Before going into the industry overview of cellular industry it would be interesting to know little bit about the concept behind it. Cellular industry revolves around the prime objective of cellular telephony (referring to making and accepting calls) with the term cellular derived from cell. Cell refers to a basic functioning block covered by a receiver and a local radio transmitter to enable connectivity with mobile terminals with in the area. Set of cells in a particular area are referred to as radio access network and radio frequencies are used for the transmission of calls plus these radio access networks and core networks actually enable the exchange of data between mobile and other networks .e. g phone, internet etc. With cell sites consisting of antennas, radio transmitters and receivers is divided into three sectors i.e omni sector, 3 sector and 6 sector.
Omni sector consists of the use of same frequencies in all directions whereas, 3 sector and 6 sector refer to the site coverage partitioned into 3 and 6 directional areas respectively with separate radio frequency for each direction. Working of mobile technology is actually the transfer and use of information with the transfer being from mobile terminal to cell site called uplink transmission or from cell site to mobile terminal called downlink transmission. However the spectrum of radio frequencies is limited, it is the mobile network that has the ability to reuse frequencies in different cells leading to increased network capacity. Interferences in the network are a result of distance between cells and cells transmission power. This is actually the way it works but the evolution of cellular industry is quite interesting.
EVOLUTION
Evolution of cellular industry can be credited to four main contributors’ i. e technology, institution, providers and users. Technological advancements refer to the use of modern equipment plus awareness among the people and in the context of cellular industry it means the transformation from first generation (1G-1980s) analogue radio signals to present use of GPRS (General Packet Radio Service).
First generation mobile terminals and infrastructure were expensive and analogue signals due to noise interferences lead to poor performance in voice quality with the big mobiles being used by only high income sector for business purpose and as a matter of luxury and social status. Second generation (2G) technological advancement was the GSM (Global System for Mobile) communication that enabled users to roam across country borders without any disruption in services. By 2006 there were approximately 2 billion GSM subscribers and the market share of 84% but today is the world of GPRS.
Whereas, institution (Government, Legislation etc.) refer to all those bodies affecting the operation of cellular industry like in Pakistan licensing policy introduced by Government in 90s contributed to the formation of market structure and affected competition. With providers of the product and service being the network operators, service providers, content providers, standard setting organizations, consultancy companies and industrial organizations made available the actual outcome of the industry to local people in the form of mobile phones. The increased use of this technology by users (people) along with the increase in providing availability by providers plus modern technology and institutions in their own unique ways made the cellular industry so apparent throughout the world and in Pakistan.
GROWTH OF CELLULAR SECTOR IN PAKISTAN
Cellular industry became familiar to Pakistanis in 1990 when first mobile licenses were issued to two private companies i.e Paktel and Instaphone by the Government. Although they were private companies but the Government itself managed competition in the industry with frequent interventions without clear regulatory policy.
By 1996 Government granted a license to Mobilink that was owned by federal minister and headed by son-in-law of president and partly owned by Motorola (a foreign based company).Cellular Services being provided at that time were largely voice services with early users of mobile phones being high income urban area professionals, industrialists, businessmen and politicians lying in the age group of 35-55 years. Keeping a mobile handset was nothing more than a fashion accessory that was kept as a symbol of social status. Having a mobile in itself was quite expensive as it was solely postpaid with Rs.7000 being activation tax to be given to Government and Rs.2000 to operator along with a security deposit of Rs.10, 000-40,000 depending on estimated usage. Even this was not the break with call charges ranging from Rs.15 to 20 per minute in addition to a line rent of Rs.300.Still the industry began to grow leading to more Government interventions.
Government introduced the telecommunication Act in 1996 that served as a legal framework for conducting market deregulation. With the key institutions of FAB (Frequency Allocation Board) and PTA (Pakistan Telecommunications Authority) the job of allocation frequencies, managing spectrum, protection of consumer and licensee rights plus assurance of open, equitable, non-discriminatory, consistent and transparent decisions was overtaken along with regulating the services, licenses to operators and overseeing tariff settings. With other institutions being MoC (Ministry of Communication) got to be a part of MoITT (Ministry of Information Technology and Telecommunications).
Besides this Government privatized even fixed line networks along with the introduction of public policies to regulate cellular industry. By the end of year 2000 Government granted a license to another mobile network operator i.e. Ufone. It was the period actually that led to increase in mobile subscribers and Mobilink identification as market leader with 64% market share due to its initiation to introduce prepaid payment methods. Competition became intense among the existing operators with great emphasis on acquiring market share and valuable customers at reasonable price.
It was a result of this intense competition that by the end of year 2003 ufone as a result of its intense media advertisements acquired 14% market share with instaphone and paktel being 11% and 9% respectively. There were now approximately 5 million subscribers as opposed to 68000 in the start and were mostly middle class Government servants, working class professionals and youth. This didn’t mean end of competition as more mobile operators entered Pakistani cellular industry by 2004.
In 2004 PTA (Pakistan Telecommunication Authority) issued licenses to two foreign based companies’ i.e Warid and Telenor. Warid being a company of United Arab Emirates and Telenor of Norway further enhanced the cellular industry with intense competition, every company introduced different tariffs to attract and retain customers. Still Government played its part in regulating their operations.
With the introduction of Mobile cellular policy in 2004, it reaffirmed Government commitment to competitive telecommunications market and encouraged private investment in cellular industry. This became the era of intense marketing with mobile companies being in the stage of birth and development striving hard to maintain and intensify their growth, profits and customer base by adopting different policies such as penetration pricing by offering low prices and rates to customers. At one side there got a peak level of demand for mobiles with such low rates and on the other side initial mobile companies of Paktel and Instaphone lost their fame and were almost in their adulthood stage leading toward old age and termination.
Organization life cycle measures resource demand against time to identify the stage of development the organization is currently in amongst conception, birth/development, adulthood and old age/termination. Paktel and Instaphone being in maturity stage with lowest subscribers strived hard to maintain and improve their position in market by introducing different tariffs such as per second billing, free Paktel to Paktel calls, cheapest prepaid sms and call rates but other companies in the industry went far forward towards the introduction of other services besides sms and calls such as internet browsing and downloading, location identification etc.
Being in Growth and development stages other cellular companies like Mobilink, Ufone, Warid and Telenor focused their attention towards differentiated features to attract and convince people to use their networks. Mobilink heading towards increasing its technological base went for its expansion of network to almost 1800 major cities with international roaming facilities. Ufone with its increased awareness amongst people through its advertisements continued in attracting the major portion of Pakistan population i.e. youth by way of its creativity and fun. On the other hand Warid by use of role models in its advertisements centered its focus on business and professional market as this being one of the emerging markets of 20th century with more needs to be satisfied. While Telenor headed towards providing and ensuring good and improved quality of service.
Such intense marketing and competition lead to the increase in mobile subscribers from 3 Million in year 2003 to 36.5 Million in July 2006 and moreover by the end of year 2005 the technology and use of internet access on mobile handsets took acceptance widely.
MAJOR PLAYERS IN THE INDUSTRY
Cellular industry started with Instaphone and Paktel but now numbers of other players are operating, these include:
Mobilink
Ufone
Telenor
Warid
Zong
Although it can’t be predicted exactly that which among these companies is operating at the top but they are continuously introducing such strategies that make them unique and give them the edge someway.
