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For the initial phase customers had limited choice and the cost the players charged was also very
high. The bargaining power with customers was low. But during the past 5-6 years when there are
more options available to the customer, the bargaining power has become HIGH. The brand loyalty
is very low in this sector. The service providers are not able to differentiate their offerings, the
switching cost is almost negligible now and with number portability it will get even higher.
2. Mobile hand set suppliers: - There can be many suppliers for handset, some of them are Nokia,
Sony Ericsson, Motorola, and Siemens etc. Many big telecom giants have their own handset
manufacturing (back ward integration) like Reliance Classic, Tata Indicom or they have collaboration
with some known companies like Reliance communication have tie ups with Samsung and LG for
their CDMA services.
3. Some other suppliers for this industry can be the Optical fibre suppliers, Aluminium suppliers
(aluminium is required for the tower) but their bargaining power is limited.
4. Other important parameters can be the software assistance where suppliers can have the edge
some of the main software solution provider are TCS, Infosys, Wipro, Satyam etc. Again one thing is
noticeable that big giants like Reliance and Tata have their own units for software solution and
companies like Vodafone, Spice are taking services from above stated companies. So here software
providers have bargaining power because suppose Vodafone can’t go to Reliance info for their
software solution so here suppliers can have edge over the companies.
During the initial phase the threat of new entrants was LOW. As the industry concentration was very
high, government rules for 49% FDI, and huge capital investments made it more difficult for smaller
players. But after 2005 we have seen many players entering the market. The government has
increased the FDI stake to 74% and there is huge untapped market potential. So, many foreign
players have entered with tie ups with Indian companies, have spent extensively in marketing and
have brought the average prices down in the industry. The network cost is also taken care of by
leasing and development of tower business. Hence the threat is very high.
5. THREAT OF SUBSTITUTES:
The substitutes for the GSM service are landline, CDMA, wireless land line. The threat from these is
low and they have gradually lost market share. For the broadband services the substitutes are VoIP
(through internet messengers), World Phone, VC the threat from these is also low. The reach for
these services is limited and the additional facilities such as the VAS and 3G in the near future will
further help to decrease the threat of substitutes. Telecom sectors also offers a wide range of services
in India, such as wireline, CDMA mobile, GSM mobile, internet, broadband, carrier, MPLS-VPN,VSAT,
VoIP, IN, etc. Internet telephone is emerging as a best option in place of because it is cheaper and
video as an added advantage.