A PROJECT REPORT

VSNL

Tata Indicom

A PROJECT REPORT

ON

Test Marketing for

Easy Surf

(Residential pre-paid broadband plans)

FOR

VIDESH SANCHAR NIGAM LIMITEDUNDER THE GUIDANCE OF

Mr. PRAVEEN SADALAGE

SENIOR MANAGER - SALES & MARKETINGTOWARDS PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR THE AWARD OF

POST GRADUATE DIPLOMA IN TELECOM MANAGEMENT

SUBMITTED BY

YAMINI KALE

PREETAM DEY

JITENDRA KHATRI

PULKIT BHATNAGAR

Symbiosis Institute of Telecom Management

Pune- 411016

2003-05

PREFACEJust as two-lane highways were inadequate to support a growing nation, Plain Old Telephone System (POTS) based upon copper circuits was not capable of carrying the huge flows of information needed for providing multimedia transmission that will drive Indias economy well in the 21st century. Based upon this analogy, it was suggested that the nation needed an Information Superhighway to provide the infrastructure needed to handle these information flows. Now, in the new millennium, this Superhighway has been rechristened The Broadband Network a network of high-speed circuits that can carry large amounts of information to residences and businesses throughout India.

High-speed access to information and web based communication / transactions have become a competitive differentiator. Internet based services (whether it is work or learning from homes, schools, colleges) or connectivity for SOHOs / SMEs is crucial for enhanced productivity and perhaps even survival. Absence of inexpensive non dial-up options is becoming a major stumbling block for the countrys growth. Ubiquitous and cost effective public and private Broadband networks are as vital today as telecommunication networks were ten years ago.

Broadband networks, both wireline and wireless, are best not seen as technologies but as non dial-up, always-on, integrated communication highways delivering voice, data and video along with interactivity at speeds necessary for delivery of different services at required quality levels and in a manner that current delivery mechanisms do not enable.

Broadband connectivity and services, if designed appropriately and innovatively and implemented effectively, can be a key driver for several socio-economic gains including:

1. Empowering consumers to enjoy the full panoply of benefits of the information age.

2. Providing a source for long-term sustainable economic growth.3. Endowing education, health, governance and citizen benefits required to achieve these economic goals for all citizens including the rural population that cannot be covered effectively using traditional brick and mortar solutions.

4. Making available broadband services at affordable price-levels resulting in a positive impact on the gross domestic product (GDP). Hence, the subsequent economic structures are likely to attract new investment, create jobs, and increase productivity through infrastructure build-up and access to new and improved services.

ACKNOWLEDGMENTA Spanish missionary was visiting an island when he came across three Aztec priests.

How do you pray? the missionary asked.

We have only one prayer, they answered. We say, God, you are three, we are three. Have pity on us.

A beautiful prayer, said the missionary. But Ill teach you one even better.

The padre taught them a prayer and then continued on his path of evangelism. Years later, when he was returning to Spain, his ship stopped again at the island. From the deck, the missionary saw the three priests on the shore and waved to them.

Just then, the three men began to walk across the water toward him.

Padre! Padre! cried one of them, approaching the ship. Teach us again that prayer which God heeds. We have forgotten how it goes.

It doesnt matter, responded the missionary, witnessing the miracle.

Similarly, a teacher is not the one who educates but one who can make the students understand the magnitude of his teachings. A teacher is never petrified to lead by example but also knows when to step back into the shadows and allow the student to develop into his own persona and spirit. A teacher is always ready to guide but is modest enough to listen to any silly idea his students put forth. We are grateful that people who personify these virtues have guided us.

We are thankful to Mr. Praveen Sadalage (Senior Manager, Sales & Marketing, VSNL, Pune), who gave us a free hand allowing us to learn from our mistakes.

We are also indebted to Ms. Priya Karkhanis and Mr. Amit Mudgal who welcomed us to be a part of their team and learn the intricacies of customer behavior.

We also appreciate the good humor of Mr. Amit Ghoshal who kept us perked up and didnt mind when we made his cubicle our home. We also want to thank for their warmth and support the front desk at VSNL who provided us with everything and taught us how to take a photocopy as well as to make a cup of coffee.

We would also like to acknowledge the efforts and perseverance of Mrs. Sujata Joshi, who has been instrumental in tutoring us with the fundamentals of Marketing.

Finally, our heartfelt regards to the Placement team for gifting us this opportunity to learn a great deal and make us feel a proud member of the Tata fraternity.

Yamini Kale

Preetam Dey

Jitendra Khatri

Pulkit Bhatnagar

CONTENTS1. Executive Summary

05

2. About the company

2.1. VSNL

072.2. DishnetDSL

112.3. The Acquisition & Combined Synergies

133. The Broadband market

3.1. Global Broadband Scenario

153.2. Broadband In India

163.3. TRAI Recommendations for Broadband in India

174. Study of Channel Network

4.1. Introduction

194.2. Questionnaire Design

224.3. Methodology

304.4. Analysis and Recommendations

315. The Product Easy Surf

5.1. Why a new product?

405.2. Technical Specifications

415.3. Business Model

425.4. Service Level Agreements

466. Market research of potential consumers for Easy Surf

6.1. Methodology

496.2. Target market segment profile

506.3. Questionnaire Design

516.4. Summary of Feedback

546.5. Limitations

577. Observations, Analysis & Recommendations

7.1. Company Associate discord

597.2. Cost-Benefit Matrix for the consumer

607.3. Recommendations

628. Glossary

659. List of Figures

66

10. Bibliography and References

67EXECUTIVE SUMMARYVSNLs new product Easy Surf envisages coalescing the advantageous features of dial-up and dedicated port Internet into an affordable, prepaid, convenient, broadband Internet access plan. This product is aimed at garnering the rapidly growing market segment of dial-up users who want to upgrade to affordable broadband alternatives. Essentially, the product will cater to the following three broad categories of Internet users:

Residential Users. Small Office Home Office (SOHOs).

Small & Medium Enterprises (SMEs).The project was carried out in two phases:

Phase1:

Developing Strategies for Strengthening the Channel Network.

The first phase encompassed developing strategies for strengthening the channel network. The major objectives under this were:

a. Understanding existing Channel Network.

b. Suggesting ways to improve performance of Channel Partners.c. To identify prospects who could be potential Channel Partners.Phase 2:

Cultivating prospective Channel Partners into Associates for the EasySurf plans.The second phase encompassed cultivating the prospective channel partners identified in Phase 1 into associates for the Easy Surf plans. The major objectives under this were:a. Interviewing the prospects and identifying how the product fits into their business model.b. Educating the prospects about the product both on the commercial and technical aspects.c. Handling objections of associate and suggesting a business proposition.d. Obtaining feedback from the end customer of the service.e. Suggesting improvements and projecting the future of the product subsequent to analysis of feedbacks from both the ends.

The group decided to christen the project as Test Marketing for EasySurf, since we have been a part of the VSNL team involved in test launching this product in the Pune market. Depending on the success or failure of this test launch, the management of VSNL will decide whether to continue with the existing product offering or to take the product back to the drawing board and rethink upon the techno-commercial aspects of the product.

VIDESH SANCHAR NIGAM LIMITED

VSNL was incorporated on April 1, 1986 under the Indian Companies Act, 1956 to take over the activities of the erstwhile Overseas Communication Services. The company operates a network of earth stations, switches, submarine cable systems, and value added service nodes to provide a range of basic and value added services.VSNL's main gateway centers are located at Mumbai, New Delhi, Kolkata and Chennai. The international telecommunication circuits are derived via Intelsat and Inmarsat satellites and wide band submarine cable systems e.g. FLAG, SEA-ME-WE-2 and SEA-ME-WE-3.

The company's ADRs are listed on the New York Stock Exchange and its shares are listed on major Stock Exchanges in India. The Indian Government owns approximately 26% equity, M/s Panatone Finvest Limited as investing vehicle of Tata Group owns 45% equity and the overseas holding (inclusive of FIIs, ADRs, Foreign Banks) is approximately 13% as on 31 December 2002, the rest is owned by Indian institutions and the public. VSNL with its dedicated work force of about 2000 employees is committed to providing efficient and cost effective world class telecommunications services.

Mission

Enriching life by enabling reliable and affordable communication anytime,anywhere.Vision

We will strive to be the preferred partner to our customers by providing appropriate and cost-effective communication solutions.The core values that VSNL believes in are: Customer Delight Excellence Teamwork

Trust Healthy Competition Employer of ChoiceServices Under VSNL

Wholesale Services

Corporate Services

Consumer Services

Wholesale Services

International Long Distance:Perfected through long years of experience and expertise in international connectivity, VSNL is on par with some of the best telecom networks in the world through constant upgradation of technology.

VSNL offers International Direct Dialing (IDD) facility to 236 countries from anywhere in India. VSNL handles approximately 9 million minutes of international calls per day. This is through any of their 12 International gateways, spread across the country.

National Long Distance:VSNL has established its Points of Presence in 109 cities using OFC/satellite media by January 2004. VSNL has already rolled out OFC network across several states covering north, west & southern part of the country. VSNL is carrying and delivering voice and data traffic

Fig 1.1 VSNLs International Switching Gateway

Corporate Services

IPLC: It is a high capacity, high speed digital circuit that provides a combination of a variety of telecommunication applications, including the transmission of digitized voice, high speed data, high speed fax and graphics for video phones. Internet Leased Line Service: It is a high-speed Internet solution for organizations with large communication and Information requirements. It provides effective Internet access tailor-made to specific needs from anywhere in the world. Managed Data Network Service (MDNS): The diverse and complex communication requirements of today have created the need for a highly efficient and intelligent wide area networking solution that runs uninterruptedly at all times. To meet this growing need VSNL has a Managed Data Network Service based on Frame Relay technology. Frame Relay technology is a managed end-to-end solution that provides a high performance integrated data network created to meet any businesses' mission critical applications as well as the bandwidth on demand that most 'bursty' data applications need.

Internet Protocol: Virtual Private Network Service (IP-VPN): It allows easy connectivity between the associates, business partners or employees with the corporate LAN on a highly reliable, robust, state-of-the-art infrastructure and secured network.

Inmarsat (International Maritime Satellite Organization): VSNL operates a constellation of geo-stationary satellites designed to extend phone, fax and data communications all over the world. The constellation comprises five third-generation satellites backed up by four earlier satellites

Data Center Services: VSNL Internet Data Centers provide the physical environment necessary to keep servers up and running 24 hours a day, 7 days a week.

Videoconferencing: VSNL systems operate under a variety of transport technologies, including ISDN, Leased and IP based videoconferencing systems that greatly decrease the costs of videoconferencing over traditional telecom infrastructures.

Corporate Net Telephony: VSNL offers customized solutions to suit a companys specific requirements. With perfectly scalable solutions, their Corporate Internet Telephony services allow to enhance the internal communication offerings. Their suites of Internet Telephony services for corporates include Managed Corporate Internet Telephony, Non-Managed Corporate Internet Telephony and CUG Calling.

Corporate Dial-up Solution: This unique solution helps to empower the business employees, distributors to connect to the Internet using the very cost effective dial up solution.

National Long Distance Leased Line (NLD LL): This is a high-speed solution for enterprises with large communication requirements. NLD leased line service is a dedicated point-to-point Bandwidth, solely dedicated for the customer's business needs. Since the bandwidth is totally dedicated to the customer, the service provides secure, reliable and high-speed connectivity.

TV uplinking and broadcasting: VSNL provides TV uplinking and broadcasting facilities to many prestigious television channels.

Consumer Services

The Internet was ushered in India by VSNL. Since then, they have offered the consumer the best and fastest connections. Now with Tata Indicom, VSNL is offering a whole gamut of affordable and reliable Internet services to the consumer. Some of their services are as follows:

Tata Indicom: Total Internet

Tata Indicom: Net Telephony

Tata Indicom: Web Mail

Tata Indicom: Calling Cards

DishnetDSL

Experience the full power of the net

DishnetDSL, used to be promoted by the Sterling Group of Companies, which spanned a range of diverse business activities. Today the Sterling groups holds investments in a wide range of technology driven industrial and commercial activities.

The erstwhile DishnetDSL, was a national Internet Service Provider (ISP), holding Category A License, headquartered in Chennai and operating through its National Operating Centres (NOCs) & Point of Presence (POPs), across more than 200 Towns and Cities.

Strategic Business Units of DishnetDSL: Digital Subscribers Line (DSL) Division

HUB Centre Division

Enterprise Solutions and Services Division

Dial-up Division

VOIP (HelloWorld) International

ETH Division

Achievements of DishnetDSL: FIRST to introduce DSL Services in India.

FIRST in path breaking, economical Dial-up plans.

FIRST to set up high quality, Internet browsing centres called DishnetDSL Hub Centres, which has a presence of 133 centres in 56 cities.

FIRST to establish presence in over 38 cities along with Internet services covering over 200 cities.

FIRST to achieve an enviable and growing Dial-up subscriber base.

FIRST and only to offer multiple Network Operations Centres with Data Centre facilities. FIRST to offer VOIP services (Hello World) without an Internet connection.

Fig 1.2All India Network

The Acquisition & Combined Synergies:When Tata acquired a stake in VSNL, the objective was to integrate its basic and cellular service with VSNL's long distance, international long distance and Internet services. In order to cater to the rapidly growing market of broadband Internet services, VSNL management took a strategic decision to take over DishnetDSL. The acquisition has not only reinforced its presence in the dial-up market, but also added on to the technical and commercial prowess in the broadband services arena.The acquisition has transformed VSNL into a major broadband player. VSNLs major handicap was that it did not have a broadband service. An inorganic growth in this space made it ideal, and DishnetDSLs broadband assets are quite impressive. DishnetDSL is Indias largest broadband provider with a customer base of 36,000, of which 4,500 are corporate users. It also has 150,000 dial-up Internet subscribers. Although the company does not officially disclose its broadband / Internet revenues, it is estimated at Rs 180 crores.

With a huge customer base, the acquisition will propel the Tata Groups telecom business into a different sphere. For instance, all fixed telephone line providers are offering DSL as part of their telephone package. Bharti Tele-services has been aggressive in this space and clearly has the lead. Meanwhile, Reliance Infocomm is also looking at garnering major slice of the broadband pie, so are players like MTNL and BSNL. So with all these developments, the Dishnet deal is likely to transform VSNL into the leader in broadband connectivity.

Broadband Internetonce considered a chimera in Indiais looking increasingly real by the day. With a massive potential still waiting to be tapped, the Indian broadband market is set for exponential growth. Research firm Gartner predicts that by 2007 India will have close to 200,000 broadband consumers.

On the integration front, it looks even easier. Tata Tele-services already has an agreement with DishnetDSL for network sharing. As per the agreement, Tata Tele-services offers fixed-line services and provides co-location for DishnetDSL to provide DSL services.

Global Broadband scenario:There are currently 57 million broadband subscriptions worldwide. North America remains the biggest broadband market, amounting to 45% of revenues, followed by Europe and Asia with 20% each. The growth rate for broadband varies from region to region. The global market can be characterized as high growth, with only Korea and possibly Hong Kong having reached maturity. On the current growth trajectory, many markets would also see penetration approaching or exceeding 50% within 5 years. For most customers, access speeds (downstream) are around 500kbit/s, with higher speeds (up to 8Mbit/s) becoming more widespread in the most developed markets. Global market for DSL and Cable Broadband has grown dramatically in the last couple of years. With traditional phone revenues declining, cellular markets saturating and telephone and cable companies looking for new sources of growth; broadband revenues are becoming a strategic imperative in the increasingly deregulated and competitive communications marketplace.

Strong broadband subscriber growth in all regions during the last year provides further evidence that consumers desire high-speed access to the Internet. Additionally, a highly competitive environment among broadband service providers is benefiting consumers with attractive pricing and features. This is particularly true in the Asia-Pacific market, which has some of the highest broadband penetration in the world.

DSL continues to be the dominant technology in nearly two-thirds of the global market. The Cable modem service continues to dominate only North America.

The pace of broadband growth in the US is being hampered by the cost. Consumers are struggling to distinguish between high-speed Internet options. While interest in high-speed services is still growing, dial-up consumers remain highly price-sensitive.

The major applications that would fuel the consumers demand for broadband in the near future and provide incumbent Telcos with renewed prospects to retain valued customers are video, gaming, home networking and audio on demand. With triple-play of voice, data and video available from one provider and regulators globally, looking for Broadband-friendly policies, competition will soon be intensifying further with lack of PC penetration becoming the only limitation restricting a parabolic growth for Broadband.Broadband In India:Till 1998, the Government-owned VSNL had a monopoly in providing Internet access services in India. The deregulation of the Indian Internet market began in November 1998 when competition was allowed in providing Internet services. However, VSNL retained a monopoly on the international gateway. In 2000, the Government of India also allowed ISPs in India to own and operate their own international gateways.

The Indian Broadband Era started late in 1999 when DSL / Cable Service were introduced. Later in 2000, the market for Broadband picked up. Now in the fifth year of services, though things are not all rosy but the market has been rapidly expanding in numbers.The overall growth of the ISP sector is likely to be catalysed by growth in PC penetration rates and also a likely increase in access through the cable television (TV) route. Moreover, the demand for Internet services from both retail and corporate customers is expected to grow, as the infrastructure improves, access costs decline and awareness of the benefits of Internet use increases. The growth of the broadband sector, combined with increased bandwidth availability and declining costs of bandwidth, is expected to result in a sharp increase in data traffic and in the demand for value-added services such as web hosting, virtual private networks, and unified messaging, besides a host of broadband applications.

"Broadband will change the face of India. It will be used in the information sector, entertainment and e-governance and will increase productivity."

Kishore Chaukar

Managing Director

Tata Industries

TRAI Recommendations for Broadband in India:The Telecom Regulatory Authority of India (TRAI) has recently released a set of recommendations intended to boost adoption of the Internet and broadband in India. The aim is to replicate the rapid growth in mobile phones in India. The target is to have 40 million Internet connections and 20 million broadband connections by 2010.

TRAI has asked for a reduction of customs duty on optic fiber cables and other supporting equipments for broadband networks to 5 per cent, a five-year service tax holiday for internet service providers and setting up of a group of ministers to push e-governance in order to bring in a quantum jump in internet usage in the country. The fixed line operators will have to specifically choose between the two methods of unbundling shared unbundling and bit stream access. They also have to suggest the terms and conditions like pricing for unbundling, which will be reviewed by TRAI.

In simple words, local loop unbundling is the method as per which the owners of the last mile copper (primarily the incumbent) are usually mandated to share their infrastructure with other licensed service providers wanting to provide broadband services. Under shared unbundling, competitive providers have access to either voice or data portion of the line. Under bit stream access, the local loop operator installs high-speed access links to its customers and allows competitive providers access to this link.

The regulator has broadly identified eleven main hurdles to growth that need to be addressed like high price for broadband, high cost of equipment, high taxes and duties, lack of locally relevant content among others. Prices for broadband in India are 1200 times higher than in Korea, said TRAI chairman Pradip Baijal. Broadband has been defined as an always-on data connection with 256 kilo bits per second of data rate.

In order to increase broadband penetration via very small aperture satellites and direct-to-home, Trai has suggested open sky policy, removal of various restrictions on size of antenna and throughput. It has also suggested reductions in license and spectrum fees. Moreover, the authority has called for delicensing of spectrum bands used for wireless broadband technologies like Wi-Fi and WiMax.

By 2010, the Authority expects the total number of Internet subscribers to jump to 40 million, which would translate, into a penetration level of 3.4 per cent from the existing 0.4 per cent, in the country. If the Centre accepted these recommendations on accelerating growth of internet and broadband penetration in the country, the rates for internet usage would come down to Rs 300 to 400 per month per subscriber from the current Rs 700.

IntroductionWith the government looking at an exponential growth in the number of Internet and Broadband subscribers and targeting a figure of 40 million Internet users with half of them preferring Broadband by 2010, the ISP market never had it so good. But these huge figures cannot be achieved at the current growth without increasing substantially the level of PC penetration in India. Other important avenues to be looked at are the government regulations and policies. However, these two factors are beyond the purview of the different Internet Service Providers. What is definitely within the scope of the various ISPs existing today is strategic partnerships and establishing distribution channels, which optimise the value of the ISPs. DishnetDSL (now VSNL) has recognised the importance of the channel network and insists that for the company, it is more suitable and apt to term the channel partners as part of a growing value network.

A value network is a system of partnerships and alliances that VSNL builds to source, augment, and deliver its offerings. Channel network establishment decisions are among the most critical decisions facing management. The channel chosen intimately affects all other marketing decisions. The companys pricing depends on what will be acceptable to the channel partner. The firms sales force and advertising decisions depend on how much training and motivation partners might need. Also, these decisions involve relatively long term commitments. VSNL, with its constant evolving market offerings, is now beginning to focus on how to optimize the relationships.

A new firm typically starts as a local operation selling in a limited market, using existing intermediaries willing to work with the company. The number of intermediaries in any local market is apt to be limited: some direct sales agents, a few wholesalers, several established retailers, and if need be, some transportation and warehousing partners. Deciding on the best channels might not be a problem. The problem might be to convince the available intermediaries to handle the firms product line.

On the other hand, if a firm is successful, it might branch into new markets. It might have to use different channels in different markets. In smaller markets, the firm might sell directly to the end customers or involve retailers, whereas in a larger market, it might sell through distributors.

In managing the channel partners, the firm must decide how much effort to devote to push versus pull marketing. A push strategy involves the company using its sales force and trade promotion finances to induce intermediaries to carry, promote, and sell the product to end customers. Push strategy is appropriate where there is low brand loyalty, or brand choices are made in stores, or the product is an impulse item and product benefits are well understood. A pull strategy involves the company using advertising and promotion to induce customers to ask channel partners for the product, thus inducing the partners to gauge the market demand and hence to order it. Pull strategy is appropriate when there is high brand loyalty and customer involvement, or when people perceive differences between brands or when people decide their purchases before making the trip to the store.

Channel partners are expected to be a part of the VSNL family by assuming responsibility for performing a number of key functions:

Gather information about potential and current customers, competitors, and other factors and forces in the marketing environment.

Develop and disseminate persuasive communications to stimulate purchasing.

Reach agreements on price and other terms so that transfer of ownership or possession can be affected smoothly.

Place orders with the company.

Acquire the funds to finance inventories at different levels of the value chain.

Assume risks connected with carrying out channel work.

Provide for the successive storage and movement of the physical equipment or products.

Fig. 4.1Value Added versus Costs of Different Channels

Among the different options available for VSNL to market and distribute its products to the end customer are the ones represented in the diagram above. As manifested, if the cost per transaction involved to the company is low (eg. through the net), the value added for a sale in terms of marketing or persuasion is also low. A customer might not like the product and there might not be another opportunity to evince interest in him by the company through another strategy, hence, losing a valuable customer. On the other end of the spectrum, are the direct sales team. The costs incurred for each sale increase depending on the frequency of visits required to convince a potential client, the transportation and daily allowances as well as the salaries given etc. However, the chances of a client jumping onto the buyer-roster improve tremendously as well as the number of products that he might choose finally. Hence, this channel is one that VSNL emphasizes on continuously.

One channel that VSNL is currently working to improve is establishing more channel partners who have a good knowledge about the area they operate in as well as have a reasonable influencing capability in their business areas.

To understand the requirements of potential channel partners as well as recognize the needs of the existing channel partners formed the first part of our project. It was imperative to carry out a market research to visualize the need for the new product offering by VSNL as well as gauge the acceptance for the new product by new channel partners. Hence the respondents selected and the questionnaire designed included a comprehensive layout of questions to facilitate the company to select with whom it wanted to establish close relationships.

One set of questions was prepared for the existing partners and another simpler set designed to pick probable newcomers. The questionnaires, the subsequent analysis and recommendations are discussed in the forthcoming pages. QUESTIONNAIRE LAYOUT Potential Channel Partners

RESPONDENT PROFILENAME:___________________________________ AGE: ____________________

ADDRESS: __________________________________________________________________

PHONE: _____________________________________________________________________1) Can you tell us your annual income and your customer base?

Income (Yearly in Lakhs)

Business Customer Base< 55-1010-1515-2020-2525-30> 30

1234567

0-5001

51-10002

101-15003

151-20004

201-25005

251-30006

301-35007

351-40008

>40009

2) What type of business operations are you involved in?

Computer Hardware Vendor1Computer Maintenance Services3

Computer Networking Services2Software Solutions/ Web Solutions4

Others:

3) Who are your major customers ?

i) Corporate / Big Enterprises.

ii) Small / Medium Enterprises.

iii) Small Offices / Home Offices.

iv) Residential Customers.

DSL CONCEPT

4) Are you aware of Digital Subscriber Lines (DSL) or Cable Internet?

YesNo

(Explain concept, if necessary, then ask Q6.)

5) Could you please tell me what you know about Cable Internet?

(Verbatim)_________________________________________________________________________ ____________________________________________________________________________________

(Translation)_______________________________________________________________________

6) Which features do you like about Cable Internet ?

Always-on connectivity.1

Higher speeds.2

Economical.3

Dedicated bandwidth.4

Number of service plans.5

Quality of Service.6

Others (Please specify).7

7) How do you like the concept of DSL?

|-----------------------|---------------------|---------------------|---------------------|

Very Good (5) Good (4) Fair (3) Poor (2) Very Poor (1)

8) Why do you say so?

(Verbatim)_________________________________________________________________________ ___________________________________________________________________________________

(Translation)_______________________________________________________________________

9) After understanding the product, how likely are you to try it?

|-----------------------|---------------------|---------------------|---------------------|

Very Likely (5) Likely (4) Maybe (3)Less Likely (2) Not Likely (1)

10) Which DSL operators / Cable Internet providers are you aware of?

DishnetDSLHathway

IqaraSilicon Mountains

ICC CablesSatyam Broadband

Others:

INTERNET USAGE

11) What is the average monthly expense of your customers on the Internet? ___________________________

12) For how long do your customers access the Internet per week on an average?

7 hour6

13) How many people buy Internet connections from you per month ?

1006

14) Which Internet Service Provider (ISP) do you normally recommend?

DishnetDSL 1

VSNL2

BSNL3

Sify4

Iqara5

Others6

15) Can you suggest ways to improve market presence of Broadband in residential areas?

(Verbatim)_________________________________________________________________________ ____________________________________________________________________________________

(Translation)_______________________________________________________________________RESPONDENTS PROMOTIONAL PREFERENCES

16) Do you think Advertising and Promotions have any impact on sales of a product?

YesNo

17) Please rank from 1-8 (1 being highest), the following promotional activities that can be adopted by an Internet Service Provider to increase market presence.

TV advertisements

Newspaper Ads

Hoardings

Glow signboards

Banners { Plastic, Cloth, Laminated }

Posters

Kiosks

POP display material

18) Please rank from 1-7 (1 being highest) the factors which are responsible for a customer to buy Internet connections.

Promotional activities

Higher Speeds

Always-On connectivity

Price

Brand name

Quality of Service

Bundling with other products

19) Please specify which newspapers and magazines do you read regularly ?

Newspapers

Business Standard01Lok Satta 07

Dainik Jagaran02Saamna 08

Financial Express03Sakal 09

Hindustan Times04The Economic Times10

Indian Express05The Times of India11

Lokmat06Others12

Magazines

Business India01Outlook

08

Business Today02PC World09

Business World03PC Quest10

Dataquest04Chip11

India Today05Auto Car12

Filmfare06Auto India13

Sport star07Others 14

20) Please specify which sites do you visit most often?

Hotmail.com Altavista.com

Rediff.comSharekhan.com

Indiatimes.comIndiainfoline.com

Yahoo.comBazee.com

Google.comSify.com

Others, specify

THANK YOU FOR YOUR CO-OPERATION

QUESTIONNAIRE LAYOUT Existing Channel Partners

RESPONDENT PROFILENAME:___________________________________ AGE: ____________________

ADDRESS: __________________________________________________________________

PHONE: _____________________________________________________________________21) Can you tell us your annual income and your customer base?

Income (Yearly in Lakhs)

Business Customer Base< 55-1010-1515-2020-2525-30> 30

1234567

0-5001

51-10002

101-15003

151-20004

201-25005

251-30006

301-35007

351-40008

>40009

22) What type of business operations are you involved in?

Computer Hardware Vendor1Computer Maintenance Services3

Computer Networking Services2Software Solutions/ Web Solutions4

Others:

23) Who are your major customers ?

i) Corporate / Big Enterprises.

ii) Small / Medium Enterprises.

iii) SOHOs.

iv) Residential Customers.

INTERNET USAGE

24) What is the average monthly expense of your customers on the Internet? ___________________________

25) For how long do your customers access the Internet per week on an average?

7 hour6

26) How many people buy Internet connections from you per month ?

1006

27) Which Internet Service Provider (ISP) do you normally recommend?

DishnetDSL 1

VSNL2

BSNL3

Sify4

Iqara5

Others6

28) Can you suggest ways to improve market presence of Broadband in residential areas?

(Verbatim)_________________________________________________________________________ ____________________________________________________________________________________

(Translation)_______________________________________________________________________CHANNEL PARTNER PREFERENCES

29) What is your revenue contribution to DishnetDSL per Quarter?

30,000-60,0003,00,000-5,00,000

60,000-90,0005,00,000-7,00,000

90,000-1,20,0007,00,000-9,00,000

1,20,000-1,50,0009,00,000-11,00,000

1,50,000-3,00,000>11,00,000

30) What sort of sales people or sales executives do you employ?

Technically Qualified.

Past Experience.

Persuasion Ability.

Others.

31) How many sales staff do you have for DishnetDSL products?

________________________

32) Do you think your sales staff can support you better?

YesNo

33) If yes, how would you like DishnetDSL [ VSNL ] to help you?

(Verbatim)_________________________________________________________________________ ____________________________________________________________________________________

(Translation)_______________________________________________________________________34) Are you happy with the availability, technical features and prices of Internet offers based on DSL?

ParameterAvailabilityTechnical CharacteristicsPrices

Yes

No

35) How does DishnetDSL [ VSNL ] add value to your enterprise / business?

i) Improved Profit Margins.

ii) Increased Product Portfolio.

iii) Product Bundling.

iv) Others:

(Verbatim)_________________________________________________________________________ ____________________________________________________________________________________

(Translation)_______________________________________________________________________36) Please rank from 1-7 (1 being highest), what you think is the most selling feature of DishnetDSL?

Always-on connectivity.

Higher speeds.

Economical.

Dedicated bandwidth.

Number of service plans.

Quality of Service.

References

37) What measures DishnetDSL should take to motivate channel partners to boost its sales?

i) More incentives/ Schemes.

ii) Better commissions.

iii) Better training.

iv) Others:

(Verbatim)_________________________________________________________________________ ____________________________________________________________________________________

(Translation)_______________________________________________________________________38) Which value-added services do you feel should be provided with the DSL connection? Web-HostingDomain Name

E-mail AddressesVirtual Private Networks (VPN)

Video and Audio ConferencingServer Co-Location

Others:

39) In your opinion, what do you think would prevent or discourage customers from switching one operator or service provider to another?

i) Lower prices.

ii) Better Customer Support.

iii) Better speeds / QoS.

iv) Acquisition by Tata VSNL.

v) Others:

(Verbatim)_________________________________________________________________________ ___________________________________________________________________________________

(Translation)_______________________________________________________________________

40) Do you feel you have clear information on offers from DishnetDSL?

YesNo

41) If No, what would you like more information on? (Verbatim)_________________________________________________________________________ ___________________________________________________________________________________

(Translation)_______________________________________________________________________42) Do you feel that VSNLs takeover of DishnetDSL will improve your business?

|------------------------|--------------------------|-------------------------|

Very Much (4)

A Little (3) May be (2) Cant Say (1)

43) Are your customers satisfied with the performance of DishnetDSL?

Yes:No:

44) If no, what are their frequent complaints?

i) Lower Speeds than promised.

ii) Frequent Disconnections.

iii) Lack of Onsite Maintenance.

iv) Unsatisfactory Customer Care response.

v) Others:____________________________________________________________________________

45) What are the things you dislike about DishnetDSL ?

i) Commission related complaints.

ii) Unsatisfactory customer care.

iii) Lack of Technical Support.

iv) High Upfront Cost.

v) Others: ____________________________________________________________________________

46) Please suggest how DishnetDSL can improve on the shortcomings you have pointed out?

(Verbatim)_________________________________________________________________________ ___________________________________________________________________________________

(Translation)_______________________________________________________________________

47) Are you satisfied with the commission structure offered by DishnetDSL?

YesNo

48) If no, why?

(Verbatim)_________________________________________________________________________ ___________________________________________________________________________________

(Translation)_______________________________________________________________________

49) Do you have any specific complaints regarding commissions given?

i) Delayed payoffs

ii) Incorrect slab structures

iii) Unnecessary paperwork

iv) Others:

(Verbatim)_________________________________________________________________________ ___________________________________________________________________________________

(Translation)_______________________________________________________________________

RESPONDENTS PROMOTIONAL PREFERENCES

50) Do you think Advertising and Promotions have any impact on sales of a product?

YesNo

51) Please rank from 1-6 (1 being highest) the factors which are responsible for a customer to buy DishnetDSL connections.

Promotional activities

Higher Speeds

Always-On connectivity

Brand name

Quality of Service

Bundling with other products

52) Please rank from 1-8 (1 being highest) the following promotional activities that DishnetDSL can adopt to increase market presence.

TV advertisements

Newspaper Ads

Hoardings

Glow signboards

Banners { Plastic, Cloth, Laminated }

Posters

Kiosks

Point Of Purchase (PoP) material

53) Please specify which newspapers and magazines do you read regularly ?

Newspapers

Business Standard01Lok Satta 07

Danik Jagaran02Saamna 08

Financial Express03Sakal 09

Hindustan Times04The Economic Times10

Indian Express05The Times of India11

Lokmat06Others12

Magazines

Business India01Outlook

08

Business Today02PC World09

Business World03PC Quest10

Dataquest04Chip11

India Today05Auto Car12

Filmfare06Auto India13

Sport star07Others 14

54) Could you please tell me which sites do you visit most often?

Hotmail.com Altavista.com

Rediff.comSharekhan.com

Indiatimes.comIndiainfoline.com

Yahoo.comBazee.com

Google.comSify.com

Others, specify

THANK YOU FOR YOUR CO-OPERATION

METHODOLOGY ADOPTEDIt is imperative that before commencing on a market research, that you formulate a strategy about how to approach the entire procedure from conceptualization to follow-up. Hence, the formation of objectives for the market research becomes important. Equally vital are the segmentation of the available market and selection of a target customer base.

Here, as described earlier, the primary objective of the first phase of the project was to study and understand the views of existing channel partners and to select a number of potential channel partners.

Since, the new product demanded that knowledge of the local area of the channel partner be high, Pune was segmented into seven zones to facilitate the further research and analysis.

Also, computer hardware and maintenance vendors along with networking experts form an influential set whose advice endusers seek before buying a new Internet connection, thus making this set a perfect group to make channel partners. Hence, the questionnaire focuses on them and their likes and dislikes.

A detailed list of the computer vendors along with their addresses and phone numbers was compiled using sites like punediary.com, and indiabizclub.com. The modus operandi used to contact these vendors was two-fold. The first method involved calling them up and requesting for appointments or conducting a quick telephonic survey about their awareness of DSL and broadband internet. The second method was making direct cold-calls. This was a better alternative because it allowed us to touch a larger number of respondents in a shorter duration of time.

One hundred respondents were covered for determining the most prospective channel partners. Twenty four dealers and DTOs were contacted for obtaining feedback vis--vis DishnetDSL and VSNL.

A part of the questionnaire also delved into the marketing and promotional aspect as well so that recommendations about the promotional strategy for the company could also be simultaneously detailed.

ANALYSIS & RECOMMENDATIONS:The major thrust of the market research was concentrated towards the Peth areas in Pune because these were the vendors who had either an established customer base throughout the city being operational for a long time, or were quite new to the business and hence looking for new strategic ways to make their operations more lucrative.

Fig 4.2Segmentation of Pune39 % of the prospective partners confirmed that the have a loyal customer base between 51 and 100 who usually make purchases or take decisions after consulting them. Bigger outlets in the city area also said that despite a fixed set of customers there is also a large number of drifting customers who need to be targeted as well. Fig 4.4Annual Turnover

The outer circle represents the potential partner base while the inner circle represents the existing channel partners. 20 % of the people contacted had an annual income in the bracket of 5 10 lakhs. The major computer vendors reported a much higher figure than the above 30 lakh segment that we had mentioned. Significantly, this segment has been so far targeted by DishnetDSL and it would be a wise strategy to continue with the same target segment.Fig 4.5Business Operations

The pie on the left depicts the business operations of the existing partners and the right pie details the operations of possible partners. There is a striking similarity between both which is indicative that the approach adopted by DishnetDSL can be continued with even after the acquisition by VSNL.

Fig 4.6Customer SegmentsWith the new product offering by VSNL, the SOHO and residential segment become increasingly attractive and an immediate target. Also, Small and Medium Scale Enterprises can be tackled on a case-by-case basis. With need-based offerings and Value for Money packages, it will be very easy to convince those who are looking at a national or international presence through the internet while keeping capital expenditure and operational expenses minimal to upgrade from Dial-up to affordable Broadband.

Fig 4.7ISP recommended by Existing Partners

The two charts shown present the recommended ISPs by the existing channel partners, with VSNL and DishnetDSL having pride of place, and the awareness of Cable Internet or DSL operators by prospective partners 86% claim to know that they know about DishnetDSL though there is only a 71% awareness level about DSL technology. This is representative of the fact that with increased and sustained awareness campaigns highlighting the advantages of DSL over dial-up, the subscriber base can increase significantly. This is corroborated in the following chart where the likelihood of people getting a low price broadband connection was enquired.

Fig 4.9Willingness to try Broadband Services

The parameters which everyone was happy about as an improvement over dial-up were the high speeds and the always-on connectivity. These results were also in sync with the results of a question where seven parameters were to be ranked according to their influencing ability on the decision of buying a net connection. Price was the primary concern for 60% respondents while approximately the same number plumped for higher speeds and better connectivity. 93% respondents felt that promotional activities are important in generating awareness about a product but hardly two-fifths mentioned that it could be the sole criteria for a purchase decision. This complements global trends about the age of the informed-buyer who makes rational decisions after comparing all offerings in the market. This is good news for the company as they can focus on Value Added Services and Feature-specific promotional campaigns.

Fig 4.12Newspaper ChoicesNewspaper advertising as well as outdoor media campaigns found a large number of takers. 31% were regular readers of The Times of India while 24% read Indian Express. 28% respondents were also avid vernacular paper readers. However, we feel that instead of advertising in newspapers and hoardings throughout the city, a more effective campaign will be a three-tier approach. With the recent ban on tobacco advertising, a large fleet of state transport buses are looking for advertisers. This will be a boost to the current media strategy of using localised hoardings as the buses travel throughout the city and the visibility of the company will improve multi-fold even if the buses are stuck in traffic. Fliers can be inserted in newspapers of localities which are technically feasible. This will ensure a 100% penetration into households as every family subscribes to one newspaper. Additionally, people have a tendency to glance at least once on fliers or pamphlets before discarding while newspaper advertising may not be very effective locally. Also, the details of the local channel partners can be included to increase their visibility as well as act as a motivational factor for them.

The third phase should include a media blitz like road-shows or demonstration kiosks at Dishnet hubs or franchisee cafes in the areas where there are more enquiries after phases one and two. The part of the questionnaire about the channel partners preferences evoked the strongest reactions from all the respondents we had for the existing Channel Partner survey. Everyone was unanimous that the company should have regular feedback sessions even if they were only twice in a quarter. In fact, three-fifths felt that lack of interaction was a major de-motivating factor for them even though above 40% respondents had contributions of greater than one lakh per quarter. Fig 4.13Contribution per Quarter

However, these contributions can be enhanced considerably, if channel partners were asked to focus the efforts of even one member of their team towards VSNL products. 50% had replied that they dont have even a single person looking after VSNLs portfolio. A primary reason for this was the absence of any kind of training program by the company on the marketing or technical methodologies to be applied. Three-fourths of the respondents would prefer better marketing and end-customer support.

Fig 4.14Number of Sales Staff

Fig 4.15Motivational Factors

40% of the respondents did not mind better commissions or other incentives while 33% were satisfied with only improvement in the training support given to help motivate themselves and their teams. Fig 4.16Strategies for Reducing Customer Churn

60% of the customers of existing channel partners were satisfied with their net connections though one-fourth of the total felt that to reduce customer churn, better customer care and a small reduction in prices need to be implemented. This might be a viable proposition to the company considering the new product offering and VSNL taking over DishnetDSL was observed by 50% of the respondents. Also, a number of answers suggested that the company was not advertising its other Value Added Services and hence losing out on a profitable source of recurring revenue.

Fig 4.17Channel Partner Put-OffsAlmost the entire sample size had at least one grouse against the company and a majority of it was directed towards an unfriendly customer support system. There were instances recounted when people were turned away even from the office. Surprisingly, the commission related complaints were not due to an incorrect slab structure but due to unnecessary delays in the final pay-offs.

Why a new product?

The Internet revolution in India has been pioneered by VSNL. VSNL was the first Indian company to offer a gamut of Internet services catering to all the segments of the market. The flagship service offered by the company has been dial-up Internet access over the existing PSTN network. The company boasts of a subscriber base of more than 750,000 customers for its dial-up service alone.

The global trends for the ISP market indicate that low-end Internet users are demanding better services both in terms of download speed and quality of connection. The product Easy Surf was designed to bridge the large gap existing between the market for dial-up and broadband. It aims to provide the best of both worlds to the end customer. The following classification will explicate the product proposition better:DialDedicatedEasy Surf

Cost of InstallationLowHighModerate

Cost of Internet (per hour)HighHighLow

Download SpeedLowHighModerate

Quality of ConnectionLowHighHigh

Billing / Tariff StructurePrepaidPostpaidPrepaid

Traffic LimitNoneExistsNone

Phone BillApplicableNot ApplicableNot Applicable

Fig 5.1Projections for the ISP market in India

Technical specificationsGlobally DSL works on the co-location model, where the ISP or the DSL provider will deploy DSLAM (digital subscriber line access multiplexer) boxes. One DSLAM box can provide DSL connectivity to a radius of 2.5 kilometers. The advantage in the co-location method is that it frees the telephone line and splits data and voice - this is the core USP of a DSL connection. But in India, when DishnetDSL started out, telecom was still a government monopoly and colocation was an unheard term. But DishnetDSL tried forging a deal, though unsuccessfully, with BSNL. With these realities, DishnetDSL started offering DSL services based on the Multi Dwelling Unit (MDU) model. Here, the DSLAM is based in a building and from there, close to 50 subscribers are serviced.

The following diagram illustrates the network layout for providing EasySurf broadband connections:

Fig 5.2Network Layout for EasySurf Connections

A 512 Kbps dedicated copper cable is laid from the nearest DSLAM to the customer premises. The technology used for this connection is DSL over copper. The dedicated bandwidth is then fed into a router, which is thereafter connected to a switch by means of a CAT5 cable. From the switch onwards, the network is a 10baseT Ethernet network (commonly known as LAN connect) over a CAT5 / CAT6 media. The switch serves the purpose of distributing the bandwidth over 16 40 users depending on the kind of switch. The CAT5 / CAT6 cables derived from the switch terminate in RJ45 jacks, which can be directly plugged into the NIC (Network Interface Card) of the users computer. The network up to the router is owned and maintained by VSNL. Thereafter, switch onwards, the network is owned and maintained by the Associate. The technical limitations of an Ethernet network permit the maximum loop distance of 100 mts in case of CAT5 cable and 200mts in case of CAT6 cabling.

Business modelVSNLs strategy is a combination of push and pull. The following prepaid tariff plans are to be launched by VSNL:

Pre-paid Residential plans

PlanBandwidth (Kbps)UsageMRP (Rs.)*Validity

10 hours 512 (shared bandwidth)10 hours149/-1 month

25 hours 512 (shared bandwidth)25 hours 299/- 1 month

50 hours512 (shared bandwidth)50 hours499/-1 month

100 hours512 (shared bandwidth)100 hours699/-1 month

* Inclusive of service tax

Detailed Plan Specifications1. Number of E-mail Ids allowed with every plan in the table above.

2. Static IP - not allowed.

3. Traffic limit - Unlimited.

4. The MRP is inclusive of Service Tax.

5. At the time of registration customers will have to pay additional Rs 150/- on account of PPPOE driver installation charges (one-time charges). Please note that if the end customer has Windows XP the associate need not install the PPPOE software since the OS already has an in built PPPOE driver. In this case alone, the associate need not collect the software installation charges of Rs 150/- from the customer.

6. No carry forward of unutilized usage is allowed.

7. Customers will have to make the requisite payment in Cash directly in favor of VSNL - this is for First time registration as well as Renewals.

Fig 5.3Key Deliverables:

Deliverables of VSNL

Supply DSL Router.

Provision bandwidth of 512 Kbps.

Provide PPPoE client software to the associate for installation at customers premises.

Technical and marketing support to the associate.

Deliverables of ASSOCIATE

Identify potential buildings, societies and complexes with PC owning units.

Obtain building permissions for cabling these complexes.

Sell the prepaid plans by acquiring new subscribers and by ensuring timely renewals.

Do necessary cabling; install equipments for providing Internet connectivity to the residential user (this includes installation of the NIC card at the associates cost and PPPOE client software at the customers premises).

Power and maintenance of the DSL router, switch and other accessories.

Provide necessary customer support and service.

Pay an installation charge (non-refundable amount) of Rs.15, 000/- per DSL router.

Fig 5.4Flow of Returns

Revenues realized

By the AssociateBy the company

30% commission on the one-time subscription charges.Port deployment cost of Rs.16200/-.

30% commission on subsequent renewals.70% of the one-time subscription charges paid by the end user.

Installation charges for setting up the LAN connect.70% on the successive renewals done by the customer.

Intangible Returns

To the AssociateTo the company

An opportunity to become a part of the largest ISP brand in the country.Easy market penetration. Thereby, enabling high growth of customer base and market share

Value added service/ add-ons for the existing customer baseBetter knowledge of the local market

Business opportunity for bundling hardware peripherals, UPS systems, AMC etc with the product.Market intelligence is gathered automatically under the system of surveying end customers

Revenue Model:Videsh Sanchar Nigam Limited

1st Floor, One Phyre Road, SM Joshi Hindi School premises,

Next to Jagtap Nursery, Near Golibar Maidan, Pune 411 040

Ph: 26305100/ 30/ 31

ClientSubjeev Business CentreDateJune 4, 2004

AddressEast Street Galleria, East Street,

Pune 01

Cost of Deployment per Router providing 14 connects

ItemDescriptionAmount

InstallationRouter installation carried out by VSNL Rs.16,200.00

SwitchAssociate has to procure the switch (Dlink 16 Port) Rs. 3,000.00

CablingAssociate has to carry out the cabling

Labor @ Rs, 3/mt Rs. 3.00

Casing & Capping @ Rs. 5/mt Rs. 5.00

Drilling & Fitting @ Rs. 5/mt Rs. 5.00

Cable Cost @ Rs. 8/mt Rs. 8.00

Total @ 20mt x 14 connects Rs. 5,880.00

UPSAssociate has to procure UPS (500 VA) Rs. 2,000.00

Total cost Rs.27,080.00 (A)

Connectivity cost to be borne by the customer Rs. 1,500.00

Total cost recovered from customer (@ 14 customers per router) Rs.21,000.00 (B)

Net Investment per router Rs. 6,080.00 (A - B)

Monthly Revenues Per Router

MonthSubscription Charges (649x16)Renewal (499x16)Net CommissionCumulative

Jul-04 Rs. 10,384.00 Rs. - Rs. 3,115.20 Rs. 3,115.20

Aug-04 Rs. - Rs. 7,984.00 Rs. 2,395.20 Rs. 5,510.40

Sep-04 Rs. - Rs. 7,984.00 Rs. 2,395.20 Rs. 7,905.60

Oct-04 Rs. - Rs. 7,984.00 Rs. 2,395.20 Rs.10,300.80

Nov-04 Rs. - Rs. 7,984.00 Rs. 2,395.20 Rs.12,696.00

Dec-04 Rs. - Rs. 7,984.00 Rs. 2,395.20 Rs.15,091.20

Jan-05 Rs. - Rs. 7,984.00 Rs. 2,395.20 Rs.17,486.40

Feb-05 Rs. - Rs. 7,984.00 Rs. 2,395.20 Rs.19,881.60

Mar-05 Rs. - Rs. 7,984.00 Rs. 2,395.20 Rs.22,276.80

Apr-05 Rs. - Rs. 7,984.00 Rs. 2,395.20 Rs.24,672.00

May-05 Rs. - Rs. 7,984.00 Rs. 2,395.20 Rs.27,067.20

Jun-05 Rs. - Rs. 7,984.00 Rs. 2,395.20 Rs.29,462.40

Jul-05 Rs. - Rs. 7,984.00 Rs. 2,395.20 Rs.31,857.60

Bottom line

Net Revenues per router Rs. 31,857.60

At the end of year 1, the net profit per router Rs. 25,777.60

* The costs of switch, cabling & UPS are estimates based on current market prices

Service level agreements1. Flat 30% margin to be given to the associate for sale of any Pre-paid plan proposed above.

2. The associate will have the flexibility to charge any amount of registration fees from the customer. VSNL will not receive any revenue share on the registration amount collected by the associate.

3. The associate will pay an installation charge (Non refundable amount) of Rs 15,000/- per DSL router.

4. A total of 40 customers will be allowed Internet access per Router. Hence, assuming that 40% of the customers are Online at the same time i.e. 16 customers, each customer will avail at least 32 kbps bandwidth.

5. The associate will sell & operate within a fixed geography, which will be agreed between VSNL & the associate before agreement signing.

6. The associate will be eligible for all sales contests involving other channel partners as launched by VSNL from time to time.

The product will be launched with the existing process whereby for a first time registration the associate will submit to VSNL the Customers payment along with the application form. The settlement between VSNL & the associate will be done on a periodic basis. Please note that only in case of Renewals, the associate may send the details of the customer i.e. customer login id and the plan id for renewals, without having to pay at the time of renewals.Once the renewal is done at VSNL end, the associate will have to submit the payments within 24 hours of requesting for renewals. Other plan details:

1. Customers can choose to renew with any plan at any given point in time. The following situations can arise on renewals:

Customer buying a starter kit of 25 hours on 1st January and on 20th January when he still has 2 unutilized hours he applies for renewal with another 25 hours plan.

Result- Customer after renewal in the system will have 27 hours of usage in his account i.e. 2 hours of unutilized usage + 25 hours of newly purchased renewal plan. His validity will now be 30 days from the date of renewal in the system i.e. if the system renews the customer, say on 21st January, his new validity will now be 30 days from 21st January.

2. Any downtime due to failure within VSNL network i.e. up to the ADSL router will be credited to the account of the customer in the following way-

Downtime less than 8 hours- No credit

Downtime between 8 hours- 24 hours- 1-day credit added to validity period.

Downtime between 24 hours- 48 hours- 2 days credit added to validity period and so on i.e. for every incremental downtime of 24 hours, the customers gets 1 day of additional credit.

Please note that in the above, customer will have to register the complaint with VSNL and any downtime due to associate network failure will not be counted as downtime. The credits will be tracked and applied manually by CC/B&C personnel (to be decided on which department will handle the credits).

3. Customers not renewing their account will still be shown as registered and provisioned into the system i.e. customers can renew with the same Login Id at any given point in time after the expiry of the validity period or usage. As of now, there will not be any penalty applicable on customers if they do not renew their connections within a specified time frame. 4. The actual validity period will start from the date of ERX provisioning of the login Id into DSLIMs.

5. A maximum of 40 sub logins will be allowed per ADSL modem released to the associate. Every 41st sub Login will have to be configured on a separate ADSL modem that the associate will procure from VSNL. At the moment the restriction of 40 Sub Logins on an ADSL modem will have to be monitored only manually.

MethodologySubsequent to the Study of Channel Network, we were assigned the task of marketing the product EasySurf to both the channel partners and the end user of the services. We found the approach of questionnaire survey aptly suited to our purpose. The methodology adapted for this assignment is as follows:

1. The potential channel partners for the new product were identified from the database created during the study of the channel network.

2. These prospects were then contacted and acquainted with the techno-commercial aspects of the new product.

3. The prospects, who found the business venture fruitful, were required to sign a letter of interest.

4. These prospects were then asked to identify certain buildings or societies where they were willing to undertake the installation.

5. We thereafter proceeded to survey these buildings on behalf of the potential associate.

Objectives of the survey:

1. To determine the business potential of a particular building in terms of hours of Internet usage.

2. To gauge the level of customer satisfaction (with the existing Internet connection) on the following factors: Download Speed

Uptime/Availability of Network

Economy/Value for money

3. To find the revenue potential for the proposed product offering

The Letter of Interest served as a vital tool to bring the prospective EasySurf associate to a greater comfort level in implementing the network installation and closing the deal. Moreover it also helped us in gaining first hand insight into the local market and to provide more realistic revenue models based on ground realities rather than estimates and projections.

At the end of conducting surveys for buildings picked by every prospect, the survey results were summarized and a report provided to the prospect. Based on the results of this survey, the prospect took the decision of becoming an associate and setting up the local area network in the most profitable buildings identified.

Target market segment profile:Essentially, the product will cater to the following three broad categories of Internet users:

Residential Users: This segment of the target market for EasySurf forms an overwhelming majority. The residential users have been using conventional dial-up access to the Internet for a long time now. As an outcome, they have grown very used to the traditional dial up features like year-long validity of the ISP account, separate billing for the ISP and the telephone service etc. We were principally exploring the market for residential users who are willing to upgrade to an affordable broadband service. This entails that the customer must surf the Internet for at least two hours daily, averaged over a month.

Small & Medium Enterprises (SMEs): SMEs found value proposition in being able to budget their Internet expenses more effectively. EasySurf empowers the entrepreneur to allocate Internet hours to each employee on the basis of a budgeted consumption per month. This not only helps contain the Internet bill within a stipulated amount, but also prevents misuse of the service to a large extent.

Small Office Home Office (SOHOs): Small offices generally have limited use for Internet. We were primarily targeting small offices in a business centre scenario. Since the offices are contained within a geographically small area, clustered together, it becomes easier to install a local area network and provide bandwidth through the EasySurf model. The owner of the business centre sees this as a value added service to his customers and an additional revenue stream to his current line of business without undergoing any major hassles.

Questionnaire design:The initiation of any kind of research comes only with the collection of the primary data and no other research instrument is as powerful and flexible as a well-defined Questionnaire. A carefully developed questionnaire was needed in order to get an appropriate response. Realizing the need we outlined a questionnaire on the following lines for the end user.

The questionnaire was an eclectic mix of close ended as well as open-ended questions in order to obtain both quantitative and qualitative information from the user.

The first few questions catered to knowing the basic demographic information of the customer. Following them were queries to comprehend the Internet usage patterns of the customer. These consisted mainly close ended questions of Dichotomous, Multiple Choice and Rating scale type to interpret and tabulate the response provided. Though inclined more towards on the quantitative front, the question on Evaluating the present internet connection also prompted the user to assess on qualitative aspect.

Subsequent to these were certain open-ended questions that reflected the respondents view on the product. These helped us in getting an insight about the users willingness to accept the new product.

The questionnaire concludes with an open-ended question that presents the remarks and suggestions from the user for the present service.

Questionnaire / Feedback Form

1Respondent Name4Phone

2Decision Maker5Mobile

3Flat No:

6Do you have a computer?YesNo

7Do you have an Internet connection?YesNo

8Who is your current Internet Service Provider (ISP) ?

Dishnet/VSNL

BSNL

Satyam

Tata Indicom

Others

9How many people in your household use the Internet?

10What is the total Internet usage for a day?

Upto 1 Hour

2 Hours

3 Hours or more

11How do you rate the following characteristics of your internet connection

Download SpeedUptime /AvailabilityEconomy

HighAlways availableExpensive

ModerateAcceptable availabilityAffordable

LowUnavailable mostlyCheap

12Would you prefer an always on Internet connection

which keeps your phone line free for calls?

YesNo

13Would you prefer a high speed Internet connection

costing at around Rs. 7 per hour?

YesNo

14How much are you willing to pay for the installation of such a connect?

Rs.2,000

Rs.1,500

Rs.1,000

15Remarks

Summary of feedback: Market share

The following pie chart illustrates the breakup of the subscribers for all the four major ISPs operating in sample audience. The VSNL slice of the pie is the cumulative sum of the subscribers for VSNL, Tata Indicom and Dishnet Dial brand names.

Usage statistics

The following pie chart illustrates the breakup of the homes where one, two, three or four users are using Internet:

The following pie chart illustrates the breakup of the average daily usage of Internet for each household.

Customer Satisfaction

The following graph summarizes the customer satisfaction levels on the download speed factor.

As it is evident from the pie chart, a majority of the respondents were not happy with the download speeds offered by their existing Internet connection. This data has unearthed a market supply gap in the residential Internet market. The product EasySurf can be successfully promoted focusing on the better speed of the connection.The following graph summarizes the customer satisfaction levels on the uptime/network availability factor.

The surveyed population was largely satisfied by the uptime or the availability of their present Internet connection. This primarily due to the fact that currently, the residential users in India have limited use of internet and that Internet is yet to become a part of their lifestyle. Therefore, this factor cannot be leveraged as the unique selling proposition of the product EasySurf.

The following graph summarizes the customer satisfaction levels on the economy factor.

Respondents were largely content with the cost incurred on Internet, but were willing to shift to cheaper alternatives given a chance provided that the cost of churning is reasonable and affordable.The following graph summarizes the customer acceptance for the product EasySurf:

Product acceptance was judged by the response to the last two questions in the questionnaire. Abstract of the product information was divulged to the end customer and their responses were recorded.

Also, the respondents were asked to give suggestions regarding what is their expected level of service. This information contributed to the qualitative analysis for the product. The interviewer noted down the suggestions at the back of the survey form and then reported back to the trainees. This helped us understand the market better and identify the problems faced by the customers through first hand information from the market.

We found that an overwhelming majority of the survey respondents liked the product and were willing to subscribe to the service.

Limitations: The sample size of the surveys was nearly 200. For more accurate results, we need to have a larger sample size. Respondents were not always willing to part with the information to be used commercially.

The data collected is completely dependent on the skill of the observer and the manner in which he records and interprets them

Company Associate discord

Company perspective:

The prospect has to pay an amount of Rs.16200/- only to the company to become an Associate. No security deposit is needed.

The product provides the associate an opportunity to market the most affordable broadband Internet service in the country.

The associate earns an attractive commission on every Easy Surf plan sold.

The company guarantees complete marketing support once the associate signs up with the company.

The Brand Value of the largest Internet Service Provider of the country is leveraged on the associate.

Associate perspective:

There are other hidden costs involved in setting up the LAN connectivity within a building like permission from society and maintenance.

Marketing support needed before signing up, since the associate needs to know the financial feasibility of the product before hand. The interest levels of the end customer are necessary to be known before planning a set up.

Even though there is a 30% commission on every recharge, the margin is very low considering a long-standing association.

The associate is used to simple stocking and retailing of the product and is hesitant to go any further than that.

Cost Benefit Matrix For The Customer:A comparison of the recurring monthly cost of Internet for Dial Up and EasySurf:

Usage (hours) Dial UpEasy Surf

Daily Monthly ISP ChargesPhone BillTotal CostPlanTotal Cost