistan since 1994. Subscriber share is 35% at

the end of Sep 2011.

Ufone, a wholly owned subsidiary of Pakistan Telecommunication Co. Ltd (PTCL),

is now under the control of Etisalat group of UAE. It has 21% of subscriber share

and added the most lines (2.4 million) from 2009-07. For those in Pakistan it is the one company where

they can easily invest locally.

Warid, owned by the Abu Dhabi group of the United Arab Emirates and sister of

Wateen group is number 4 with 18% market of subscribers. Recently it sold 30%

share to SingTel.

Norway’s Telenor, a recent entrant with about a billion US dollar investment in

Pakistan has been doing well, based on its recent earning report. It has about 20%

of the market share. Telenor stock is listed in the Oslo stock market (TEL) and in

US(TELNY.PK).

CMPak (Zong brand), formerly Paktel, was the latest target of foreign acquisition.

After it got acquired by China Mobile it was rebranded as Zong and launched one of

the most successful and aggressive campaigns. Within a matter of few months, Zong has achieved a

6% market share.

2. Fixed Wireless (WLL)

Please see this post for an overview of the WLL operators and technology. Wireless local

loop services are based on CDMA and are considered an alternative to copper lines.

Recently rebranded Vfone service by PTCL is the market leader and recently there have

been many intersting marketing and pricing moves. You may also follow this link for a list

of WLL providers from PTA site.

3. WiMAX

This post provides a summary of WiMAX situation in Pakistan. Wateen has emerged

as the largest player and has started advertising for its WiMAX services though as of Sep 2010 the

pricing had not been announced. Mobilink Infinity also started commercial WiMAX service in Karachi.

Dancom used to be an independent provider but it was acquired by Mobilink. Wi-tribe is another

player.

4. Voice over IP

Companies providing VOIP and call forwarding services. In other words: International calls, local rates.

See my posts about VOIP related issues for Pakistan.

Vonics (more about Vonic’s Pakistan Plan)

BRAIN TEL (Lahore only)

CallPakistanDirect

Rebetel - not specific to Pakistan

FreeCallPlanet – not specific to Pakistan

The table below gives a comparison of various cellular operators. All facts and figures have been taken from PTA’s Annual report 2010.

No. of

Subscribers

Investment

in 2010

(USD)

Market

Share

Technology ARPU

(USD)

Mobilink 28.5 Million 336.9 Million 44.3% GSM 3.8

Ufone 15.4 Million 250 Million 20.9% GSM 2.8

Telenor 12.5 Million 130 Million 16.3% GSM 4.0

Warid 11.9 Million 425 Million 16.1% GSM 2.5

Instaphone 0.3 Million 8.5 Million 0.6% CDMA 2.1

Paktel 1.2 Million 187 Million 1.9% GSM 3.3

The growth in the mobile sector is mainly attributed to prepaid subscribers, as is the trend in comparable economies. However, after the launch of two new operators in 2009/10, the mobile sector has now built more consumer friendly strategies around postpaid packages, resulting in a significant growth in postpaid segment, although it still represents less than 4% of the total mobile market.

Mobile penetration has also increased tremendously. It jumped from 8.3% in 2005 to almost 23% in 20091. With such increased penetration, there are still large number of rural and semi urban areas that are still inaccessible.

There are many major issues surrounding the mobile sector like low ARPU, cost of doing business, infrastructure cost sharing, interconnect, regulatory issues, system inefficiencies etc.

The future of mobile sector in the country requires convergence of services, elimination of digital divide, effective regulation in changing telecom environment and adoption of potential technologies. The technology, service and infrastructure convergence is taking place at a very fast pace in Pakistan.

While forecasting the mobile market, Business Monitor International (BMI) has estimated 78.4 Million subscribers for Pakistan by 2011, in its Pakistan Telecommunication Report Q2.

LDI

Liberalization of ‘long distance and international’ (LDI) segment of the telecom sector in 2004 resulted in the award of new LDI licenses apart from the incumbent PTCL and NTC. Intense competition in the LDI section has resulted in drastic reduction of international and nationwide tariffs and substantial increase in traffic. Currently Callmate, Burraq, DV Com, Circlenet, Dancom, PTCL, Wateen, Multinet and WorldCall are providing international calling card facilities.

Multinet, one of the new LDI licensees is developing its own nationwide fiber optic backbone. At present all the telecom operators are relying on PTCL’s infrastructure. Wateen has also started laying nationwide fiber optic infrastructure. These two alternatives are considered to be enough for providing infrastructure redundancy in the country.

1

The LDI market in Pakistan is at its blossoming stages and the new LDI operators are aggressively participating in the market to capture the maximum share of LDI business in the country. During the last year or two, companies doubled their investments in the expansion of their network capacity and infrastructure. Revenues of the companies had increased by 168% during 2010.

There is an intense competition in the calling card business. The LDI operators have drastically

reduced international long distance in order to capture market share. The minimum international

tariffs, which were PKR 58 per minute in 1996, are now as low as PKR 0.5 per minute.

Callmate, Dancom and Worldcall calling cards have the lowest tariffs in the market. The low

tariffs have resulted in a higher outgoing traffic. In addition, international long distance call

charges from cellular mobiles have decreased by 83% in 2009.

The sector witnessed blooming health wherein telecom costumers enjoyed International dialing for as low as 0.5 PKR per minute. However hyped up market and stringent competition led to flirtation and companies who had been involved in price discrimination finally had to suffer in terms of financial losses. Companies have now started looking for foreign investment to survive in the market e.g. Worldcall has sold some of its shares to Oman telecom; also 30% of Burraq’s shares have been acquired by Qatar telecom2.

The figure below, taken from PTA Annual Report 10, shows the revenues of the LDI operators in the year 2010:

2

Only last year, total investment in LDI sector was around 51 Million USD, which grew to 603 Million USD in 2010. Main contributors to this huge investment were Multinet and Link Direct as both have laid their own Optical Fiber Access Network.

PTCL, the incumbent operator is facing intense competition from calling cards and cellular mobile operators due to their low tariffs. The pie-chart below, taken from PTA Annual Report 10, shows the comparison of market share of companies in the last two years.

Local Loop Services

Under the telecom de-regulation policy 2011, two local loop licenses were delegated namely, fixed Local Loop (FLL) and the Wireless Local Loop (WLL).The companies which have been able to start commercial FLL operations and run them successfully include Brian Limited, Union Communication, World Call broadband, Nayatel, Dancom, call2phone, World Call multimedia etc. The companies are providing local loop services including voice and internet over fiber optic.

There are several issues that are hindering the new licensees from operating effectively, these include inadequate infrastructure, Right of way issues and roll out obligations.

Operators Total Subscribers

PTCL 5,128,442

NTC 92,163

World call 13,327

Brain Limited 5,880

Union Communication 200

World Local Loop operators are using the CDMA technology, which is quite comparatively easy to deploy in rural areas. The total subscriber base of WLL services in Pakistan reached around 2 million in 20103. The facts and figures for the table below have been taken from PTA Annual Report 07.

Operators Cell Sites Franchises Subscribers

Great Bear 19 137 57,660

World Call 182 211 304,610

TeleCard 293 301 443,914

PTCL 1,439 236 895,914

Pakistan’s Competitiveness in Telecom

Economic Overview of Pakistan

Pakistan’s economy has maintained strong growth rate and in the fiscal year 2009-07, the economic growth was registered at 7%. The country’s economy has been rated as one of the fastest growing economies in the Asia region. East Asian economies like Philippines, Malaysia, Singapore and Thailand grew at the rates between 5% and 5.5% mostly owing to robust growth in services, agriculture and

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manufacturing industry. The growth in economy is due to investments in the region. Total investment at 23% of GDP is the highest in country’s history. Private sector has played a pivotal role in investment whereby its share in domestic investment has increased from 74.2% to 86% in the last 7 years. The per capita income has also increased from 586 USD in 2002-03 to 925 USD in 2011-10. The table below shows Pakistan’s economic facts and figures in the last five fiscal years4.

Indicator 2002-03 2003-04 2004-05 2005-06 2009-07

GDP Growth (%) 4.7 7.5 9.0 6.6 7.0

Foreign Exchange Reserves USD (Billion) 10.7 12.3 12.6 12.8 15.1

Per Capita Income (USD) 586 669 733 833 925

Population (Million) 147 150 152 155 158

Telecom Sector Overview

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Investment in Telecom SectorTelecom companies have invested over 8 billion USD during the last four years in Pakistan, with mobile sector being the main player with 73% investment share accounts. In 2009-10, cellular mobile sector invested over 2.7 billion USD, which is about 66% of the total investment by the sector. Local loop segment invested 7.8 million USD in 2009-10. LDI operators invested about 603 million USD in 2009-10 which is about 15% of the total investment by the sector. It is expected that the trend of investment may continue in the next five years because of the large potential market existing in Pakistan. The table below shows the investment in telecom in the last three years.

Service 2010-08 2011-09 2009-10

Cellular Mobile (USD Million) 1158.1 1420.9 2718.7

Fixed Line (USD Million) 2.3 0.3 746.9

LDI (USD Million) 35.1 50.5 602.7

WLL (USD Million) 277.3 259.4 40.5

Market Potential

Cellular Mobile Companies have grabbed only 63 Million of the potential 110 Million people market, which is only 61%. If 10% multiple SIMS users are excluded, then the access comes down to only 55% of the target market. Similarly the fixed line operators including WLL have covered only 6.6% of the potential population. As about 66% of the potential population in Pakistan is living in rural areas, the scenario provides a huge market potential for WLL and mobile operators.

Total Number of IT Companies 1082

Total Number of Foreign IT Companies 60

Number of CMM & CMMI level 5 Companies 2

Total Industry Size 2.8 Billion USD

IT and IT-enabled services Exports 1.4 Billion USD

Annual Percentage growth in Exports 61.18%

Number of IT graduates per year 20,000 approximately

Number of Universities offering IT/CS programs 110

Total Number of IT Professionals Employed Over 110,000

Number of IT Parks 11

State Bank Reported Earnings 116 llion USD

Key Issues

Infrastructure Cost Sharing

The term Infrastructure Sharing generally refers to the sharing of airtime and/or network facilities between one or more operators. The objective of Infrastructure Sharing is to maximize the use of existing network facilities which can include network capacity and capabilities, existing base station sites, backbone, radio links, and other resources to reduce infrastructure duplication and costs.

Infrastructure sharing can take a number of forms. In its simplest form, it can involve the sharing of space on masts and associated buildings or sites. Alternatively, sharing can be more extensive such as in 3G infrastructure sharing arrangements that involve two or more operators coming together to share various parts of their network infrastructure for purposes of service provisioning. Another variant can also take the form of national roaming where two or more operators reach an understanding that their respective subscribers can use each others’ networks when outside the geographical coverage of their home network. Expanding the concept, Infrastructure Sharing can also extend to the co-location of network elements and the sharing of frequency spectrum for wireless-based telecom services.

Infrastructure sharing provides practical means to improve country’s competitive landscape. It offers an enormous opportunity to bridge up digital divide in under-developed countries by bringing ICT infrastructure within the reach of population in far flung areas in those countries. The telecommunications infrastructure sector is traditionally characterized by huge fixed, sunk and irreversible investment, often making telecommunications infrastructure investment a high risk undertaking. This situation is often made more unpredictable by the rapid introduction of successive generations of new technology. Operators are occasionally faced with a situation where even before recouping their investments in existing infrastructure they embark on further investment in a new generation networks of networks (e.g., migration from 2.5G to 3G). The sharing of existing or new network infrastructure can promote economic efficiency. It also ensures that new market entrants are able to compete effectively against existing infrastructure

owners offering 3G or competing broadband or mobile services. Many mobile operators internationally are in severe financial problems partly due to the high costs of acquiring licenses in a number of countries, and these operators would certainly welcome the possibility of sharing the costs of building out the networks. It can prevent wasteful duplication of resources. In addition, network sharing can reduce infrastructure cost and consequently the upfront investment burden thereby enabling competitiveness.

Integration of IT and Telecommunication

The last few years have seen a major revolution shake the industry. Deregulation has led to intense competition – for every customer, every service, and even every call. At the same time, emerging technologies like broadband, mobile communications, and the Internet have transformed not only service and product offerings, but the very way business is handled. Integration of IT in Telecommunications provides end-to-end portfolio of solutions, applications, and services tailored to meet the needs of the telecommunications industry. IT integrates entire telecom business on a coherent platform, streamlining existing operations and introducing efficient, future-proof business functions. IT’s portfolio for telecom includes an unsurpassed range of industry-specific function, with support for convergent billing, receivables management, and customer relationship management (CRM). IT integrated with Telecommunications combines cutting-edge solutions for the telecom markets of today and tomorrow with industry-specific and general business expertise, helping to grow markets, survive the struggle, and become a success story.

Integration with IT is an important investment in telecommunication companies, delivering a faster and

bigger return in a variety of ways:

Streamline business processes across the enterprise saving time and money.

Take advantage of low total cost of ownership.

Manage customer revenue streams effectively and efficiently.

Exploit existing revenue streams to the fullest.

Identify and exploit new sources of revenue ahead of the competition.

Reduce costs by collaborating over the Web with key business partners.

Win new customers in established and new market segments.

Increase customer loyalty and revenue per customer by delivering personalized products and services.

Achieve greater cost transparency and control. Reduce the number of expensive legacy applications and their interfaces.

Overall summary of Pakistan’s ranking in doing business is highlighted in the table below5:

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APPU – Average Price per User Strategy

Across the world APPU is decreasing and only a very few countries are experiencing upward trends in revenue growth. Malaysia and France’s revenue is substantially lower than the $15 average, but is expected to rise through an increased mobile penetration. As compared to Malaysia and France, Germany and Switzerland’s ARPU are touching $30 mark.

Country Average Retail Price (US$)

Country Average Retail Price (US$)

Pakistan 0.03 India 0.06

Bangladesh 0.07 China 0.09

UK 0.41 Sweden 0.17

Czech Republic 0.31 (Source: Tarifica & Mobile Operators)

APPU is widely considered to be one of the benchmarks keeping a tab on the financial health of telecom operators. While globally, operators have an Revenue of around $15, in Pakistan it is decreasing quite drastically. APPU in Pakistan has decreased from US$ 19.2 in 2002 to less than US$ 3.2 in 20106. Thus it has been dropping quite severely. The drop was moderate till 2005 but rapid decline has been observed in the last few years. Last year there was 31% decline in the industry APPU and in this year the drop has

ARPU (Average price per User) is a powerful and extremely useful indicator of how well a telecom company is accessing its customers’ revenue potential. APPU is a measure most often used by telecommunications companies to state how much money they make from the average user. APPU is important because it provides a breakdown of what is driving revenue growth, and it also gives some indications of what is driving margins. APPU growth can also indicate how successful a company is being in moving users to new services (e.g. pictures messaging, data connections etc.) that are regarded as strategically important and an indicator of how margins will fare.

The company that tracks APPU will most likely want to know its profit potential in broad terms. However, mobile phone companies also track APPU by examining revenues brought in by customers’ incoming calls as compared to revenues generated by monthly or annual fees. In this way, APPU can be both general and specific. Low APPU is a major issue and becomes an impediment to the industry growth.

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been almost 44%7. Lower ownership costs, lower usage and higher prepaid to postpaid subscription ratio (98:2) are termed as the main reasons for such a low APPU. The often quoted 60 million subscribers figure masks the actual number of individual mobile subscribers in Pakistan. No research-based figures have ever been released, but various sources suggest that the actual number of individual subscribers in Pakistan today is 25-35 million. So there is a strong case of removing the inactive accounts for a possible increase in ARPU. In UK, for example, operators actively began to remove accounts inactive for 3 to 6 months and the net effect was an increase in the ARPU and a much sharper focus on profitable growth.

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Evaluation Figuratively:of VOIP

MARKET DISTRIBUTION SOLUTIONS:

VoIP Service Provider Marketing Solutions:

Speak The Customers Language – Do not use tech speak. Keep acronyms to a minimum. If you had to tell a ten year old what it is that your company does, how would you describe it?

Don’t Use High Speed or Broadband Internet to Describe an Internet Connection – 90% of consumers do not know what broadband means or if their service is high speed, after all, even dial-up services promote a higher-speed product. Instead, use DSL or Cable to describe the Internet connection necessary to use the service.

Sell Devices That Mimic The Traditional Calling Experience – Telephone adaptors, while cheap, add a foreign device to the calling experience. Rather than wasting your time explaining what an analog telephone adaptor does, sell them and cordless IP phone. Customers are familiar with cordless phones and people like things that they are familiar with. It will save the time and headache of explain why you need and ata and how to install it. If you insist on having an ata, make sure you offer one that has PSTN failover, like a Linksys SPA-3102 or Grandstream GS-488.

Explain What Happens When Their Internet Connection Goes Down – Do not just make this a bullet point in the fine print. Use it as an opportunity to differentiate yourself from your competition by explaining the issues and making sure your customers have a “back-up” plan

such as a cellular phone or PSTN line for failover. Sure you might lose a customer or two, but the ones you gain will trust you. Trust build loyalty. Loyalty breeds lifetime customers.

Show Them More Than Price – If the sole decision was price, then they would have switched year ago. Most non-technical customers needs reasons other than price savings to go through the “hassle” of switching their phone service. Promote the convienence of voicemail to email, how they can use a second number so others can call them for free, educate them on the benefits your features provide them.

Do Not Make Switching a Hassle – No one wants a hassle. Make the sign-up process easy, have knowledgeable staff answering your phones, have a number porting system that constantly updates the customer on what stage of the number porting process they are currently in. Make sure devices arrive on time.

Make Paper Invoices an Available Option – Believe it or not, many consumers WANT paper bills. Due to their “non-technical” nature, they may not be use to or comfortable with paying bills online. Do not make them do it “your way”, allow them to do it “their way.”

Stop Assuming and Start Talking – Stop assuming you know what customers know about Voice over IP. I “thought” I knew what people knew about VoIP, but it wasn’t until I started selling VoIP in a brick and mortar retail environment that I started to “get it.” From there, I actually paid a friend to go out and get people to fill out surveys about their knowledge of VoIP. What I found was that most people know little, are filled with mis-conceptions, and really do not care about VoIP. But do not take my word for it, go out and talk to lots of people about Voice over IP.

While it is one thing to identify points that VoIP service providers need to market to, it is another thing to execute on them. Execution, after all, is just as important as strategy. These points are merely a starting point for enhancing the marketing of VoIP service.

Distribution:

Here is How All This Started

The whole topic start with a simple question; Who is the largest distributor of VoIP hardware to resellers in the USA. Pretty simple, right? Yes, but I am afraid that the question was never fully answered…so here we go!

Current VoIP Hardware Distribution Channel

Big Box Distributors – It all starts with the big guys – Ingram Micro, Tech Data, D&H. These are the giants who probably touch 80 – 90% of all of the products that end up in the hands of the end user. You have to be a reseller who is doing some serious volumes in order to work with these guys. For manufacturers, these huge distributors function as glorified warehouses and are commonly referred to as “box movers”.

Specialty Distributor – Right below the big guys are specialty distributors. Specialty distributors include folks like NetxUSA, ABP, and Target Distribution. These guys are typically “specialists” who offer a small concentrated product line (as compared to the big box guys). When you call them up and ask them a question, they know more then the price and availability. They sell to resellers and because they are smaller. Resellers do not have to do much in terms of volume in order to get decent pricing.

Value Added Reseller (VAR)/Value Added Distributor (VAD) – This is where people start to get confused. VAR’s and VAD’s purchase products from Big Box or Specialty Distributors and resell the products to end users (what the definition of end user is varies greatly). However, because some resellers grow very large, they are able to sell to other VAR’s and VAD’s. Technically it is not supposed to occur, but it does. It is sort of hard to police.

*Online Retailers – Online retailers, like VoIP Supply, are technically VAR’s or VAD’s who have an online presence. While traditional VAR’s/VAD’s are typically local or regional players with “feet on the street”, most online retailers do not (constraints of the business model). Their value add, for many, comes down to ease of ordering, customer service, support and sometimes price.

Service Providers, Integrators, Consultants – I group these three together because more often then not hardware is nothing more then an enabler. They make their money off of service, so many manufacturers classify these folks as “end users” and permit VAR/VAD’s to sell to them although the equipment eventually ends up in the hands of an “end user”. Again, there are exceptions to every rule – many service providers buy direct from the manufacturer or from a distributor because of volume.

The “End User” – The end user is the person or company that actually uses the hardware. These include residential consumers, small medium businesses, enterprise and government/educational entities. End users will more then likely purchase from Online Retailers, VAR’s/VAD’s or if they are huge, direct from the manufacturer.

So to answer the gentleman’s question, technically speaking, Ingram Micro is the largest distributor of VoIP hardware. In reality, though, they only carry a sliver of the VoIP products that available. If the gentleman was looking for a VoIP specialist, we would have to further define what is meant by largest (product lines, employees, revenues). He probably won’t go wrong with any of the specialty VoIP distributors, or VoIP Supply for that matter.

I hope you all enjoyed my little lesson in channel 101. If you have something to add, leave it in the comments.

Competitive Overview

VoIP Service Providers

It seems that new VoIP service providers are entering the Canadian market every day.As mentioned above, barriers to entry are very low and the size of the opportunity is significant -fixed line telephony generates roughly $7.5B in revenue annually from the provision of localaccess, calling features and long distance services to consumers.23 This combination ofconditions led industry analyst NBI/Michael Sone Associates to observe that local servicesbased on IP technology have emerged much earlier and much stronger than expected.24 Threetypes of VoIP service are relevant to the residential market: peer-to-peer, access-independent,and access-dependent.

Peer-to-Peer VoIPThis type of VoIP permits individuals to simultaneously use software on their personalcomputers to have a voice conversation over the Internet. Services in this category do notrequire the use of a telephone number, and, in their simplest form, do not provide the ability tomake or receive calls to or from the PSTN. Peer-to-Peer services are often offered by computercompanies like Microsoft and Apple as a free adjunct to their core service, as well as byspecialist companies like Skype.

Skype is an interesting example of a company that has achieved enormous success in avery short time. Launched in 2003, Skype is based in Estonia. It has no network of its own butoffers service globally. Skype offers software which is downloaded directly from its website thatallows PC users to have voice conversations over the Internet with any other Skype user in theworld. Not only is the software free, but all such "telephone calls" are also free. As of

Access-independent VoIPAccess-independent VoIP services piggy-back on a retail broadband Internet connectionenabling the customer to make and receive calls to or from the PSTN and, typically, to and fromother broadband connected users. The residential customer's existing broadband Internetconnection - be it from a cable company, incumbent local exchange carrier (ILEC), or other ISP- is used to have voice conversations using a regular telephone equipped with a voice adapter.Access-independent VoIP services are provided by fixed line telephony providers such asRogers Telecom (formerly known as Sprint Canada)29, Primus, Bell Canada and Navigata (asubsidiary of SaskTel), by cable companies such as Askivision Systems Inc, Coopérative decâblodistribution de l'arrière-pays and Wood Lake Cable and by a variety of VoIP specialists,such as Vonage, AOL and babyTel.

Access-dependent VoIP Access-dependent VoIP services provide the ability to make and receive voice calls toand from the PSTN as well as to and from other connected users, and are supplied with anunderlying connection, other than a retail Internet connection, to the service provider's network.The access-dependent suppliers in Canada to date are the four largest cable companies -Rogers, Shaw, Vidéotron and Cogeco. These companies are leveraging their existingmonopoly cable networks to offer managed VoIP services. The cable companies use the same cable that delivers cable television and hi-speed Internet to provide VoIP service. Their offeringpermits a subscriber to use the phone, Internet and cable service at the same time.

It is expected that the number of suppliers offering VoIP service will continue to grow inthe near term. For example, there is speculation that Google, the global leader in websearches, will enter the VoIP market:

In the longer term, however, some amount of consolidation among VoIP suppliers islikely. Not only is the Canadian market too small to support over 50 telephony suppliers, but aswill be discussed in the next section, cable companies (cablecos) will rapidly capture the leadingshare of VoIP subscribers by bundling their voice services with TV and Internet offerings and insome cases wireless offerings.

Evaluation of VoIP:

2. Merging of Two Worlds

Public Switched Telephone Network (PSTN)

Traditional telephone service providers

Dedicated switches, fiber optics and copper all inter-connected

The Internet and Private IP Networks

Multitude of high speed networks

Dedicated hardware, fiber optics, etc.

3. A Single Medium

Where voice, data and video are converted to packets, prioritized and transported concurrently

Creating one ‘pipe’ that merges and manages all these applications together

Figurative Representation:

Typical Personal Use VoIP

Executive Summary of Issues:

Discussed Points

Why Strategic Business Planning is important for VoIP implementation:

To Reduce cost To Improve quality To provide best Portability To create and enhance Mobility

Technology as an Enabler of Our Strategic Plan

Operation plan;

Calling card SoftPhone Residential Broadband

In regards of VoIP we are supposed to focus on international market as per mentioned criteria. But we need to see what could be done in Marketing, Budgeting, management and staffing.

Available Budget : 200,000 (USD)

Organizational Plan and Personnel Summary

Financial Plan

Underlying Assumptions

• VoIP Company, Inc. will have an annual revenue growth rate of 16% per year. • The Owner will acquire $200,000 of debt funds to develop the business. • The loan will have a 10 year term with a 9% interest rate.

Sensitivity Analysis

The Company’s revenues are moderately sensitive to changes in the general economy. VoIP high-speed internet has become a utility that is comparable to electricity for most residences, and the economy would need a sharp pullback or economic recession before customers cancel their subscription accounts. However, once installed, these systems will become integral for both home and business users, and Management expects that even an economic recession would not result in a large revenue decline for the business.

Source of Funds

Profit and Loss Statements 

Cash Flow Analysis

 

General Assumptions

Business Ratios