V Telecom Business Review olume 9 Issue 1
A Journal of SITM (TBR) is an annual journal of Symbiosis Institute Of telecom Management. TBR is a referred journal with a process of double blind review ISSN: 0973-9114 The Journal is published every year by SITM with the objective of participating and promoting research in the field of Telecom, IT and Business. TBR contains valuable inputs in the different areas related to 1. Profitable Solution to Emerging Market Challenges technology as well as business and helps the readers to keep abreast of the current trends in the area of through 'Internet of Things' telecom business. Papers are invited from authors in varied areas related to telecom business such as: Swarnabha Shankar Ray, Amardeep Verma 1
·Wire-line & Wireless Networks. 2. Implicit Testing - An Improved Way of Testing ·Telecom Regulation, Spectrum Allocation, Interconnection, Quality of Service (QoS) etc. Software ·E-Governance. Shraddha Avhad Bahalkar, Shankar Ramamoorthy 9 ·Marketing: Trends in Telecom / IT at Global/ Indian Level. ·Financial, Accounting Issues in Telecom/ IT. 3. Decoding DA-Vinci Code: TMMI Assessment ·OSS/BSS, Network Security, Telecom Network Management. Model Revisited 17 ·Project Management in Telecom/ IT. Shankar Ramamoorthy ·IT Risk Management and IT Infrastructure Management. 4. Telecom – OTT Partnership – Generating New Revenue Sharing Models 21 Journal in Association With: T elec Sujata Joshi, Rohit Dalal, Rohan Egbert,
om Business R Akshara Chaudhary
Publishing India Group 5. Valuation Techniques in Telecommunication Industry – Plot No. 56, 1st Floor, Deepali Enclave An Alternative Approach based on Operating Cash Pitampura, New Delhi-110034, India Flow and Number of Subscribers 32
Tel.: +91-9899775880 e Abhijit V. Chirputkar, Prasanna Kulkarni, vie ChintanVadgama, Sandeep Prabhu
Email: [email protected] w Website: www.publishingindia.com 6. Literature Review of Service Failure, Service Recovery and their Effects on Consumers and Service Employees ISSN 0973-9114 Roshan Kazi, Sandeep Prabhu 39
9 770973 911009 S ept ember 2016
Constituent of Symbiosis International University (SIU). (Established under Section 3 of the UGC Act 1956, by notification No. F 9-12/2001-U 3 of the Government of India ), Accredited by NAAC with “A” Grade Symbiosis Knowledge Village, Village Lavale, Mulshi Taluka, Pune-412115. Phone: +91-20-3911 6177 (Office Direct), 39116180. Fax: 39116181 Email: [email protected], Website: www.sitm.ac.in Volume 9 Issue 1 SEPTEMBER 2016 Telecom Business Review TELECOM BUSINESS REVIEW (Annual Journal)
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*Students or Individual academicians need to provide copy of ID card & letter from relevant authorities to avail the Editorial Review Board pricing offered. Postal charges extra i.e. Rs 150 for annual subscription. Dr. Sam Dzever Professor, Telecom Ecole de Management, France Dr. Maria Bruna Zolin Payment can be made through Demand Draft/Cheque (at par) in favour of “Publishing India Group” payable at Deputy-head of the School of Asian Studies and Business Management, Department of Economics, Ca' Foscari University of New Delhi and send to below mentioned address. Venice, Italy Dr. N.K. Chidambaran Despatch Address:- Assistant Professor in Finance, Graduate School of Business, Fordham University, New York, USA The Manager, Dr. Vidyasagar Potdar Telecom Business Review Senior Research Fellow, School of Information Systems, Curtin Business School, Curtin University, Perth, Western Australia Plot No-56, 1st Floor Dr. Archana Bhosale Deshmukh Deepali Enclave, Pitampura Adjunct faculty (Electronics and Computer Engineering) at ITT Technical School, Austin New Delhi -110034 Dr. Bhumika Gupta Ph - 9899775880 Associate Professor, Telecom Ecole de Management, France Dr. Yogesh Patil Research Mentor - Faculty of Management, Symbiosis International University (SIU) & Associate Professor (Energy & Environmental Management), Symbiosis Institute of International Business (SIIB), India Disclaimer Dr. Omkarprasad Vaidya The views expressed in the journal are of authors. Publisher, editor or editorial team cannot be held Professor of SCM & Operations, Indian Institute of Management (IIM), Lucknow, India responsible for errors or consequences arising from the use of information contained herein. While care has Dr. Rameshwar Dubey been taken to ensure the authencity of the published material, still publisher accepts no responsibility for their Associate Professor-Operations Management, Symbiosis International University, India inaccuracy. Dr. R. Venkateshwaran Sr. Vice President & CTO, Persistent Systems Ltd., India Dr. V. Sridhar, Copyright Professor, Centre for Information Technology and Public Policy (CITAPP), International Institute of Information Technology Bangalore, India Copyright-© Symbiosis Institute of Telecom Management (SITM). Neither this publication nor any part of it may Dr. Kirankumar S. Momaya be reproduced, stored or transmitted in any form or by any means without prior permission in writing from Professor, Technology Management, IB and Competitiveness copyright holder. Shailesh J. Mehta School of Management (SJMSOM), Indian Institute of Technology Bombay (IITB), Powai, Mumbai, India. Dr. KSS Iyer Exclusive Rights Honorary Adjunct Professor, Symbiosis Institute of Telecom Management, Pune, India Publishing India Group, holds exclusive and transferable marketing rights for the journal in all form of media. Dr. Pramod Damle Professor (Telecom &IT) Symbiosis Institute of Telecom Management, Pune, India Prof Prasanna Kulkarni Associate Professor, Symbiosis Institute of Telecom Management, Pune, India Dr. Giri Hallur Assistant Professor (Telecom), Symbiosis Institute of Telecom Management, Pune, India Dr. Trupti Dhote Assistant Professor (Marketing), Symbiosis Institute of Telecom Management, Pune, India Editorial Message
It gives me immense pleasure in presenting to you the ninth issue of Telecom Business Review (TBR 2016). The TBR has been a platform for scholars, teachers, professionals and students to contribute and showcase their knowledge, research, experience, study results and findings in the relevant areas of Technology, Business and Management. In the TBR September 2015 Issue, we published articles on diverse topics such as Flexible Spectrum management: Approaches for India, Management of Service Gaps by Infusion of Technology, Exploration of product centric Factors in Telecom Industry, On the History of Telecommunications: Patents, Disputes and Rivalries that shaped the modern Telecommunications industry, Social Networking Sites Continuance: An application of extended theory of planned behaviour, Analysing the Indian Subscriber behaviour towards mobile social media-A data monetization and customer engagement perspective, Innovative product management driving enhanced customer experience, Wrist wars: Smart watches vs Traditional watches.
I am sure this year’s issue of the TBR 2016 will also help to trigger quality studies in the field of Telecom Business Management and enlighten and educate the telecom fraternity.
At the release of the ninth issue, I thank all the contributors for their thought provoking articles. I also express my heartfelt gratitude to the members of the Editorial Review Board and all our esteemed reviewers. I also seek the support of the telecom fraternity in our efforts of making the TBR global by contributing research papers that highlight global issues in telecom business.
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Telecom Business Review Volume 9 Issue 1 September 2016 ISSN: 0973-9114
Contents
1. Profitable Solution to Emerging Market Challenges through ‘Internet of Things’ Swarnabha Shankar Ray, Amardeep Verma 1-8 2. Implicit Testing – An Improved Way of Testing Software Shraddha Avhad Bahalkar, Shankar Ramamoorthy 9-16 3. Decoding DA-Vinci Code: TMMI Assessment Model Revisited Shankar Ramamoorthy 17-20 4. Telecom-OTT partnership – Generating New Revenue Sharing Models Sujata Joshi, Rohit Dalal, Rohan Egbert, Akshara Chaudhary 21-31 5. Valuation Techniques in Telecommunication Industry – An Alternative Approach Based on Operating Cash Flow and Number of Subscribers Abhijit V. Chirputkar, Prasanna Kulkarni, ChintanVadgama, Sandeep Prabhu 32-38 6. Literature Review of Service Failure, Service Recovery and their Effects on Consumers and Service Employees Roshan Kazi, Sandeep Prabhu 39-45
Journal is available online at www.publishingindia.com means that the traditional fields of embedded systems, wireless sensor networks, control systems, automation
(including home and building automation), all have contributions to enable the Internet of Things (IoT) Article can be accessed online at http://www.publishingindia.com
Profitable Solution to Emerging Market Challenges through ‘Internet of Things’ Swarnabha Shankar Ray*, Amardeep Verma** *Lead Consultant, Ericsson India Consulting, India. Email: [email protected] ** Senior Consultant, Ericsson Centre of Excellence, India. Email: [email protected]
Abstract The world is undergoing a dramatic transformation, rapidly transforming from isolated systems to ubiquitous internet-enabled ‘things’ capable of generating data that can be analysed to extract valuable information. Commonly known as the internet of things (IOT), this new reality will enrich everyday life, increase business productivity, improve monitoring of traffic, control crime and improve government efficiency, etc. The IoT is based on the integration of billions of different things, from tiny sensors to video cameras, from cars to production machines. The main objective is to integrate or connect things that can be used as sensors or actuators. Developing & under-developed economies constitutes about 80% of world population. This paper talks about how these strata of population can benefit from Internet of Things, which according to EricssonFigure1 vision: Ericsson’s of Networked vision society of networked will connect society some 50Bn devices across the globe by 2020. Keywords: IOT, Profitable Solutions, Smart Environment, Smart Business Solutions, IOT Operations 1.2 IOT: Future of Human Progression
1. Introduction 1.2 IOT:Study showsFuture that of the Human Internet Progressiondoubles in size every 5.32 years. Using the below mentioned figure in
1.1 Internet of Things Studycombination shows that with the theInternet number doubles of devices in size connected every 5.32to the Internet in 2003 (500 million, as determined by years. Using the below mentioned figure in combination The vision of the Internet of Things has evolved due to with Forresterthe number Research of devices), and theconnected world population to the Internet according in to the U.S. Census Bureau, Ericsson has estimated the a convergence of multiple technologies, ranging from 2003 (500 million, as determined by Forrester Research), and the world population according to the U.S. Census wireless communication to the Internet and from embedded number of connected devices per person. systems to micro-electromechanical systems. This means Bureau, Ericsson has estimated the number of connected that the traditional fields of embedded systems, wireless devices per person. sensor networks,means thatcontrol the traditional systems, fields ofautomation embedded systems, (including wireless sensor networks, control systems, automation home and building(including automation),home and building automation),all have allcontributions have contributions toto enable the Internet of Things (IoT) enable the Internet of Things (IoT)
Fig. 2: No. of Connected Devices Per Person
Fig. 1: Ericsson’s Vision of Networked Society Source: Ericsson Figure1: Ericsson’s vision of networked society
1.2 IOT: Future of Human Progression
Study shows that the Internet doubles in size every 5.32 years. Using the below mentioned figure in
combination with the number of devices connected to the Internet in 2003 (500 million, as determined by
Forrester Research), and the world population according to the U.S. Census Bureau, Ericsson has estimated the
number of connected devices per person.
Benefits, operating model and monetization model are highlighted for each of the use-cases/offering.
Different Use-case will have different operating model and monetization models and thereby different
technology requirements for communication, sensing instruments and their effectiveness, complexity of the
NOC as well as the other business and operational processes.
2. Environmental Use-Cases
2.1 Control the extent of Natural Calamity
Global warming and Climate change is leading to unexpected natural occurrences. This is our 1st use case where
2 Telecom Business Review: SITM Journal Sensor apparatus couldVolume have 9 Issue informed 1 September about 2016 cloud burst, flash floods, earthquakes or Tsunamis that can help
Prediction tells that there will be 25 billion devices wherethe Sensor authorit apparatusies to takecould pre have-emptive informed control about cloudand property. In the era where drones, balloons and satellites can help connected to the Internet by 2015 and 50 billion by 2020. burst, flash floods, earthquakes or Tsunamis that can help It is important to note that these estimates do not take into the authorities to take pre-emptive control and property. us communicate, use case will become a reality soon. account rapid advances in Internet or device technology; In the era where drones, balloons and satellites can help the numbers presented are based on what is known to us communicate, use case will become a reality soon. be true today. IoT is something that is common amongst Nature, Animals, Vehicles, and People. When we crossed the threshold of connecting more objects than people to the Internet, a huge window of opportunity opened for the creation of applications in the areas of automation, sensing, and M2M communication.
Traffic free roads for Ambulance!Where: A moving ambulance can be monitored by central traffic management department and signals can be made free by stopping vehicles from other side to cross, allowing the ambulance to reach hospital faster. FigureFig. 3: 3:Massive Massive Wave Wave Illustration Illustration Source:blogspot.com/ Holy Cow! In the world of IoT, even cows will be Source: blogspot.com/ connected. Implanting sensors in the ears of cattle will allows farmers to monitor cow’s health and track their 2.1.1 Background> Background movements, ensuring a healthier, more plentiful supply of Flash floods in 2014 in Kashmir & Uttarakhand, India; have led to massive devastation of life, environment. milk and meat for people to consume. Flash floods in 2014 in Kashmir & Uttarakhand, India; have led to massive devastation of life, environment. The loss in In fact, the possibilities are almost endless. With the termsThe of damage loss in to termsproperty of rises damage up to USDto property 16Bn. It riseskilled up to USD 16Bn. It killed more than 500 people in Jammu & knowledge we have acquired for working in emerging more than 500 people in Jammu & Kashmir, India and more markets & IoT, we are confident that a lot of challenges than 4500Kashmir, people India in Uttarakhand, and more leavingthan 4500 thousand people other in Uttarakhand, leaving thousand other homeless. The federal faced by these counties can be mitigated to a significant homeless. The federal government sent more than$164Mn extent by leveraging IoT. for reliefgovernment and reconstruction sent more in thanJammu$164M and Kashmirn for relief alone. and reconstruction in Jammu and Kashmir alone. Tsunami in 2004 At high level we have clustered the use cases (which are Tsunami in 2004 in the Indian Ocean was the deadliest one potential business offerings) in two core themes which was causedin the Indianby a 9.0 Ocean magnitude was theearthquake, deadliest killing one wasmore caused by a 9.0 magnitude earthquake, killing more than 250,000 are central to a sustainable future of emerging markets than 250,000 people in a single day. societies: people in a single day. 2.1.2 Benefits • Environmental challenges faced due to climate change or pollution and how IoT can help solve the same The extent of disaster could have been avoided had there • Societal cases deal with the real life challenges in law been effective information on the impending calamity, and order saving precious lives and property to an extent Benefits, operating model and monetization model are 2.1.3 Operational Model highlighted for each of the use-cases/offering. Different Use-case will have different operating model and monetization models and thereby different technology Strategically placed sensors sensing an unpredictable event requirements for communication, sensing instruments like movement of tectonic plate, formation of disastrous and their effectiveness, complexity of the NOC as well as cloud, underground volcanic movement can trigger a the other business and operational processes. quicker disaster control response and if acted upon on time it has the potential to save precious life & property. 2. Environmental Use-Cases • Sensor would communicate with Satellite for ex- changing information 2.1 Control the Extent of Natural Calamity • In case of any disaster forecast by the sensors the Global warming and Climate change is leading to NOC alarm would be triggered with disaster man- unexpected natural occurrences. This is our 1st use case > Benefits
The extent of disaster could have been avoided had there been effective information on the impending calamity, saving precious lives and property to an extent
>Operational model
Strategically placed sensors sensing an unpredictable event like movement of tectonic plate, formation of disastrous cloud, underground volcanic movement can trigger a quicker disaster control response and if acted upon on time it has the potential to save precious life & property.
-Sensor would communicate with Satellite for exchanging information
-In case of any disaster forecast by theProfitable sensors Solutionthe NOC to Emergingalarm would Market beChallenges triggered through with ‘Internet disaster of managementThings’ 3 instructionsagement. This instructions. would help This in taking would prehelp-emptive in taking measures pre- 2.2.1 Background for evacuation emptive measures for evacuation Fresh water resources are limited and with rise in temperatures glaciers are melting faster. At the same time agriculture intensive emerging economies also need to produce food and use water. Idea is to optimize the water needs, to draw only the amount of water needed and at a time when required.
2.2.2 Benefits Saves water, reduces electricity usage and thereby the carbon emissions. With the kind of scale of cultivation and gardening (5% of total earth area). This will have a profound positive impact on environment. FigureFig. 4: 4: Communication Communication Network Network for for Natural Natural Calamity Alert Calamity Alert 2.2.3 Operational Model Sensors have to be placed in the field at suitable spatial -It c-Itan canbe integrated be integrated with with area area specific specific mobil mobilee telecom telecom system to generate SMS/alerts to inform people and intervals in a mesh style which will send the readings to system to generate SMS/alerts to inform people and a central intelligent unit. Based on the data received, the provideprovide direction direction for for evacuation evacuation.. unit will decide when to start the watering process, in which part of the field and for what duration. 2.1.4 Monetization Model >Monetization Model Currentl.y the Government spends Millions of dollars Sensors can communicate with the intelligent unit using post any disaster. Telecomservice provider can offer an appropriate communication technologies. Also, the sensors are not required to send frequent readings to the Currentlyintegrated the technologyGovernment solution spends to M theillions government of dollars in posta any disaster. Telecomservice provider can offer an managed services model. Central Unit and therefore the data requirements and extent of data processing are not of the highest order, integrated2.2 technologySmart Field, solution Green to the environment, government inHappy a managed Farmersthereby services !helping model. in the viability of the solution. 2.2 Smart Field, Green Environment, Happy Farmers! - To reap economies of scale, the intelligent unit can be Field shall tell the farmer ‘I am thirsty’. So can a lawn orcentrally a garden placed to a gardener.at Service The provider idea premisesis to install and soil operated Field shall tell the farmer ‘I am thirsty’. So can a lawn or in a virtualized cloud based multi-tenanted model. a gardenspecific to sensors a gardener. that canThe measure idea is to the install dryness soil of specific soil, the minerals required, ambient temperature and thereby sensors that can measure the dryness of soil, the minerals -NOC alarm can be raised if sensor is out of order and the required,informing ambient the water temperature and mineral and thereby requirements informing to thethe ownersfault or notification simply transmitting shall be sentthem to tothe a landwater owner pump and the water and mineral requirements to the owners or simply service provider for correction. transmittingreceptor which them would to a water automatically pump receptor start watering which would the field. automatically start watering the field. 2.2.4 Monetization Model Farm owners, gardeners, co-operatives as well as irrigation ministry and government can all be the clients for this kind of futuristic solution. The operator can keep the pricing of such solution based on the number of sensors installed or the area of the farmland.
3. Societal Use Cases
3.1 How Can IoT improve Biker’s Safety? According to the World Health Organization, road traffic injuries causes an estimated and remains unacceptably FigureFig. 4:5: Agriculture Agriculture Field Field Sensor Sensor:: Illustration Illustration high at around 1.3 million deaths worldwide in a year.
> Background
Fresh water resources are limited and with rise in temperatures glaciers are melting faster. At the same time
agriculture intensive emerging economies also need to produce food and use water. Idea is to optimize the water
needs, to draw only the amount of water needed and at a time when required.
> Benefits
Saves water, reduces electricity usage and thereby the carbon emissions. With the kind of scale of cultivation
and gardening (5% of total earth area). This will have a profound positive impact on environment.
>Operational model
Sensors have to be placed in the field at suitable spatial intervals in a mesh style which will send the readings to
a central intelligent unit. Based on the data received, the unit will decide when to start the watering process, in
which part of the field and for what duration. 4 Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016 Only 28 countries, representing 449 million people (7% of 3.1.4 Smart Helmet the world’s population), have adequate laws that address Helmet to have a chip integrated which would generate all the risk factors. Even if the riders are aware of the Proximity system radio signals. The helmet is authenticated via one of safety norms, many a cases they avoid wearing helmets. recognizes the the several antennas in the motorcycle’s bodywork. What if even without the traffic law a technology was in The motorcycle with a smart helmet can disengagetransducer the in place which makes sure that riders wear helmet? immobilizer and automatically unlock the bike.helmet
3.1.1 Background Proximity system recognizes the transducer in Figure 6: Illustration: Bike proximityhelmet Sensor
A secondary proximity sensor can sense whether a pillion is sitting or not and whether the pillion is wearing an
FigureapprovedFig. 6: Illustration:7: helmet Illustration: Bike Bike proximity Proximity Sensor Sensor
A secondary proximity sensor can sense whether a pillion A secondary proximity sensor can sense whether a pillion is sitting or not and whether the pillion is wearing an Figure 5: Road accident comparison isHuman sitting orBody not capacitanceand whether the pillion is wearing an Fig. 6: Road Accident Comparison approved helmet approved helmet Source: www.who.int Treadmill safe key, capacitive touch phones, calorie/speed monitor devices and many others use human body Source: www.who.int 3.1.5 Human Body Capacitance - Over 90% of all road fatalities occur in low and middle-income countries. • Over 90% of all road fatalities occur in low and mid- Humancapacitance Body capacitanceas the medium to transmit signal. The small chip for the security system can be embedded on the dle-income countries. Treadmill safe key, capacitive touch phones, calorie/ - The number of motorcycle rider deaths is nearly 30 times morespeed thanmonitor drivers devices of other and vehicles many others use human • The number of motorcycle rider deaths is nearly 30 Treadmill safe key, capacitive touch phones, calorie/speed monitor devices and many others use human body bodyhelmet capacitance inner surfac as thee. medium As soon to transmitas the ridersignal. wears The the helmet and touches the handle of the motorcycle, the body - Majortimes reasons more of than death drivers on the of spotother include vehicles brain hemorrhage,small internal chip for injury the securityto organs system or due can to bloodbe embedded loss on • Major reasons of death on the spot include brain capacitancethewill helmet act asinner as the the surface. capacitor medium As soon to completing transmit as the rider signal. circuit wears The thebetween small chip the for helmet the security and thesystem bike. can This be embedded will activate on the the ignition - Ridershemorrhage, wearing an internal approved injury helmet to organs reduce or duethe torisk blood of death helmet by 37 andpercent touches the handle of the motorcycle, the loss helmetbodywithout will inner actinserting assurfac the capacitor e.a Askey soon in completing the as ignition.the rider circuit wearsThe between push the helmet button and when touches pressed the handlewill ignite of the the motorcycle, engine the body > Benefits the helmet and the bike. This will activate the ignition • Riders wearing an approved helmet reduce the risk willwithout act insertingas the capacitor a key in thecompleting ignition. Thecircuit push between button the helmet and the bike. This will activate the ignition of death by 37 percent Instead of trying to stop someone from violating safety normswhen pressed by not will wearing ignite thea helmet, engine we would have a without inserting a key in the ignition. The push button when pressed will ignite the engine 3.1.2 Benefits technology in place which won’t allow them to do it in the first place. Fatal injuries to the brain can be avoided.
>OperationalInstead of trying model to stop someone from violating safety norms by not wearing a helmet, we would have a Thetechnology helmet isin toplace have which sensors won’t which allow would them totell do the it inmotorcycle whether the motorcyclist and the pillion has the first place. Fatal injuries to the brain can be avoided. worn helmet or not. 3.1.3 Operational Model
SmartThe Helmethelmet is to have sensors which would tell the motorcycle whether the motorcyclist and the pillion has Fig.Figure 8: Illustration: 7: Illustration: Body Body Capacitance capacitance as the Ignitionas the ignition activation medium Helmetworn helmet to have or a not. chip integrated which would generate radio signals. The helmet is authenticated via one of the Activation Medium several antennas in the motorcycle’s bodywork. The motorcycleFigure 7: Illustration:with a smart Body helmet capacitance can disengage as the ignition the activation medium >Monetization Model immobilizer and automatically unlock the bike. >ProductionMonetization & Model Marketing
Production & Marketing Profitable Solution to Emerging Market Challenges through ‘Internet of Things’ 5 3.1.6 Monetization Model 3.2 Crime Control through Real-time video Production & Marketing Surveillance with Smart Cameras • The market for branded helmets (ISO certified) all Income inequality has given rise to sharp increase in crime rates and is a major concern for law makers and around the world and especially in developing and 3.2.1 Background under developed countries is much smaller com- Incomeparents inequality of school has going given children rise to, corporatesharp increase bodies in in BPO industry where staff travels during nights and in pared to the unbranded ones, which do not provide crime rates and is a major concern for law makers and safety from fatal accidents. parentsgeneral of women school going safety children, in buses corporate. Cameras bodies installed in BPO inside vehicles are a deterrent but the stored video clips come industry where staff travels during nights and in general • Just like a car manufacturer’s tie-up with a tire man- handy for investigations post any crime. What if the cameras can be connected through wireless networks that ufacturing company, if motorcycle manufacturing women safety in buses. Cameras installed inside vehicles companies have tie ups with helmet manufacturers, are a deterrent but the stored video clips come handy for investigationscan not only postmulticast any crime. real- timeWhat feed if the to camerasbe viewed can by multiple stakeholders with personal safety interest but it will be a win-win situation for both. Consumers be connected through wireless networks that can not will have access only to branded ISO certified hel- onlyalso multicast send alarm real-time to neare feedst policeto be viewedvehicle/station by multiple with location coordinates and other details. Thus raising the mets. Helmet manufacturers will be able to sustain stakeholders with personal safety interest but also send well with better quality products as competition from alarmdeterrence to nearest level manifoldpolice vehicle/station with location the unbranded market will die out. coordinates and other details. Thus raising the deterrence • If one loses ones helmet or if it is damaged, one can level> Benefits manifold simply call up the customer care to block the access of the helmet and issue a new helmet within a day. 3.2.2 BenefitsOnline remote surveillance will provide real time feed to which security officer / parents / corporate bodies can Simply walk into the nearest dealer, give your cre- subscribe and monitor the vehicle and kids’ activities. Smart relay of vehicle condition would help in taking dentials and once the seller encodes the chip inside Online remote surveillance will provide real time feed helmet and gives the access to the bike key, walk to which security officer / parents / corporate bodies can informed decision of whether to travel in the vehicle or for the owner to get servicing done. away with a new helmet. subscribe and monitor the vehicle and kids’ activities. Smart relay of vehicle condition would help in taking - Improved vehicle monitoring 3.1.7 Eco-system informed decision of whether to travel in the vehicle or for the owner to get servicing done. - Improved kids/traveler’s safety • Government mandate can make the motorcycle man- • Improved vehicle monitoring ufacturers include this feature in their vehicle by de- - •Cri Improvedme control kids/traveler’s by monitoring safety the inside activities of the bus fault. If the entire eco system is developed, no user • Crime control by monitoring the inside activities of (rider) can skip a helmet. - These surely are the USP & differentiation for transport provider the bus • Also, this can lessen the theft of bikes as just a me- chanical key won’t be the access to start a bike. • These surely are the USP & differentiation for trans- Electronic key with unique identification and key port provider numbers (just like a credit card) can provide good amount of security towards theft of bike.
3.1.8 Financial Viability
• Financial viability is one big concern, but the way price for touch sensors in mobile phones or simcards have come down, paying a small premium for secu- rity from life threatening accidents should not be a matter of great concern. Figure 8: Real time feed from bus Source: Google Pics • Government can reduce taxes on helmets and motor- Fig. 9: Real Time Feed from Bus cycles having this feature. >Source:Monetization Google Pics Model Service provider can monetize by selling the service to entities including schools, transport operator, parents Sensors installed across places and localities, factories, mills would generate data about the contents of the air 6 Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016 etc. The revenue models can be of various type including fixed fee/ fixed and variable fee / monthly fee/ 3.2.3 Monetization Model and andsend send it across it across to the tocentral the centralbody where body the where data canthe data can be processed and can generate real time reports for transaction based fee etc. be processed and can generate real time reports for each Service provider can monetize by selling the service to area.e achPollution area. Pollutioncontrol board, control NGOs, board, general NGOs, population general population can buy these reports or log on to websites where entities including schools, transport operator, parents etc. can buy these reports or log on to websites where real The revenue3.3 modelsPollution can be of freevarious air type to breatheincluding in!time real reports time arereports published. are published. A premium A premiumcan be charged can be charged accordingly. fixed fee/ fixed and variable fee / monthly fee/ transaction accordingly. based fee etc. Monitor & notify air quality at pre-determined locations4. Business so that designauthorities Essentials can take measures to control, 3.3 Pollution Free Air to Breathe In! 4. Business design Essentials: commuters can take informed decision on their IdeasplannedIdea ands visit,anduse-cases use Alternate-cases are are goodroutes good only display only if theyif forthey can navigation canbe be technologically> implemented, manageable and scalable. Monitor & notify air quality at pre-determined locations technologically implemented, manageable and scalable. so Backgroundthat authorities can take measures to control, commuters can take informed decision on their planned visit,One Alternate of the routesgreatest display problems for navigation. that the world is facing today is that of air pollution, increasing with every passing
3.3.1 Backgroundyear and causing grave and irreparable damage to the earth. Leave aside other flora & fauna, people especially
Onechildren of the greatest are hugely problems affected that the byworld air ispollution. facing today It is thus important to curb air pollution and also important to is that of air pollution, increasing with every passing year andavoid causing the grave regions and irreparablewith high damage amounts to theof earth.nitrous oxides, carbon monoxides, Sulphur dioxides, lead, and Leave aside other flora & fauna, people especially children are biologicalhugely affected pollutants. by air pollution. It is thus important to curb air pollution and also important to avoid the regions with high amounts of nitrous oxides, carbon monoxides, Sulphur dioxides, lead, and biological pollutants.
Figure 10: Ericsson Design essentials Fig. 11: Ericsson Design Essentials This section discusses some of the fundamental design aspects that an organization would need to follow This section discusses some of the fundamental design aspectsintending that anto captureorganization one or would more IoTneed opportunity: to follow intending to capture one or more IoT opportunity: • Outlines the strategy and policy to get into 1 or more - IoTOutlines growth the areas strategy based and on policythe Analysis to get intoof Local 1 or more IoT growth areas based on the Analysis of Local market market and regulatory environment, and regulatory environment, • Identifies target Business Segments and GTM- of FigureFig. 10:9: IllustrationIllustration ofof pollutionPollution freeFree zone Zone ferings and works to develop the capability to offer - Identifies target Business Segments and GTM offerings and works to develop the capability to offer those > Benefits those Products & Services 3.3.2 Benefits • ProductsIdentifies & andServices develops the Resource Infrastructure Informed decision to pollution control board would help them in understanding the exact nature of the pollution, Informed decision to pollution control board would help with appropriate capabilities required to create the - products.Identifies This and can developsrange from thecreating Resource the following: Infrastructure with appropriate capabilities required to create the themreason in understanding for it and how the exactto control nature and of curbthe pollution, it. Parents can take informed decision for visiting a particular place or reason for it and how to control and curb it. Parents can • Cloud platform to offer services (offering scalability, take informed decision for visiting a particular place or products. This can range from creating the following: taking a particular route, to safeguard their children from multi-tenancy,deadly pollutants. etc.), taking a particular route, to safeguard their children from • Suitable communication infrastructure (Operators are deadly pollutants. . Cloud platform to offer services (offering scalability, multi-tenancy, etc.), > Monetization Model showing keen interest in using Wi-Fi capabilities due 3.3.3 Monetization Model to the higher data rates, no spectrum fee. However, other technologies might be more relevant example Sensors installed across places and localities, factories, satellite communication for remote rural reach. mills would generate data about the contents of the air . Suitable communication infrastructure (Operators are showing keen interest in using Wi-Fi capabilities due
to the higher data rates, no spectrum fee. However, other technologies might be more relevant example
satellite communication for remote rural reach. . Suitable communication infrastructure (Operators are showing keen interest in using Wi-Fi capabilities due
to the higher data rates, no spectrum fee. However, other technologies might be more relevant example
satellite communication for remoteProfitable rural reach. Solution to Emerging Market Challenges through ‘Internet of Things’ 7 • Success Mantra: Benefit and end usage focused prop- ositions. Should help in solving real life difficulty • Long tail monetization: Make tit reach the mass market, the cost of solution & offering has to be affordable • Easily Available: Smartphone App, Smart TV, Web interface etc. Application that gives whole gamut of services: Front end followed by tabs for each of the area ex tab for Home Energy usage 6. Conclusion: Next Step Figure 11: Ericsson Connection Platform As discussed in this paper, ‘Internet of Things’ is at a IdentifiesFigure 11: the EricssonFig. Activation 12: Guiding Connection and Principles provisioning Platform of servicesstage where to fulfill disparate the networks market and offerings a multitude of sensors must come together and interoperate under a common IdentifiesSource: Ericsson the IOTActivation and provisioning of services to fulfill the market offerings Finalizes build-buy-partnership decisions and forgesset of partnerships standards. This to effortcreate will e2e require supply businesses, chain • Identifies the Activation and provisioning of services governments, standards organizations, and academia to Finalizesto fulfill build the -marketbuy-partnership offerings decisions and forges partnershipswork together to toward create a e2e common supply goal. chain Identifies • Finalizes the build-buy-partnership risks to the business decisions and and take forges actions to control the risks. There are a few hurdles in the road to a ‘Connected Identifiespartnerships the risksto create to the e2e business supply chain and take actions to control the risks. World’ which have the potential to slow the development • Identifies the risks to the business and take actions to of IoT. The three biggest barriers are the deployment of control the risks. IPv6, power for sensors, and agreement on standards. It is 5.5.GuidingGuiding principles for for building building an IoT an importantapplication: IoT application: to note that while barriers and challenges exist, they are not insurmountable. Given the benefits of IoT, 5. Guiding principles for building an IoT application these issues will get worked out. It is only a matter of SmallSmall Changes Changes can can make make a lot a lotof impactof impact provided provided time.they are they delivered are delivered right and atright the rightand timeat the right time • Small Changes can make a lot of impact provided Smart experience: Only work if easy & intuitive toNext, use for IoT to gain acceptance among the general Smartthey are experience: delivered right Onlyand at thework right if time easy & intuitivepopulace, to use telecom operators, service providers and others • Smart experience: Only work if easy & intuitive to must deliver applications that bring tangible value to use peoples’ lives. In conclusion, IoT represents the next evolution of the Internet. IoT has the potential to change the world as we know it today - for the better. How quickly we get there is up to us.
7. Bibliography Source: Wikipedia, 2014 Sources: U.S. Census Bureau, 2010; Forrester Research
Transforming Smart City ideas into Reality: Retrieved Fig 12: Guiding Principles Source: Ericsson IOT from Ericsson research paper presentation https://www.ericsson.com/spotlight/services/ Fig 12: Guiding Principles Source: Ericsson IOThttps://iot-marketplace.ericsson.net/ Fig. 13: Guiding Principles Realizing the connected world – how to choose the right IoT platform Retrieved from Source: Ericsson IOT https://www.bosch-si.com/media/bosch_software_in- novations/documents/white_paper/iots_1/20141007_
Realizing the connected world – how to choose the right IoT platform Retrieved from https://www.bosch- si.com/media/bosch_software_innovations/documents/white_paper/iots_1/20141007_bosch_software_innovatio ns_iot_whitepaper_technology_final.pdf
Sources: Cisco IBSG:
Developing Solutions for the IoT- Retrieved from Intel report- http://www.intel.in/content/dam/www/public/us/en/documents/white-papers/developing-solutions-for-iot.pdf
Source: “India Has Its Own Kind of Power Struggle,” The Wall Street Journal, Jackie Range
Road safety data. Retrieved from http://www.who.int/mediacentre/factsheets/fs358/en/
8 Telecom BusinessRealizing Review: the SITMconnected Journal world – how to choose the right IoT platformVolume Retrieved9 Issue 1 September from 2016
https://www.bosch- Amardeep is a Senior Consultant at COE, Ericsson with 15 years of advisory experience in Information & Communication bosch_software_innovations_iot_whitepaper_technolsi.com/media/bosch_software_innovatio- Integrators,ns/documents/white_paper/iots_1/20141007_bosch_software_innovatio Telecom Service providers & IP Players). ogy_final.pdf ns_iot_whitepaper_technology_final.pdfHe has led CXOTechnology level consulting value chain engagements (OEMs, System in Integrators, Telecom Service providers & IP Players). He has led CXO level Sources: Cisco IBSG: http://www.cisco.com/web/about/ Competence domainsconsulting OSS, BSS, engagements Cloud, M2M, in Competence Big data, domains OSS, BSS, Cloud, M2M, Big data, etc. with business skills in the ac79/docs/innov/IoT_IBSG_0411FINAL.pdfSources: Cisco IBSG: etc. with business skillsBusiness in the Model Business Inno Modelvation, Innovation, Planning and Strategy, M&As, Green-field & Brown field Transformations across the globe. Planning and Strategy, M&As, Green-field & Brown field Developing Solutions for the IoT- Retrieved from Intel Transformations across the globe. report- http://www.intel.in/content/dam/www/public/ He is a thought leader with Go-Getter attitude and is backed with solid credentials from reputed institutes (MBA, us/en/documents/white-papers/developing-solutions-Developing Solutions for the IoT- RetrievedHe is froma thought Intel leader reportComputer with- Go-Getter Engineering attitude and and Professional is backed certifications) for-iot.pdf http://www.intel.in/content/dam/www/public/us/en/documents/whitewith solid credentials from reputed-papers/developing institutes (MBA,-solutions -for-iot.pdf Source: “India Has Its Own Kind of Power Struggle,” The Computer Engineering and Professional certifications) Wall Street Journal,Source: Jackie “India Range Has Its Own Kind of Power Struggle,” The Wall Street Journal, Jackie Range Road safety data. Retrieved from http://www.who.int/ mediacentre/factsheets/fs358/en/Road safety data. Retrieved from http://www.who.int/mediacentre/factsheets/fs358/en/
Brief Bio of Author/s
Swarnabha is an Operations Consultant at GSI Consulting-Ericsson.Swarnabha He has isover an Operations8 years of Consultant diverse at GSI Consulting-Ericsson. He has over 8 years of diverse experience of working experience of workingwith with leading leading Telco Telco Operators, Operators, and andService Providers across geographies in a cross functional environment in the areas of Service Providers across geographies in a cross functional Business Process Assessment & Re-engineering, Financial Analysis, Business Case Development, OSS/BSS, IoT etc. environment in the areas of Business Process Assessment & Re-engineering, Financial Analysis, Business Case Development, OSS/BSS, IoT etc. Amardeep is a Senior Consultant at COE, Ericsson with 15 years of Amardeepadvisory experience is a Senior in Consultant Information at COE,& EricssonHi consultative with 15 years skills of is advisory backed experience with credentials in Information from & Communication Communication TechnologyTechnology value value chain chain (OEMs, (OEMs, SystemSystem Integrators,reputed institutesTelecom Service(MBA, providersElectronics & IP Engineering Players). He andhas led CXO level consulting engagements in Competence domainsProfessional OSS, BSS,certifications) Cloud, M2M, Big data, etc. with business skills in the Business Model Innovation, Planning and Strategy, M&As, Green-field & Brown field Transformations across the globe.
He is a thought leader with Go-Getter attitude and is backed with solid credentials from reputed institutes (MBA, Computer Engineering and Professional certifications)
Swarnabha is an Operations Consultant at GSI Consulting-Ericsson. He has over 8 years of diverse experience of working with leading Telco Operators, and Service Providers across geographies in a cross functional environment in the areas of Business Process Assessment & Re-engineering, Financial Analysis, Business Case Development, OSS/BSS, IoT etc. Article can be accessed online at http://www.publishingindia.com
Implicit Testing - An Improved Way of Testing Software Shraddha Avhad Bahalkar*, Shankar Ramamoorthy** *SW Test Team Lead, Amdocs DVCI Pvt Ltd, Cyber City Tower 2, Magarpatta city Pune, Maharashtra, India. Email: [email protected] **Quality Business Partner, Amdocs DVCI Pvt Ltd, Cyber City Tower 2, Magarpatta city Pune, Maharashtra, India. Email: [email protected]
Abstract This Paper talks about implicit testing in software, Implicit is defined as, “Suggested though not directly expressed, Implied, indirectly suggested; unconditional, contained within.” Implicit testing has many dimensions however it is slightly ignored or can say untouched. This Paper is going to explore and get to know it in detail for better usability, get the maximum returns from the software to achieve better customer satisfaction. This paper will talk about the comparison between Maslow’s Hierarchy of Needs and Software needs to explain the correlation between human needs and software needs and different ways of conducting implicit testing; for example, Intuitive Testing, Exploratory, Accessibility, Heuristics, Hypothesis and Usability Testing. Life cycles of Software needs. Keywords: Implicit needs, Implicit testing, Hierarchy of Needs
1. Introduction Customer”, if one skips testing it then one is not doing his/her job devotedly. We can say that one is not working on enhancing customer experience. In the software context, Implicit needs means needs or requirements which are not mentioned in any specification This technical Paper discusses the Hierarchy of Needs documentation such as BRD/SRD/HLD. Now, one will and different types to conduct implicit testing and life ask why one needs to test this “Implicit Need” when it cycle of software needs. is not mentioned in any specification documentation, absolutely correct! 2. Comparing two Needs Models We have been taught that “Software testing is a procedure of using a software system or application with the Here, we discuss the Hierarchy of Needs, and compare concentrating on discovering the software issues/problem Maslow’s Hierarchy of Needs Model [1] with a Software or defects”, and defect is nothing but “Deviance from the Needs Model. For a better understanding of the topic, this requirement stated in the software system/Application paper will do a high level study of Maslow’s Hierarchy functional requirement document” of Needs.
So will a good tester always refer to specification A. Concept of Maslow’s Hierarchy of Needs[1] - documentation (like BRD/SRD/HLD/User Story) and Abraham Maslow created a model. He explained that skip testing implicit needs? elementary needs such as physiological and safety must be fulfilled before superior needs such as love, esteem or Or shall we stop referring to specification documentation? self-actualization. In this model, only when an elementary One should keep using/referring to specification need is satisfied, can the next superior need start tobe documentation. There is more to test apart from these fulfilled. Maslow’s hierarchy of needs diagram follows: Documents and that is called as “Implicit Needs of a 10 Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016
-esteem needs.and accomplishment Esteem. External needs esteem are categorized as internal or external. respect. Examples of internal esteem needs are self-esteem and accomplishment. Examples of external esteem needs are
social status and respect.
• Dignity is the top most need of Maslow's related• toAccomplishment one’s development as a fulfilled; as there are to grow. needs such as:• Responsiveness Reality Honesty/ Integrity • Appreciation Knowledge Significance • Status As per Maslow, only a small proportion of the people touch Fig 1: Maslow's Hierarchy of Needs the level of self-actualization. Fig. 1: Maslow’s Hierarchy of Needs Self-actualization Need is the top most need of Maslow’s hierarchy of needs. It is related to one’s development as B. Concept of Hierarchy of Software Needs Physiological Needs are low level needs which are basics The Hierarchy of softwarea person.needs needs like is Thisselfa model-esteem need describing and isaccomplishment never fully. External fulfilled; esteem as there are Physiologicalto endure life, Needs such as: are low level needs which arehierarchy basics of needs in the context of software. Project team Air (Dev and QA teams)constantly startneeds working like onsocialnew specified status prospects needs and respect to. grow. to endure life, W suchater as: which are all documented and onceDignity all needs are meet with Food /Nourishment different levels of Documentation then only they can think Sleep Self-actualizationAccomplishment needs include: • Air about higher level needs such as Implicit needs. Hierarchy As per Maslow's theory, if low level needs are not fulfilled of Software Needs is shown in theResponsiveness following diagram then one will try to fulfil these needs on priority. Superior • Reality • Water Appreciation needs like social or esteem needs are not sensed until one Status has fulfilled the needs basic to one's living. • Honesty/ Integrity • Food /Nourishment Safety Needs- When physiological needs are fulfilled then, Self• -actualizationKnowledge Need is the top most need of Maslow's • Sleepone will start thinking about safety and security hierarchy of needs. It is related to one’s development as a These needs can be fulfilled by: person, this need is never fully fulfilled; as there are House/ Home • Significance As per Maslow’s Medical theory, facilities if low level needs are not fulfilled constantly new prospects to grow. then one will Jobtry/ service to fulfil these needs first. Superior needs As Selfper-actualization Maslow, needs only such a as:small proportion of people reach Financial security Reality like socialAs per or Maslow's esteem theo ry,needs if safety are needs not are notsought fulfilled after until one the self-actualization Honesty/ Integrity level. then one will try to fulfil these needs on priority. One will Knowledge has fulfillednot think theabout superiorbasic needs. to one’s living. . B. Concept Significance of Hierarchy of Software Needs As per Maslow, only a small proportion of the people touch Safety Needs When physiologicalFig 1: Maslow's needs Hierarchy are fulfilled, of Needs Social Needs- When one fulfils low level physiological the level of self-actualization. The Hierarchy of software needs is a model describing then oneand will safety start needs, thinkingthen one starts about thinking safetyabout superior and security. needs like social needs. Social needs are related to hierarchy of needs in the context of software. Project communicating with other people: Fig 2: Hierarchy of Software Needs These needs canFamily be fulfilled by: teamsB. Concept (Dev of and Hierarchy QA of teams) Software startNeeds working on specified Friends Physiological Needs are low level needsBusiness which areRequirement basicsneeds, - BusinessThe which Hierarchy requirements are of softwareall are documented, needs is a model and describing once all needs are nothing but foundation block for creating an application or • House/ L oveHome to endure life, such as: hierarchy of needs in the context of software. Project team Air System. Client createsmet, BRs. sometimes BR are provided toon del iverdifferent levels of documentation, value, Products, systems, software,(Dev and and QA processes teams) tostart working on specified needs • Medical facilities Water satisfy business requirementsthen onlywhich of clients canare all. Thesethey documented think and about once all higher needs are level meet with needs such as •Esteem Job/ Needs service - When one fulfils socialFood needs, /Nourishment then one starts Requirements are basicImplicit and differentneeded needs. to levels endure The of the Documentation project.hierarchy then of Softwareonly they can Needsthink is shown thinking about other superior needs likeSleep esteem needs. Esteem about higher level needs such as Implicit needs. Hierarchy needs are categorized as internal or external. Internal esteem in the following diagram • Financial securityAs per Maslow's theory, if low level needs are not fulfilled of Software Needs is shown in the following diagram then one will try to fulfil these needs on priority. Superior As per Maslow’s theory,needs if like safety social orneeds esteem needsare notare not fulfilled sensed until one has fulfilled the needs basic to one's living. then one will try to fulfil these needs first. One will not think about superior needs.Safety Needs- When physiological needs are fulfilled then, 2 one will start thinking about safety and security Social Needs WhenThese one needs hascan be fulfilled fulfilled by: low level physiological and safety needs,House/ only Home then will one start Medical facilities thinking about superior needs Job / likeservice social needs. Social needs are related to communicating Financial security with other people: As per Maslow's theory, if safety needs are not fulfilled • Family then one will try to fulfil these needs on priority. One will not think about superior needs. • Friends . • Love Social Needs- When one fulfils low level physiological and safety needs, then one starts thinking about superior Esteem Needs When needs one li fulfilske social needs. social Social needsneeds, are related then to one starts thinking about othercommunicating superior with otherneeds, people: like esteem Fig 2: Hierarchy of Software Needs Family Fig. 2: Hierarchy of Software Needs Friends Business Requirement - Business requirements are Love nothing but foundation block for creating an application or System. Client creates BRs. BR are provided to deliver value, Products, systems, software, and processes to satisfy business requirements of clients. These Esteem Needs - When one fulfils social needs, then one starts Requirements are basic and needed to endure the project. thinking about other superior needs like esteem needs. Esteem needs are categorized as internal or external. Internal esteem
2
Implicit Testing- an Improved Way of Testing Software 11
Business Requirement Business requirements are (obviously useful) to them. Software quality may nothing but foundation blocks for creating an application defined as explicit as well as implicit requirements and or System. A client creates BRs. BRs are provided to expectations; however some people tend to accept quality deliver value, products, systems, software, and processes as compliance to only explicit requirements and not to satisfy business requirements of clients. These implicit requirements. This trend needs to change, and the Requirements are basic and needed to endure the project. tester needs to give more attention to cover implicit needs Unless we have BRD, the project team cannot think about of the customer for a higher level of customer satisfaction. higher level needs/requirements document. This is a basic For example, a Telecom domain has many new fields need to start with any project. apart from Voice and Text. The testers need to explore the new fields and think about the implicit needs of a new System and Performance Requirements are more world, like better usability, accessibility of the telecom detailed and descriptive requirements. They describe application, such as customer web sites and portals to see what is expected from an application or Software system usage, pay bill, generate reports, etc. to satisfy the client’s needs. SRs are written as statements, opinions, and performance requirements; including levels Digitalization is occurring very quickly in developed of security, safety, dependability of the application or countries and it is a need of time to use websites or a software system. This is the second most important need portal for day to day work. In India, the Government to start work on any project. is promoting Digitalization for a better e-Governance model. In this scenario, there is a huge scope of implicit User Story are requirements from the view of end user, needs understanding and testing for better usability and why and how the user is going to use any particular accessibility of web applications. functionality. It describes the user’s details, and their expectations from the application. A user story aids to Amdocs always pays more attention to their customer’s produce a basic explanation of a requirement. implicit needs by setting up innovation labs and creates different useful tools/utilities to enhance the customer This is the third most important need to start work on any experience. project. Amdocs introduced the BEAT-Testing framework for Business Processes are a gathering of correlated, improved testing processes and customer satisfaction. arranged events that produce a precise real life business scenario for the end user. Most of the time, a business This paper discusses the different types to conduct implicit process is presented as a flow chart. Methodology and testing, as below: tools to this layer are widely applied in Amdocs[4]. Work Procedures are used to describe the Business 3. Different Types to Conduct Implicit Process in detail. This allows clear documentation of how Testing a particular activity should be performed. This can be an optional document to start the project work. In the previous section, the implicit needs were presented as the tip of the testing needs. Although it is a new Implicit Needs means needs or requirements which are approach, there are several existing testing methods that not mentioned in any specification documentation, like are adequate to conduct implicit testing, including: BRD/SRD/HLD/US/DD. There is more to test, apart from these Documents and that is called, “Implicit Needs A. Intuitive testing of a Customer”. Once all the stated/specified needs are B. Exploratory testing implemented step by step, the Project team should think C. Accessibility testing about implicit needs. One should start thinking like an end user of the application to know implicit needs better. D. Heuristic testing Implicit testing has a very wide horizon, which includes E. Hypothesis testing various types of testing. F. Usability testing Currently, the IT world has become very competitive and Customer Satisfaction is the key to success. As an A. Intuitive Testing Intuitive can be defined as “obtained IT professional, One should always think to pleasantly by using your feelings rather than by considering the surprise a customer with delivering something extra facts”, OR “able to understand something by using feelings rather than by considering the facts”[3]. Now “Testing”. Intuitive testing is also known as way. It is testing of software without any precise Error Guessing. This cannot be used a primary strategies and timeframe. Dr. Cem Karner [7]. testing technique however one can find more conceived the term exploratory testing. This is issues and errors unnoticed by the organized prescribed testing procedure where tester does testing.12 Telecom Intuitive Business testing Review: can SITMbe used Journal to support not need any test casesVolume or 9 Issuetest 1 Septemberplanning 2016 oneand must complete have startedthe choice correlating of test the casesword through“Intuitive” documentsa prescribed to testing start proceduretesting the where system the. Testertester does get not andsystematic “Testing”. testing Intuitive methods testing. 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Always try to test Fig. 3: Exploratory Testing like division by 0, incorrect/blank input, blank files and thecondition incorrect which input datais very (these unlikely are special to happencharacters in in system/ application. input fields or alphabetical characters where digits are InIn explora exploratorytory testing,testing, testerstesters havehave toto dodo minutestthe minutest Following factors can be used to guess the mandatory). They will always try to test a condition that efforteffort for fortest test design design,. H oweverhowever, extremean extreme effort effort is for errors: is very unlikely to happen in the system/application. requiredexecution for toexecution get to know to theget particular to know functionality particular of a Lessons learnt from past releases functionalitysystem. This of issystem helpful. 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Variety of data used for testing. Some tips for exploratory testing methods: Some tips for exploratory testing methods: • Application UI • Find out the scope of the project. Find out the scope of the project. B. Exploratory• Previous testTesting results – Exploratory Testing is a • Identify the requirements along with functionality testing• Risk method reports ofthat the applicationpermits to apply one’s of the software system/application. capability and talent as a tester in an influential • Variety of data used for testing. • Check out the constraint of the software system/ application. B. Exploratory Testing – Exploratory Testing is a testing method that permits to apply one’s capability and talent • To validate stability of software system, tester as a tester in an influential way. It is testing of software should prepare test scenarios without any precise strategies nor timeframe. Dr. Cem • Comprehensive testing of the software as per4 the Karner[7]. conceived the term exploratory testing. This is prepared test scenarios and identified requirements. Identify the requirements along with Speech Recognition Software – this software helps functionality of the software differently able people to convert the spoken word to text that can be given as input to the computer. system/application. Screen reader software – it is used to read out the Check out the constraint of the software written text which is displayed on the screen of the system/ application. computer To validate stability of software system,Implicit Testing- Screen an Magnification Improved WaySoftware of -Testing it is used Softwareto 13 tester should prepare test scenarios magnify/ enlarge the monitor /screen to make reading easy for visually-impaired people. C. Accessibility Testing – dayComprehensive by day the web testing is becomingof the software aswhere defects People or issueshaving motor can control be found difficulties in the or application by more important in everyone’sper lives; the prepared the web test uses scenarios e-paper, and doing intellectualmovement analysis. issues can use special keyboard for identified requirements. easy typing social media, e-commerce, e-payments, Internet banking and many more. Therefore,C. Accessibility the availability Testing – dayof information by day the web is ExpertsD. Heuristics in the Testingfield- Heuristicscan bring testing a includescloser testing focus of on how one can doco softwarede components testing, algorithms to and get projects better having results testing of testing, technology tools becomesgetting largerimportant importance for in everyone’severyone. lives.I t strategies depend on historical data about possibilities. Therefore, Accessibilitycan testing be e-paper is born., social media , e - commerce , e- thereforeHeuristics heuristics testing mostly testing allow can finding also where be defects called or experience- payments, Internet banking and many more. based issuestesting. can be Experts found in the like application developer by doing intellectualand testers make Hence availability of information technology analysis. Accessibility Testing toolscan becomes ensure important that forthe everyone. system/ Thereforedecisions aboutExperts inhow the field software can bring moretesting focus oncan how be one performed application is usable by differently able people, like to makecan dothe software testing testing process to get better more results ofeffective testing and result Accessibility testing is born. hence h euristics testing is also named as experience-based having impaired vision, havingAccessibility hearing Testing problems, can ensure colour that the oriented.testing. Please Experts referlike developer to the and Heuristic testers make decisionmodel for better blindness, senior citizenssystem/ andapplication other is usabledifferently by differently able ableunderstanding. about how software This testingmodel can bewas performed designed to make by Mr James people like having impaired vision, having [2]testing process more effective and result oriented. Please groups. One can alsohearing describe problems accessibility, colour blindness, testing senior as Bach. refer Heuristic model for better understanding. This model type of systems testing intended to identify differently was designed by Mr James Bach. [2] citizens and other differently able groups. One able individuals who can also use describe the system, accessibility with testing ease. as Ittype of can be software systemsyst or emsapplication, testing intended hardware, to identify or somedifferently able individuals can use the system, with ease. It other type of system. canDifferently be software able system people or application can have, hardware, an extensive kind of physicalor some other difficulties, type of system. which Differently can be able learning or understandingpeople issues, can have problems an extensive with kind vision, of physical problem with hearing anddifficulties difficulties, which canin bemovement. learning or understanding issues, problems with vision, Section 508, an alterationproblem to the with United hearing States and difficulties Workforce in movement. Rehabilitation Act of 1973, Section is 508,a federal an alteration law tomandating the United States that all electronic and informationWorkforce Rehabilitation technology Act developed, of 1973, is a procured, maintained, orfederal used law by mandating the federal that allgovernment electronic and be accessible to differentlyinformation able people. technology[5] developed, procured, maintained, or used by the federal government be accessible to differently able people. [5] Many Telecom ServiceMany providers Telecom haveService introduced providers have accessibility testing tointroduced ensure thatan accessibility the differently testing toable ensure that community has full accessthe differently to modern able telecommunications community has full access to Fig 4: Heuristic Test Strategy Model technology. modern telecommunications technology. Fig. Heuristic 4: Heuristic Test Strategy Test Strategy Model consists Model Differently able people use assistive technology [6] it can [6] of components which can help in creating Differently able peoplehelp use people assistive in functioning technology./ using software Itproducts can in a a better testing strategy. Ultimate better way. Products like - help people in functioning/ using a software product in a Heuristic Testuse/ purposeStrategy of this Model model consistsis to make of components better way. For example, products like: that can helptester in thinkcreating about whata better is needed testing while strategy. The • Speech Recognition Software – this software helps ultimate use/purpose of this model is to make tester think differently able people to convert the spoken word about what is needed while creating test strategies. Also, it is proposed to be tailored and used to assist conversation to text that can be given as input to the computer. and uninterrupted self-learning for expert testers.5 • Screen Reader Software – this is used to read out the written text which is displayed on the screen of Project Environment includes assets, limitations, the computer restrictions, resources, team and other features in the project which may empower or restrict our testing. • Screen Magnification Software - this is used to The tester should encounter restrictions or constraints, magnify/enlarge the monitor/screen to make read- however sometimes the tester needs to agree to these ing easy for visually-impaired people. restrictions or constraints. The tester’s decision about • People having motor control difficulties or move- constraints handling can depend on the situation and ment issues can use special keyboards for easy requirements. typing Product Elements are software features that need to be D. Heuristics Testing-Heuristics testing includes tested. Software can be composite and indiscernible, so testing of code components, algorithms and projects the tester needs to be very careful while creating a test having testing strategies depend on historical data about strategy. The tester needs to plan to cover all easy as well possibilities. Heuristics testing mostly allows finding as complex elements in a project. 14 Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016
Quality Criteria are the guidelines, standards, and • User friendly –application should be easy to use procedures which can be used by the tester to identify • Easy to learn – application should be easy to learn issues in the product. Quality criteria can have many and user should get familiar to the system/applica- magnitudes and measurements. tion very easily. Test Techniques are procedures for generating the • User satisfaction - user should be satisfied with tests. The test technique involves analysis of project the complete experience of using the application/ environment, product elements, and quality criteria. This system is a very important part of heuristic testing as results depend on the test technique used. • Result oriented - application should perform well and give the correct results to the end user. Perceived Quality is the outcome of testing. The tester can never know the “definite” quality of a software The word “Usability” has various magnitudes. It is all product, however one can do extensive range of tests for about the user’s ‘experience’ during their interaction with software product/application, to identify the well-versed an application and their ‘feeling’ towards it. A structured evaluation of the software product quality. Usability Test translates this experience/feeling into a Validation Process. While doing usability testing, one E. Hypothesis Testing- is a statistical test which is used to should keep the following points in mind. identify whether there is sufficient confirmation in sample • Easy to learn: application/system should be easy data to conclude that a particular circumstance/condition is factual for the complete population. A hypothesis test to use for end users. The user should able to learn observes two contrasting hypotheses about a population: the application/system easily in the very first the null hypothesis and the alternative hypothesis. The attempt. null hypothesis is the declaration being tested. Typically • Easy to memorize: The user should able to re- the null hypothesis is a declaration of “no effect” or “no member and use functionality and navigations of difference”. The alternative hypothesis is the declaration the application/system even if the user does not use one wants to be able to determine is factual. From the the application very frequently or has not used it sample data, the test concludes whether to discard the null after a long time. hypothesis. One uses a p-value to conclude. If the p-value is less than or equal to the significant level (one can define • Errors: the application should have proper error the cut-off point) then one can discard the null hypothesis. handling and user friendly error messages. Even For example, assume one want to conclude, if a coin is if the user makes an error, one should be able to in good condition and proportionate. One flips the coin; recover from errors easily. it may result in half of the time Heads and other half • Contentment: the user should like using the ap- of the time Tails. The alternative hypothesis can be the plication/system. User experience should be number of Heads and Tails will be very much dissimilar. Representatively, these hypotheses can be stated as satisfying. • Effectiveness: the user should desire the perfor- H0: P = 0.5 mance and accuracy from application/system. Ha: P ≠ 0.5 G. Other ways to find out and test Implicit needs –One Assume one flipped the coin 100 times, resulting in 60 should use different techniques to find out implicit needs, Heads and 40 Tails. Assuming this outcome, one may be for example: prone to discard the null hypothesis. One would determine • Think like an End User from these results that the coin was probably not in good • Role Play condition and not proportionate. • Check User friendliness F. Usability testing- Usability testing is used to identify • Check Error messages up to what extent a desired software application can be understandable, how easy it is to learn, how easy it is to • Use logical thinking/common sense operate and is it user friendly. • Have futuristic view The primary focus is on: Implicit Testing- an Improved Way of Testing Software 15
• Think like an End User Start using an application After a certain time, all implicit needs become stated forgetting that you are a software professional, try needs and a new set of implicit needs is generated. to do common mistakes while data entry, clicking onCheck buttons, Error wrong messages navigation. Use logical thinking/common sense • RoleHave Play futuristic –if anview application has different types of users, then role play is the best way to validate implicitThink likeneeds. an EndOne User can –actStart as using if they application are an end userforgetting with a that particular you are anrole software and start professional, using the ap- try to do common mistakes while data entry, plication. One may get authorization or role based clicking on buttons, navigations access issues. • CheckRole Play User – iffriendliness application has – Validate different iftypes application of users then Role play is best way to validate is user friendly. This means it should be easy to implicit needs, one can act as if they are end user use.with One particular can test role Navigation, and start using screen application. layout, font, colour.one may Please get authorization, refer to the Role Usability based accesstesting men- tionedissues above.
• Check Error messages- Validate all Error mes- Check User friendliness – Validate if Fig 5: Life Cycle of Software Needs sages;Applicatio theyn shouldis user friendly,be understandable means it should to bethe end easy to use. One can test Navigation, screen Fig. 5: Life Cycle of Software Needs user. Each should not be similar to, “Technical An example for a cycle of software needs Error”,layout, “Error font, colour. 404”, Pleaseetc. Error refer messages to Usability should be testing mentioned above can be seen in the development of usability testing. in simple English and easy to understand. OneThis can was say never that implicita stated needneeds in are early never 90’s. ending; It was new sets understood by vendor and implemented in some • UseCheck logical Error thinking/common messages- Validate sense all Error- This is the of implicit needs will become generated as technology evolves.projects, in production end user liked this experience mostMessages; difficult it should part ofbe implicit understandable testing. to Asend everyone user. It should not be like “Technical Error”, “Error and end user gave positive feedback to Client and knows “Common sense is very uncommon”. Try to Client is also happy and for next projects, clients will 404”etc. Error messages should be in simple 6. Summary and Conclusion useEnglish common and easysense to and understand. past experience to locate is- like to have such functionalities. They start sues in the application. Please refer to the Intuitive mentioning it in their business requirements documents. This is the life cycle of any implicit need. TestingUse logical and Exploratorythinking/common Testing sense mentioned- This is above. This technical paper explained about implicit software most difficult part of implicit testing. As needsAfter as certain the top time, level all implicitof software needs requirements, become stated similar needs and new set of implicit needs generated. everyone knows “Common sense is very to Maslow’s psychology hierarchy of Needs. One cannot 5. Lifeuncommon”. Cycle of T Softwarery to use common Needs sense and past One can say that implicit needs are never avoidending; implicit new needs set of implicitidentification needs will and get the generated testing of it to experience to locate issues in application. Please give a better customer experience. One should always refer to Intuitive Testing and Exploratory Testing as technology evolves. What is the Life Cycle of Needs – if one can see the pattern think about implicit needs of the customer and try to fulfil in Needs,mentioned one will knowabove that all the implicit needs in early them for a better customer experience. 90’s are becoming stated or specified needs. So one can say that at some point implicit needs become stated needs There are many benefits for testing implicit software and a newV. setLIFE of CYCLEimplicit OF needs SOFTWARE will be N EEDSgenerated. Can we needs, including the following: say itWhat is as is a LifeLife Cycle Cycle of ofNeeds Needs? – if one“Yes”, can seewhy the not! The • Impressing the customer belowpattern diagramin Needs, will one explainwill know it thatbetter all the implicit needs • Less production defects in early 90’s are becoming stated or specified needs. So VI. SUMMARY AND CONCLUSION Anone examplecan say that for at a somecycle point of software implicit needsneeds become can be seen in This •technical Goodwill Paper building explained for customer about to end implicit user thestates development needs and new of usabilityset of implicit testing. needs will be generated. Can we say it as Life Cycle of Needs? “Yes” software • Positiveneeds marketingas top for levelour brand of software Thiswhy not!was Below never diagram a stated will need explain in theit better early 90’s. It wasrequirements • Birth like of newMaslow’s stated requirements/needs psychology hierarchy understood by the vendor and implemented in someof Needs, One cannot avoid implicit needs projects, in production the end user liked this experienceidentificati Althoughon implicit and testing needs itis toa newgive concept, better customerthere is a large and the end user gave positive feedback to the client. Thisexperience. variety of One testing should methods always to target think implicit about needs.implicit way the client was also happy, and for future projects,needs of customer and try to fulfil it for better This paper explained that Implicit needs gives birth to clients will like to have such functionalities. They startcustomer experience. mentioning it in their business requirements documents. new explicit needs in the software Life cycle, which Therecreates are more many business benefits for the vendorfor testing and a better implicit customer This is the life cycle of any implicit need. software needs, some are as below: • Wowing the customer • Less production defects
7
16 Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016 experience for end users and customers. Implicit needs test_magazine_september2015_web and its testing is unavoidable and a very important part of Section 508 – reference taken from http://www.sec- today’s software world. tion508.gov/content/learn/laws-and-policies Although there are advantages of testing implicit needs, Assistive technology reference taken from https://www. there are also disadvantages in Testing Implicit needs; microsoft.com/enable/at/types.aspx some are listed here: Dr. Cem Kaner, J.D., Ph.D. reference taken from http:// • Extension of budget www.kaner.com/pdfs/QAIExploring.pdf • No Budget to fulfil customer’s Implicit needs Brief Bio of Author/s • Misalignment between development and Testing teams • Misunderstanding of implicit needs • Limited or no enough time for testing.
7. Acknowledgment
We would like to thank Gilli Shama (Data Scientist) for her guidance and timely feedback. We would like to thank Mr. Leo Paulose (Innovation Expert) for providing Shraddha holds MCA post graduate degree and has 10+ support and guidance for technical paper format. We years of experience in telecom testing domain. She is thank Mr Prashant Beniwal and Mr Radhakrishna Pai working as Test lead in Amdocs and worked with client (Line Managers) for believing in us. We are thankful of closely. She is part of Amdocs Elite Expert group. She Amdocs and TIS management for providing the platform conducts training sessions for Overview of OSS and BSS for writing this technical paper. Last but not the least; I at Amdocs DVCI level. (Shraddha) would like to thank my husband Mr. Yogesh Bahalkar and Technical Writer Mr Steven Edell for reviewing and giving feedback for this paper. Thanks to my (Shraddha) Team members, Mr Manikumar (Project Manager), friends and family for keeping me motivated throughout the writing process.
References Maslow, A. H. (1943). Maslow’s hierarchy of needs. Dr. Shankar Ramamoorthy is currently working as Quality Originally Published in Psychological Review, 50, Business Partner in Amdocs Testing services. Dr Shankar 370-396. is a TQM (Total Quality Management) professional, who has spent much of his 25-years career managing change James Bech (1996- 2015). Heuristic Test Strategy Model and improving software Quality Engineering efficiency James Bach’s Blog-, Satisfice, Inc. Version 5.2.2 Date through Data and Metrics driven Quality Management 5/20/2015 Retreieved from http://www.satisfice.com/, Systems. He believes in evangelizing, coaching and http://www.satisfice.com/tools/htsm.pdf mentoring test teams through inspirational leadership. Intuitive -definition –An oxford dictionary Shankar is a computer science engineer from NIT Shama, G., & Szyk, I. (2015). Business oriented testing Tiruchirappalli and is armed with a PhD in Software in the telecommunications Industry. Test magazine, Quality Engineering from IIT Delhi, M. Tech from IIT- p. 26. Retrieved from http://issuu.com/31media/docs/ Delhi in Technology Management Systems, and an MBA from AIMA-Delhi. Article can be accessed online at http://www.publishingindia.com
Decoding DA-Vinci Code: TMMI Assessment Model Revisited Shankar Ramamoorthy Quality Business Partner, Amdocs DVCI Pvt Ltd, Cyber City Tower 2, Magarpatta city Pune, Maharashtra, India. Email:[email protected]
Abstract The majority of IT organizations face considerable challenges in tailoring their test process frameworks, since not every process applies to all types of testing projects in any one test organization. Regardless of whether an organization’s testing process is CMM1 compliant, CMMI2 compliant, ISO 9001: 2008 Quality Management System compliant, or just internally compliant, a single process framework of an organization cannot be applicable for all types of project. After all, some projects are straightforward and have relatively short gestation periods, while others are huge transformation projects that include a high level of uncertainty and painstaking complexity. Within this landscape where project composition, type, and nature are varied and diverse there is a need to define the context of each project. As test process leaders, Test Managers need to drive the definition of project context and implement processes that can be signed off as early as project kick-off and implemented diligently. Keywords: Complexity, Uncertainty, TAM (Test Assessment Model) Testing, Multi Criteria Decision Making, Sheep Dogs, Cows, Bulls, Colt, TMMI
1. Introduction faced. The essence of the proposed TMMI Assessment Model is to do the best we can with what we get. Context actually means we improve effectiveness and reliability In the TMMI Assessment Model, project complexity and through situational specific strategies, processes and uncertainty is the key problem to which the appropriate practices. This model proposes to manage uncertainty usage of processes can help provide a solution. Various (market, technical, customers, duration, and change) and dimensions and perspectives have been created to complexity (team size, team location, maturity, domain understand this. gaps, and dependencies). Context-driven testers start with This paper proposes a context-driven testing approach requirements of stakeholders and are keen to understand for ANY ORGANIZATION Testing projects. ANY projects’ complexity, uncertainty, and constraints and are ORGANIZATION Testing projects are profiled under not context oblivious. Context-oblivious testers do not four categories based on the testing types, and each of match the testing practices with testing problems. They 3 the project types is plotted under four quadrants based on do exploratory testing . Context-imperial testers (that project complexity and uncertainty. The model is based is to say, testers who consider context as king) insist on on the premise that the value of any practice depends on changing the project or business in order to fit the testers’ its context. This school of testing purports that there are own best practice or models. The context-driven testing good practices in context but there are no best practices. school described in this paper is an approach and not a People working together are the most important part technique. The TMMI Assessment Model proposes and of such a project’s context. Technically, this school maps testing types of ANY ORGANIZATION Testing maintains that the product is a solution and if the problem into four quadrants. The four quadrants are mapped based isn’t solved, the product does not work. Each of the on project complexity and uncertainty. testing models does not address the project challenges
1 Weber 2 S Shrum 2 J Bach Decoding DA-Vinci Code: TMMI Assessment Model Revisited Dr. Shankar Ramamoorthy Quality Business Partner –Amdocs Testing Services Abstract — effectiveness and reliability through situational Most of the IT organizations have a bigger challenge of specific strategies, processes and practices. This tailoring their test process framework as all processes don’t model proposes to manage uncertainty (market, apply to all types of testing projects in any test organization. Any process framework whether it is CMM technical, customers, duration, and change) and (Weber) or CMMI (ShrumS) compliant/ OR ISO complexity (team size, mission critical, team location, 9001:2008 Quality Management System) compliant or even maturity, domain gaps, and dependencies). Context internal process Quality Management System of an Driven testers start with requirements of organization cannot be applicable for all type of projects. stakeholders and are keen to understand projects There are projects with less gestation period, there are huge transformation projects and there are projects which are complexity, uncertainty, constraints and are not highly uncertain and painstakingly complex. context oblivious. Context Oblivious testers do not In this landscape of variety and diversity in project match the testing practices with testing problems. texture, type, nature, there is a need to define a context to They do exploratory testing (J Bach).Context Imperial each project and test managers as test process leaders testers insist on changing the project or business in should drive the context of project and implement order to fit the testers own best practice or models. processes which would be signed off as early as kick off and implemented diligently. Context testing school is an approach and not a technique. TMMI ASSESSMENT Model proposes and Key Words: Complexity, Uncertainty, TAM (Test maps testing types of Any Organization Testing into Assessment Model) Testing, Multi Criteria Decision four quadrants. The four quadrants are mapped on Making, Sheep Dogs, Cows, Bulls, Colt, TMMI Projects18 Telecom Complexity Business and Review: Uncertainty. SITM Journal Volume 9 Issue 1 September 2016
for this quadrant. I. INTRODUCTION TMMI ASSESSMENT Model - Project Complexity and Uncertainty is the key problem which needs to C. Bulls be resolved and usage of process appropriately can This quadrant signifies complete releases (E2E) with help to address this problem. Various Dimensions paired project management and frequent integration. and perspectives have been created to understand ANY ORGANIZATION E2E projects are examples of this. this quadrant. The TMMI Assessment model proposes This Paper proposes Context Driven School of testing to use tight cohesion as project uncertainty and project for ANY ORGANIZATION testing projects. ANY complexity are very high. This model proposes a high ORGANIZATION Testing projects are profiled under degree of process management for these types of projects with adequate gates, reviews and control. four categories based on the testing types and each of the project types are plotted under four quadrants based on project complexity and uncertainty. The Fig.1. Uncertainty and Complexity Factors and example of scoring D. Cows model is based on the premise that value of any Fig. 1. Uncertainty and Complexity Factors and This quadrant signifies high project complexity and practice depends on its context. This school of A. Sheep Dogs Example of Scoring low uncertainty. Testing where backend changes and a testing purports that there are good practices in high level of interface management has to be done can context but there are no best practices. People Relatively mature products of Any Organization be mapped to this quadrant. ANY ORGANIZATION should be tested in this quadrant where developers working together are the most important part of A. Sheep Dogs Transformation projects fit into this category. The projects context. Technically this school maintains and testers are domain experts in Any Organization customers are dominant here and teams are distributed that Product is a solution and if the problem isn’t products. Project Complexity and Uncertainty are with a high amount of interface management and inter- Relativelylow and iterations mature products are less ofand ANY teams ORGANIZATION are collocated solved, the product does not work. Each of the should be tested in this quadrant where developers and project management. The TMMI Assessment model Testing Models does not address the project and TAM Testing for Sheep Dogs entails clean and proposes frequent checkpoints for such projects. testersclear areregression domain expertssuite (ainutomated) ANY ORGANIZATION and TMMI challenges faced. The essence of proposed TMMI products. Project complexity and uncertainty are low, ASSESSMENTsmoke test. All proposes key processes test strategy of Software of offload Testing and ASSESSMENT Model is to do the best we can with iterations are fewer, teams are collocated, and TAM outsource.Life cycle TMMI and ASSESSMENTall major process model areas guidance of Any is what we get. Context actually means we improve TestingOrganizationsmoke for Sheeptest. standard All Dogs key entails methodologyprocesses clean of and andSoftware clear tools. regression Testing to do multi- level regression test and automated suite Life (automated). cycle and TMMIall major Assessment process areas proposes of Any test ColtsOrganization standard methodology and tools. strategies for offloading and outsourcing. The guidance of theThisColts TMMI quadrant Assessment signifies model new product is to perform release, multi-level weekly iterations, collocated team, very active product owner regressionandThis projects quadrant testing of signifiesandthis typeautomated new have product highsmoke uncertaintyrelease, testing weekly ofand all keylow processesiterations, project collocatedin complexity.the Software team, Anyvery Testing activeOrganization Lifecycle product owner andB2B, all Agileand projectsprojects of fallthis typeunder have this high quadrant. uncertainty TMMI and majorASSESSMENTlow process project areas complexity. ofproposes ANY ORGANIZATION AnyAd -hocOrganization testing, standardB2B,light methodologyweightAgile processes,projects and tools. fallcreate under change this components quadrant. andTMMI the ASSESSMENT proposes Ad-hoc testing, light guidance for these projects are discovering the Fig.2.Complexity – Uncertainty Grid contextweight processes,and invent createing the change processes components to do and TAM the Testingguidance. Any for Organizationthese projects E lectronicare discovering Business the - Fig. 2.Fig Complexity.2.Complexity – Uncertainty– Uncertainty Grid Grid B. ColtsDigitalcontext Experience and invent projectsing the belongprocesses to thisto doca tegoryTAM TMMI Assessment Quadrant
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Experiencegates, reviews projects and belong control. to this category and not all Fig. 3. FigQuadrant.3.Quadrant of of Uncertainty –Complexity –Complexity Grid Grid
processC. Cows areas of ANY ORGANIZATION Testing can be Attempt has been made as part of this research paper followedThisC. Cowsquadrant here. Agile signifies projects High withProject Test Complexity First Approach and Attemptto explore has companies been made andas part projects of this of research different paper kinds Anand attempt tailor has and been customize made as partTMMI of this based research on paperAny to andLow TestThis uncertainty.Drivenquadrant Development signifies Testing High where (TDD) Project Backend will Complexity be applicablechanges and to explore companies and projects of different kinds andLow high uncertainty. level of interfaceTesting wheremanagement Backend has changes to be exploreandOrganization tailor different and Process kinds customize of framework. companies TMMI and Whichbased projects hason process andAny tailor doneand highcan levelbe ofmapped interface to managementthis quadrant. has toAny be Organizationareas into Processfour quadrantsframework. forWhich TAM has process(TMMI Organizationdone can beTransformation mapped to projectsthis quadrant. fits into Anythis areasASSESSMENT into four Modelquadrants). The for16 processTAM (areasTMMI of category.Organization The customersTransformation are dominant projects he fitsre andinto teams this ASSESSMENTTMMI has been Model tailored). Theand 16classified process into areas each of of arecategory. distributed The customers with high are dominantamount heofre andinterface teams TMMIthe project has beenquadrant tailored as below. and classified into each of managementare distributed and interwith projecthigh amountmanagement. of interface TMMI the project quadrant as below. ASSESSMENTmanagement and modelinter projecthere management.proposes frequent TMMI checkpoints.ASSESSMENT model here proposes frequent checkpoints.
Decoding DA-Vinci Code: TMMI Assessment Model Revisited 19 and customize TMMI based on ANY ORGANIZATION and Strategy is needed more for the purpose of setting process framework for TAM (TMMI Assessment Model). stakeholders’ expectations. Test Planning, is also The 16 process areas of TMMI have been tailored and considered to manage both uncertainty and complexity. classified into each of the project quadrants as below. TDE (Test Design and Execution) and TMC (Test Monitoring & Control) are used to manage the project TMMI Assessment Quadrant execution.
Peer Review and Advanced Peer Review are used as different level. Test Lifecycle and Integration for Colts Bulls additionalmanaging toolscomplexity to manage of projects. uncertainty. Defect Prediction
is also used to provide guidelines on expected defects
iii. Sheep Dogs Test Policy strategy, Test Test Environment is used to manage environments for Test Design, Test planning, Test Design, test Execution, Execution, TLCI, PR, AR, testThese execution, types of Test projects Organization will have helpsall key define processes the roles at Peer review DP differentlike TPS levels,(Test andPolicy Test LifecycleStrategy) and, TMCIntegration(Test help manageMonitoring the complexityand Control) of, projects.Defect Prevention, Peer Reviews and high degree of Process optimization can be done for Sheep Dog type of projects where mature products and rolling releases of Any Organization are Test Design, Test Design, Configuration 2.3 Sheep Dogs tested. Test Execution Management, Quality Control, Test Environment Theseiv. typesCows of projects will have all key processes like TPS(Test Policy Strategy), TMC(Test Monitoring and
Control), Defect Prevention, and Peer Reviews. A high
Sheep Dogs Cows degreeThese oftypes process of projects optimization applicable can for be transformation done for Sheep Dog type of projects in Any Organization need huge type projects where mature products and rolling releases interface management, and the projects are too of ANY ORGANIZATION are tested. complex but certainty is low. One can apply TPS, TMC, TLI (Test Lifecycle Integration), PR (Peer Fig.4.TMMI mapping of Context Leadership Model Fig. 4. TMMI mapping of Context Leadership Model 2.4 CowsReview) and DP (Defect Prevention) for these types of projects.
II. PROCESS TAILORING USING TMMI These types of projects are applicable for transformation 2. Process TailoringASSESSMENT Using TMMIMODEL type projects in ANY ORGANIZATION that require Assessment Model huge interface management and are too complex but This model includes: certaintyIII. USAGE is low. OF One TMMI can ASSESSMENT apply TPS, TMC,MODEL TLI (Test
This model includes: Lifecycle FORIntegration), ANY ORGANIZATION PR(Peer Review) Testing and DP(Defect i. Colt PROJECTS Prevention) for these types of projects.
2.1 ColtDue to less complexity and high uncertainty, study Each of the testing projects in ANY says that the uncertainty is manageable. Hence the 3.ORGANIZATION Usage of TMMI Testing willAssessment be classified into Model one Due tofocus less is complexity on Test Planning and high to define uncertainty, and / or studies redefine say of the four quadrants using the criteria of Project that theexecution uncertainty path. is Peermanageable. Review Henceas an theaddition focus isto on ComplexityFor Any and Organization Project Uncertainty. Testing The entire Test Planningmanage uncertainty to define isand considered / or redefine. Defect execution Prediction path. projectProjects list (Group View) will be plotted into each of to give a guideline on expected defects is also the four quadrants. Process sets will be created for Peer considered.Review is Testalso Monitoringconsidered and to control,manage Test uncertainty. Design Defect Prediction is also considered to provide guidelines EachSheep of Dogs, the testingColts, Buprojectslls and Cows.in ANY During ORGANIZATION the kick and Execution is considered for Colt based Projects. off, all the factors of the project namely market, on expected defects. Test Monitoring and Control, Test Here the focus is on MVQ (Minimum Viable Testingtechnical will prowess, be classified customer intobase, oneduration of the of fourproject, quadrants DesignQuality) and Execution rather than are possible also considered quality or testing for Colt-based can be usingchange the management, criteria of teamProject size, Complexity criticality, andteam Project projects.done Here as time the constraints focus is maron theMVQ usage (Minimum of using heav Viabley Uncertainty.location, team The maturity entire project(Experience list (Groupcurve/Learning View) will be Quality)processes rather here. than the possible quality or testing that can plottedcurve), intodomain each gaps, of the and four third quadrants. party dependencies Process sets will be done, since time constraints mar the usage of heavy bewill created be listed for as Sheep variables. Dogs, Colts, Bulls and Cows. During processesii. here.Bulls KickTAM Off, (TMMI all the Assessment factors of Model) the project strategies - namely will be market, applied to each of the project types. Each project type This has both high complexity and high uncertainty technical prowess, customer base, duration of project, changebased onmanagement, the quadrant team they size,belong criticality, to, will haveteam itslocation, 2.2 Bullsprojects. To manage such projects Test Policy and own testing objective which will be remove strategy is needed more to set stakeholders’ teamuncertainty maturity and (experience/learning reduce project complexity. curve), domain gaps, This expectations.relates to projects Test Planning,of both highto managecomplexity both and andProcesses third-party listed dependencies for each of -the will quadrant be listed will as variables.be high uncertaintyuncertainty. andTo managecomplexity. such TDE projects and TestTMC Policy to followed right from Kick Off. manage the project execution Peer Review and Advanced Peer Review as an additional to manage uncertainty. Defect Prediction to give a guideline on expected defects Test Environment to manage environments for test execution. Test Organization to define the roles at 20 Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016
TAM (TMMI Assessment Model) strategies will be model. The model is the result of my sincere and honest applied to each of the project types. Each project type, conversations with people who I have worked with and based on the quadrant it belongs to, will have its own who have indicated a strong opinion on how they feel testing objective, which will alleviate uncertainty and about processes that are heavy, complex, and serve no reduce project complexity. purpose other than satisfying the auditor and his narrow compliance criteria. Processes listed for each of the quadrants will be followed right from Kick Off. References 4. Validation of TMMI Assessment Bach, J. (2004). Exploratory testing, in: E. van Veenendaal, Model The testing practitioner (2nd Ed.). UTN Publishing. Paulk, M., Weber, C., Curtis, B., & Chrissis, M. B. (1995). At the project Exit meeting, the usage of processes and The capability maturity model, guidelines for improv- their benefits will be assessed and a project quality score ing the software process, Addison –Wesley. will be computed to take into account the uncertainty and Chrissis, M. B., Konrad, M., & Shrum, S. (2007). CMMI complexity factors using variables and their weightages. Second edition, Guidelines for process integration and This model will be suited to organizations like ANY product improvement, Addison Wesley. ORGANIZATION and other organizations that have their [ISO9001:2008] Quality Management Systems- own internal process frameworks. It provides guidance to Fundamentals and Vocabulary, International process practitioners to pick and choose the right quadrant Organization for Standardization. based on their project category. Agile projects at ANY CDTL(Context Driven Test Leadership Model) - Dr. ORGANIZATION Testing can use the processes listed Shankar Ramamoorthy, International Conference on for the Colt quadrant. Similarly, other types of project like Emerging Trends in Software Testing UNICOM 2014. E2E, Transformation, B2B or S2S, or any nine functional streams of ANY ORGANIZATION Testing can use this Ramamoorthy, S. (2015). Agile Test Leadership Model – model. International Conference QAI –STCQAI.
5. Conclusion Brief Bio of Author/s
There is no need to kill a fly with a sledgehammer. The idea behind this paper is to bring about a customized and tailored view that is more relevant to the individual context of a project before we begin testing. TAM Testing and leadership models are becoming popular in organizations who have developed not only lightweight processes but also have used the concepts of project complexity and Dr. Shankar Ramamoorthy is currently working as Quality uncertainty as major drivers to determine the best process Business Partner in Amdocs Testing services. Dr Shankar set that can be adopted and adapted for a specific context. is a TQM (Total Quality Management) professional, who has spent much of his 25-years career managing change This paper highlights the need for bringing about a and improving software Quality Engineering efficiency calibrated approach as we see in the four quadrants of the through Data and Metrics driven Quality Management model. There is no such thing as a single best practice; Systems. He believes in evangelizing, coaching and practices that work for the organization and which are mentoring test teams through inspirational leadership. in alignment with their business goals will prove to be Shankar is a computer science engineer from NIT the best fit process set for companies to leverage in the Tiruchirappalli and is armed with a PhD in Software coming years. Quality Engineering from IIT Delhi, M. Tech from IIT- Delhi in Technology Management Systems, and an MBA Acknowledgment from AIMA-Delhi.
II acknowledge the vast experience of all the stakeholders whom I have worked with in helping me to arrive at this Article can be accessed online at http://www.publishingindia.com
Telecom – OTT Partnership – Generating New Revenue Sharing Models Sujata Joshi *, Rohit Dalal**, Rohan Egbert**, Akshara Chaudhary** *Associate Professor, Symbiosis Institute of Telecom Management, Constituent of Symbiosis International University, Pune, Maharashtra, India. Email: [email protected] ** Students Research Associates, Symbiosis Institute of Telecom Management, Constituent of Symbiosis International University, Pune, Maharashtra, India.
Abstract This paper propounds revenue sharing models for mobile operators and over the top (OTT) players in an attempt to seek a solution to the complex challenge of falling voice average revenue per user (ARPU) rates for the operators due to emergence of OTT services and the need for monetization of services by OTT players. The paper to quantify this opportunity, and highlights three partnership models as a suggestive measure to revitalize the revenue growth for both operators and OTT players 1) Service- Bundling 2) Sponsored-Data 3) Collaboration-Platform-Model Primary data was collected by means of online survey on 250 respondents in the age group of 16-25 in the city of Pune. Use case examples and secondary data was also referred to for the purpose of this study. The paper specifically highlights why OTT players should partner and how the partnership will help both Telecom andOTT operators to augment their revenue potential. Keywords: Revenue Sharing Models, Telecom- OTT- Partnership, Sponsored-Data, Service Bundle, API
1. Introduction second biggest market in 2016. India will exceed 200 million smartphone users, topping the US as the world’s 1.1 The Growing Smartphone Market : Global second largest smartphone market by 2016 (marketer, 2014). Over 44 million smartphones were sold in 2013. and Indian Figures Compared to this, handset makers sold over 59.3 million handsets in the January-September 2014 period.(IDC Telecommunications has evolved very rapidly making report year, 2014). it a necessity of our day to day life. And the one thing that lies in the centre of all is the “smartphone”. Mobile devices are increasingly becoming the first go-to device 1.2 Rise of Data: Global and Indian Stats for communications and content consumption. (Gartner, Inc., 2014) The upsurge of smartphones has affected two sectors in particular in the telecom ecosystem: The operators (data Globally, there were 1.43 billion smartphone users in 2013 providers) and Apps/OTT players (data consumers) and was predicted to increase to 1.75 billion users in 2014 (an increase of 22.5%). The number of global smartphone Global mobile data traffic grew 69 percent in 2014. It users reached 2 billion in 2014 (Strategy Analytics’ WSS reached 2.5 exabytes per month at the end of 2014, up from research, 2014). By the end of 2015, the company predicts 1.5 exabytes per month at the end of 2013. In 2014, the the number of users will have grown to 2.5 billion. typical smartphone generated data traffic of 819 megabytes per month, globally. The reports predict that monthly global Indian smartphones market is expected to further mobile data traffic will surpass 24.3 exabytes by 2019. consolidate its position, before emerging as the world’s (CISCO global mobile data traffic forecast report (2015) 22 Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016
Specific to Indian subcontinent, the mobile data traffic Brazil (185.6 million smartphone-based OTT users) and generated by 2G and 3G services has risen by 74 percent Germany (97 million). (Asianfo, 2014) during the course of 2014 (Mbit Index study, 2014). According to the study, 3G data traffic increased by 2. Literature Review 146%, surpassing the world average. The amount of mobile data consumed in India grew from 49 petabyte at The research supports a necessary change in the approach the end of 2013 to 85 petabyte by end of 2014, out of operators have towards OTT partnerships. If telecom which 52 percent came from 3G usage. Indian operators operators are to develop a successful strategic response have focused on expanding the 3G services in the last 2 from OTT competitors then they will have to first analyse years. Today there are about 80,000 mobile towers that their assets and capabilities. According to our research transmit 3G signals, accounting for 30-40 percent of operators and OTT players should work on more strategic coverage in the country. It has led to three times increase partnerships and work symbiotically. in the average data consumption by a 3G subscriber in India. 3G consumers, consume 688 MB of 3G data on an average every month, an increase of 29% during the year. 2.1 Challenges Faced by Operators and OTT The industry not only aims to achieve 70-80 percent 3G Players coverage but also it is pitching for the 4G services quite aggressively. The reports on the same are yet to come but The telecommunications marketplace is changing rapidly it is worth a mention that the gadget freaks in the country and both operators as well as the OTT players have their already have purchased 5.5 million devices capable of own set of challenges. We now highlight the challenges supporting 4G networks. faced by these players in this fast changing scenario. From Operators point of view 1.3 Rise of OTT Services and Apps • Rise of OTT players: Over the last 2 years there has The other sector that we argued earlier that has seen been an exponential growth of OTT communica- a consequential change is the App/OTT service tions. WhatsApp is leading the field by adding 8, industry. Over-the-top content (OTT) has emerged as a 00,000 new users per day. It is expected to join the dominating determinant in the foundation of new age Billionaire’s club by 2016. At present WhatsApp telecommunication ecosystem. It refers to delivery of is leading with 660 million users followed by Line audio, video and other media over the Internet without with 510 million users, WeChat with 440 million the involvement of a multiple-system operator in the users and Snapchat with 100 million users (Mobile control or distribution of the content. The popularity of squared, 2014). smartphone apps is growing constantly. Starting with just over 2.5 million downloads in 2009, in 2014 the app store • Data a priority: Customers wants to access data boasts over 138 million downloads. The estimated number more than they do voice. Operators are expected of app downloads for the upcoming year is enormous, to provide superior service by providing additional reaching 268 million for 2017. The data from on mobile bandwidth. According to a report (GSMA, 2014) media time (Nielsen, 2014) reveals the consumer 75% of data traffic is video and browsing. So to preference for mobile apps which account for 89% of deal with this operator needs to expand their data media time in mobile is from the use of the most popular carrying capacity so that superior service can be social network, email and OTT service apps. More than provided. the definition its orientation as the channelizing factor is • Decreasing Revenue: Despite high investment lev- monumental. Globally, smartphone-based OTT users will total to 2.89 billion by 2018, an increase of 130% over els and the strong growth in data traffic, revenue the forecast period with 1.26 billion by the end of 2014. growth has been slowing for operators across the (Mobile squared forecast 2014) globe due to fierce competition, decline in voice ARPU and regulatory tariffs. Growth over the last India in particular will have 56.8 million smartphone- five years has been at a still healthy rate of over 5% based OTT users by the end of 2014 and 216.9 million by per annum, though this is under half the rate in the 2018, when it will be the third largest smartphone-based preceding six years from the year 2002 (GSMA, OTT market, behind China and the US and ahead of 2014). In 2014 the reduction in revenue was be- Telecom – OTT Partnership – Generating New Revenue Sharing Models 23
tween 16% and 20% for 5% of respondents. More Better service quality: Facing the same cost pressure, mobile operators (33% of total respondents) are telecom operators and OTT content providers can partner now being impacted by up to a 10% revenue de- to deliver quality services at lower bandwidth costs. cline, up from 21% of mobile operators in 2013, The Open Connect model adopted between Netflix and which does confirm the impact of OTT communi- operators is one such success. Netflix moves its content cations on mobile operators is becoming more far- delivery network (CDN) edge servers into operator data centres (DCs) to speed up content delivery. reaching. Concern (Mobile squared, 2014). • Costs: Mobile operators have invested more than Revenue: The global mobile operator opportunity for US$ 1 trillion over the last six years across the OTT communication will increase to $42.9 billion in globe. Investment has been done to improve net- 2018 from $4.2 billion in revenues in 2014 while OTT work coverage, to increase network capacity to will leap to $30 billion in 2018 from $4.2 billion in 2014 by this partnership. This will be a win-win partnership deal with both the growth in connections and the for both operators as well as the OTT players.(Mobile even greater growth in data traffic, and to deploy squared, 2014) higher speed mobile broadband networks (GSMA, 2014). Service Innovation: Besides cost reduction and revenue generation telecom operators and OTT can collaborate for From OTT point of view service innovation. Operators have a large subscriber base • Quality of Services: Poor speech quality and with subscribers paying monthly bills. Content providers dropped calls disappoint paying subscribers can strengthen market position by leveraging the operator who are used to high quality of service in circuit billing channel and distribution channel, and operators switched telephony. The unstable bandwidth as- can earn more through innovative broadband services. sociated with OTT can cause unwanted buffering, China Unicom Tianjin (Tianjin Unicom) and Galaxy Internet Television illustrate this perfectly. long start-up times and video/audio stuttering and poor video quality on full screen view. Telecom operators should collaborate with OTTs to • Need for Monetization: The greatest challenge enhance user experience, reduce operation costs, and OTT providers face will be monetization of their even increase profits because OTT content plays an service. Most players, including Skype, have yet important role to drive traffic. Both Operators and OTT players should have a collaborative partnership to bolster to substantially monetize their large user base, as of sustainable growth. conversion rates to paying users have to date been very low. In response, OTT players have applied a variety of revenue models, from ad-based, pre- and 3. Objective of the Research post-paid to freemium and customized. The paper attempts to see the above challenges as a genesis of new opportunities for both operators and OTT 2.2 Why should OTT and Operators Agree for players to converge and integrate with the purpose of Revenue Sharing? increasing their revenues. We believe that operators and the OTT players need to capitalize in a co-existential There is a need of synergism to survive and retain value fashion to grow together in terms of revenue generation. both for operator and OTT players. Concentrating on this approach, the objective of this paper is to discuss three partnership models as a Cost Pressure: Telecom operators want to charge suggestive measure to revitalize the revenue growth for bandwidth hogging. This poses cost pressure on OTT. both operators and OTT players: 1) Service bundling2) For video two major cost pressures are bandwidth Sponsored data3) API resource sharing consumption and content rights. To reduce operational costs some OTT players may cut bandwidth costs by These solutions will help operators and OTT players to compromising on video quality. The result of this is low collaborate more effectively, ensuring that operators will customer satisfaction and increase in churn which directly see increase in their ARPU rates and subscriber base by hurts the revenue. attracting and retaining customers through OTT services while OTT players will see reduction in the complexities by opening up to the operator’s IT systems to provide
4. Taking the Next Step: Modelling for Revenue Sharing The following section explains the three revenue sharing models for operators and OTT players namely 5.1) Service Bundling5.2) Sponsored Data5.3) Collaboration Platform Model. The models have been explained by providing a descriptive background which includes requisite definitions. Cases have been used where necessary. Primary data has been examined in support of establishing the arguments.
5.1 Service Bundling
5.1.1 The Concept In this model we refer to bundling as a “mash-up” of similar purpose app or OTT services. In a service bundling partnership model we see collaboration arrangements of operators and OTT players where OTT players provide rich content for their servicesand operators create provisions of specific data and its quality delivery, to be used forsimilar servicesof different OTT playersgrouped together in a distinguished bundle
5.1.2 The Essence of Bundling Bundling - the strategy of marketing two or more products or services as a specially priced package (Venkatesh & Mahajan, 2009, p. 232). It is persuading the customers to buy all the
24 Telecom Business Review: SITM Journal goods and services in a Volumepackage 9 Issue rather 1 September than on 2016one item. What is worth realizing is that the faster and quality services. Together the operators and Mahajan,bundled proportions2009, p. 232). help It allis persuading the goods orthe service customerss in a bundle to generate adequate revenues. OTT players will be able to operate more flexibly creating to buy all the goods and services in a package rather than better and differentiated content while contextualizing on onThe one strategy item. What has beenis worth widely realizing used is in that industries the bundled ranging from fast foods to high-technology increased revenues from the users. proportions(Chung & helpRao, all 2003, the goodspp. 115 or -services130). Authors in a bundle like toSmith, Armstrong and Kotler have argued generateupon the adequate decisive revenues. nature of the price of the bundle. Price bundling means combining several 4. Research Methodology products and offering the bundle at a reduced price. The price of the bundle should be lower than the sum price ofTable the independently1: priced products to encourage different customers For the progress of the paper and devising revenue with different independent product valuations topurchase all products in a single bundle. At sharing models for operators and OTT players we Table 1 the same time this price should be higher collected quantitative primary data by means of online than the price ofany specific product survey. Responses of 250 respondents in the age group within the bundle (Smith, 2012, p. 216). of 16-25 were recorded in the city Pune. The purpose of Price bundling can promote the sales of the primary data was to record the usage patterns of data products, consumersmight not otherwise services, quantifying it on monthly basis. Then to analyse buy, only when the combined price is the exact wants and needs of the consumers. And finally low enough it canconvince them do buy toconstruct revenue sharing models that could fulfil the the bundle(Armstrong & Kotler, 2011). needs for OTT players and operators describing customer In the context of our model specific to as one of the prime elements. Furthermore, we have used OTT players and operators we define the case examples and secondary data for the purpose of price in terms of data usage charges. This our study. We have also made use of qualitative data to study current and emerging market trends to support our gives us the advantage to evaluate the arguments. benefits reaped by the operators, OTT players and customers given in table 1 5. Taking the Next Step: Modelling for It is here we would like to highlight the Revenue Sharing importance of size of a bundle. On one The following section explains the three revenue sharing hand, Smith claims that the larger the number of goods in a bundle, the greater the reduction in The strategy has been widely used in industries ranging models for operators and OTT players namely 5.1) disparity in willingness to pay (Smith, 2012, p. 216). But on the other hand, we would like to from fast foods to high-technology (Chung & Rao, Service Bundling 5.2) Sponsored Data 5.3) Collaboration argue that increase in constituents of a bundle, increases anxiety and fear thus decreasing the 2003, pp. 115-130). Authors like Smith, Armstrong and Platform Model. The models have been explained by popularityKotler have of aargued bundle. upon Thus the itdecisive is important nature offor the the price operators to adopt optimal product bundling providing a descriptive background which includes of the bundle. Price bundling means combining several requisite definitions. Cases have been used where products and offering the bundle at a reduced price. necessary. Primary data has been examined in support of The price of the bundle should be lower than the sum establishing the arguments. price of the independently priced products to encourage different customers with different independent product 5.1 Service Bundling valuations to purchase all products in a single bundle. At the same time this price should be higher than the price of any specific product within the bundle (Smith, 5.1.1 The Concept 2012, p. 216). Price bundling can promote the sales of In this model we refer to bundling as a “mash-up” of products, consumers might not otherwise buy, only when similar purpose app or OTT services. In a service bundling the combined price is low enough it can convince them do partnership model we see collaboration arrangements of buy the bundle (Armstrong & Kotler, 2011). In the context operators and OTT players where OTT players provide of our model specific to OTT players and operators we rich content for their services and operators create define the price in terms of data usage charges. This gives provisions of specific data and its quality delivery, to be us the advantage to evaluate the benefits reaped by the used for similar services of different OTT players grouped operators, OTT players and customers given in table 1 together in a distinguished bundle It is here we would like to highlight the importance of 5.1.2 The Essence of Bundling size of a bundle. On one hand, Smith claims that the larger the number of goods in a bundle, the greater the Bundling - the strategy of marketing two or more products reduction in disparity in willingness to pay (Smith, 2012, or services as a specially priced package (Venkatesh & p. 216). But on the other hand, we would like to argue Telecom – OTT Partnership – Generating New Revenue Sharing Models 25 strategy defined as offering several products for sale as one combined product (Wikipedia), that increasebased on in theconstituents type of the of a service bundle, offered,increases in anxiety the creation operator of a “mashto create-up” an service exclusive bundle. bundle of homogeneous and fear thus decreasing the popularity of a bundle. Thus services using a product bundling strategy. Collaboration it is important for the operators to adopt optimal product arrangements may include mash up of music/video bundling5.1.3 strategy Essence defined of Model as offering several products for providers, social media services, educational services, sale as one combined product (Wikipedia), based on the travel services etc. The bundle would be perceived as type Basedof the service on the offered, explanations in the creation and importance of a “mash-up” of price ‘unique’bundling for and the productconsumers bundling based on and their the taste need and choice. servicefor bundle. revenue generation we establish the service bundlingThis becomesmodel as beneficial a three stage for process the OTT. players to have a First stage of the model suggests a partnership betweenfocused various approach O TTon consumersplayers offering and create similar competitive 5.1.3 Essenceservices and of anModel operator to create an exclusive bundledifferentiated of homogeneous tactic. Forservices the new using OTT a product players in the bundling strategy.Collaboration arrangements may marketinclude it givesmash aup chance of music/video to piggybank providers, on the established Basedsocial on themedia explanations services, educationaland importance services, of pricetravel servicesOTT players etc.The and bundle have would their bepresence perceived known as thus bundling‘unique and’ forproduct the consumersbundling and based the need on their for revenue taste and choice.enjoying This faster becomes “time to beneficial market” and for visibility.the OTT For the generationplayers we to establish have a thefocused service approach bundling onmodel consumers as a operatorsand create it competitivehelps them to differentiated generate increased tactic . revenue threeFor stage the process. new OTT players in the market it gives a chanceon the popularityto piggybank of the on OTT the establishedservices by exploitingOTT the players and have their presence known thus enjoyingconsumer’s faster “time willingness to market” to payand forvisibility. the usage For of their Firstthe stage operators of the model it helps suggests them ato partnership generate increased between revenuefavorite on apps. the popularity of the OTT services variousby exploitingOTT players the offeringconsumer’s similar willingness services andto pay an for the usage of their favorite apps.
Fig 1: Framework of Service Bundling Model Fig. 1: Framework of Service Bundling Model Second stage of the model suggests the partnership based on revenue sharing by OTT players Second andstage operators of the frommodel the suggests offered thebundle. partnership In smartphone content ecosystem provider. (Example the providers constructed of content for the and purpose of based onapplications revenue sharing contribute by OTT value players to and services, operators but relyexplanation). on the network Such proportionate operators toshare charge of revenue the could from theend offereduser (Jonasonbundle. In, 2002). smartphone The content ecosystem providers the bebring engineered the richness during whilepartnership the operators deals based bring upon market providersthe of reachcontent ( Jonasonand applications & Eliasson contribute 2001). valueHence, shareoperators of the shouldOTT players, generate richness revenue and exclusivity on its of the to services,delivering but rely capabilitiesbon the networky providingoperators totechnical charge andplayer’s data content, environment popularity for of thethe serviceuse of etc. OTT the enduser (Jonason, 2002). The content providers servicesor bundles and OTT players should generateAccording revenue to the on model the usagethe revenue of their sharing services. could be done bring theAs richness an example while, anthe operatooperatorsr canbring charge the reach the subscriber a monthly payment of video service (Jonason & Eliasson 2001). Hence, operators should through the following bundle. For a particular video service provider in a bundle an operator can bill 40% of the generate revenue on its delivering capabilities by • Usage based charging, in which OTT players can price per packet for providing seamless streaming for the provider’s video while pay the providing technical and data environment for the use generate revenue according to quality and quantity of OTTremaining services or 60% bundles to the and content OTT provider.players should (Example constructed for the purpose of explanation). Such proportionate share of revenue could be engineeredof contentduring partnershipdelivered. The deals measuring based uponmetrics could generate revenue on the usage of their services. As an be devised during partnership deals example,market an operator share can of chargethe OTT the players,subscriber richness a monthly and exclusivity of the player’s content, popularity paymentof of the video service service etc. bundle. For a particular video • Fixed price charging, that does not change accord- service provider in a bundle an operator can bill 40% of ing to the usage. Operators can generate revenue by the priceAccording per packet tofor the providing model theseamless revenue streaming sharing for could be donebundle through offerings the at following fixed rate to the subscribers and the provider’s video while pay the remaining 60% to the charge fixed rate to OTT players for its presence in the bundle •Usage based charging, in which OTT players can generate revenue according to quality and quantity of content delivered. The measuring metrics could be devised during partnership deals •Fixed price charging, that does not change according to the usage. Operators can generate revenue by bundle offerings at fixed rate to the subscribers and charge fixed rate to OTT players for its presence in the bundle
The advantage of this approach is two-fold. For operators it provides an opportunity to earn from their content. Paid OTT services which charge on monthly basis can use operator’s real- time chargingcapabilities to offer day passes may attract to pre-paid consumers. The operator might alsomonetize on itssubscriber intelligence to helpOTT service providers create context- aware marketing offers and also promote themselves in a better and effective way to increase their target market and subscriber base.
Third stage of the model suggests a price bundling strategy discussed in Fig 1 to adequately price the offer bundle. This is critical to the model as it will not only help create attractive bundles for the consumers but effective price will lead to customer satisfaction and customer loyalty. Price bundling is also critical in a way to establish an ideal partnership model between operators and respective OTT players based on maximizing returns on their respective functions of delivering and providing the data. OTT players and operators should be able to leverage on their own strengths to generate increased revenues while using each other as a productive resource.
5.1.4 Inferences from Primary Data
For the purpose of conceptualizing the above model it is necessary that we validate the core idea of acceptance of service bundles in the first place. We surveyed 250 respondents online, in the city of Pune, India in the age group of 16-25. We consider this demographic group because of the 80% penetration of smartphone (Delloite Global mobile User Survey, 2013) in this particular group. Firstly we found the popularity of social media services like Facebook, WhatsApp, Viber, WeChat, is on the rise (figure 2). They spent on an average 5.5 hours a day on social services and chat services compared to 0.5 hour on video services, and 1 hour on music services. A considerable amount of time is spent on e-commerce sites, a new trend. Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016 26 Average monthly consumption of data by the respondents is calculated to be 600mb. The advantage of this approach is two-fold. For operators it provides an opportunity to earn from their content. Paid OTT services which charge on monthly basis can use operator’s real-time chargingcapabilities to offer day passes may attract to pre-paid consumers. The operator might alsomonetize on itssubscriber intelligence used differ providers for the same basic need but consumed different features of different to helpOTT service providers create context-aware marketing offers and also promote themselves in a better providers. We found a conglomerate of Facebook chat service, WhatsApp, Viber and and effective way to increase their target market and WeChat on the same mobile with equal percentage of usage per day (figure 5). Respondents subscriber base. used Facebook to chat with their Facebook friends, Whats app for the purpose quick and •Usage based charging, in which OTT players can generate revenuegroup according chats. to quality Viber and was used more for the purpose of sending videos while WeChat for the Figure 2 Figure 3 Third stage of thequantity model of suggests content adelivered. price bundling The measuring strategy metrics could be devisedpurpose during of over partnership the top voice messaging. Time spent on services per day Fig. 3: MonthlyMonthly Consumption consumption of of data Data discussed in Figdeals 1 to adequately price the offer bundle. This is critical •Fixedto the modelprice charging as it will, that not doesonly nothelp change create according to the usage. Operators can generate revenue by bundle offerings at fixed rate to the subscribers and charge fixed rate to OTT attractive bundles forRather the consumers than directly but effective asking pricefor the acceptance of the service bundle we tested on the will lead to customerplayers for satisfaction its presence and in thecustomer bundle loyalty. psychographic trend in the way respondents used the social service apps. The survey resulted Price bundling is also critical in a way to establish an ideal The advantagein two major of this findings. approach Ratheris two-fold. than For being operators loyal it toprovides one social an opportunity service providerto earn the respondents partnership model between operators and respective OTT from their content. Paid OTT services which charge on monthly basis can use operator’s real- players based on maximizing returns on their respective time chargingcapabilities to offer day passes may attract to pre-paid consumers. The operator functions of deliveringmight alsomonetize and providing on itssubscriber the data. intelligence OTT to helpOTT service providers create context- players and operatorsaware m shouldarketing be offers able and to leveragealso promote on their themselves in a better and effective way to increase own strengths theirto generate target market increased and subscriberrevenues whilebase. using each other as a productive resource. Third stage of the model suggests a price bundling strategy discussed in Fig 1 to adequately price the offer bundle. This is critical to the model as it will not only help create attractive 5.1.4 Inferences from Primary Data Figure 4 Figure 5 Figure 6 bundles for the consumers but effective price will lead to customerFig. satisfaction 4:Satisfaction Satisfaction and Levelscustomer Levels Time Spent on Services per Day Recharge Type For the purposeloyalty. of conceptualizing Price bundling theis also above critical model in ita way to establish an ideal partnership model is necessary thatbetween we validate operators the coreand respectiidea of veacceptance OTT players based on maximizing returns on their Rather than directlyThe otherasking major for the finding acceptance is that of Indian the Community is price sensitive. We found that most of of service bundlesrespective in the functions first ofplace. delivering We andsurveyed providi ng 250 the data. OTT players and operators should service bundle we tested on the psychographic trend in the respondents online,be able in to the leverage city of on Pune, their Indiaown strengthsin the age to generate increased revenuesthe respondents while using eachopted for unlimited data packs at higher price while showing an way respondents used the social service apps. The survey group of 16-25.other We as a consider productive this resource. demographic group unsatisfactory behavior in its complete utilization (figure 4). resulted in two major findings. Rather than being loyal because of the 80% penetration of smartphone (Delloite 5.1.4 Inferences from Primary Data to one social service provider the respondents used differ Global mobile User Survey, 2013) in this particular This is a concrete evidence of greater perceived value of the service in relation to pricing. providers for the same basic need but consumed different group. Firstly we found the popularity of social media From the two findings we are able to conclude that there is a prevalent need of better and For the purpose of conceptualizing the above modelfeatures it is necessary of different that providers. we validate We the found core a conglomerate services like Facebook,idea of acceptance WhatsApp, of service Viber, bundles WeChat, in isthe on first place. We surveyedoptimal 250 respondents offers at online, reduced price which could warrant the subscribers to use similar but many used differ providers for theof sameFacebook basic chat need service, but consumed WhatsApp, different Viber and features WeChat of different the rise (figurein the 2). city They of Pune, spent India on anin theaverage age group 5.5 ofhours 16-25. We considera ppsthis demographicat the same grouptime. It is here we suggest a service bundling model an appropriate diffusion a day on socialbecause services of the and 80% chatproviders. penetration services Weofcompared smartphone found toa (Delloiteconglomerateon the Global same mobilemobileof advancementFacebook User with Survey, equal chat that2013)percentage service, brings in WhatsAppof benefitsusage per , to Viber the andoperators, OTT players and consumers while 0.5 hour on videothis services,particular andgroup. 1WeChat hour Firstly on on wemusic thefound sameservices. the popularitymobile day with of (figure socialequal media 5).percentage includingRespondents services of like chargesusage usedFacebook, per Facebookfrom day all (figure toparties chat 5 ) .based withRespondents on sharing revenues and creating value proposition. A considerableWhatsApp amount ,of Viber, time usedWeChat,is spent Facebook ison on e-commerce the torise chat (figure with 2their) . theirThey Facebook spentFacebook on friends,an averagefriends, Whats 5 .5Whats hours app appfora day the for purpose the purpose quick quick and on social services and chat services compared to and0.5 hourgroup on chats. video Viber services, was and used 1 hourmore on for the purpose of sites, a new trend. Average monthlygroup consumption chats. Viber of wasdata used more for the purpose5.2 Sponsored of sending Data videos (B2B whileapproach) WeChat for the music services. A considerable amount of time issending spent on videos e-commerce while WeChat sites, a fornew the trend. purpose of over the by the respondents is calculated purposeto be 600 of mb. over the top voice messaging. Average monthly consumption of data by the respondentstop voice is calculatedmessaging. to be 600mb. 5.2.1 The Concept
Sponsored Data a business to business partnership approach is a service that entitles the
content providers to sponsor data for their services or content in return of priority data traffic
and guaranteed quality of service. The consumer in return enjoys the free data usage for the
services without being charged on his data allowance.
Benefits to the content providers are
Promotion of their services
Enhanced consumer engagement Figure 2 Figure 3 Benefits to the operators are Time spent on services per day Monthly consumption Possibility of data of monetization of service Transformation of data delivery channels Fig. 2: Time Spent on Services Per Day through enhanced customer engagement Figure 4 Fig. 5: TimeFigure Spent 5 on Services per Day Figure 6 into revenue generation assets Satisfaction Levels Time Spent onPossibility Services per Dofay customer loyaltyRecharge program Type Rather than directly asking for the acceptance of the service bundle we tested on the Increased ARPU’s & enhanced perceived psychographic trend in the way respondents used the social service apps. The survey resulted Creation of cross selling opportunities consumer value in two major findings.The Ratherother thanmajor being finding loyal isto thatone socialIndian service Community providerby guaranteeing is the price respondents sensitive. better Wequality found of thatservice most of Data charges resulting from direct billing the respondents opted for unlimited data packs at higher price while showing an Increase consumer stickiness leading to to sponsored OTT players unsatisfactory behavior in its complete utilizationnew (figure revenue 4). generation opportunities
This is a concrete evidence of greater perceived value of the service in relation to pricing. From the two findings we are able to conclude that there is a prevalent need of better and optimal offers at reduced price which could warrant the subscribers to use similar but many apps at the same time. It is here we suggest a service bundling model an appropriate diffusion advancement that brings benefits to the operators, OTT players and consumers while including charges from all parties based on sharing revenues and creating value proposition.
5.2 Sponsored Data (B2B approach)
5.2.1 The Concept
Sponsored Data a business to business partnership approach is a service that entitles the content providers to sponsor data for their services or content in return of priority data traffic and guaranteed quality of service. The consumer in return enjoys the free data usage for the services without being charged on his data allowance. Benefits to the content providers are Promotion of their services
Enhanced consumer engagement Benefits to the operators are Possibility of monetization of service Transformation of data delivery channels through enhanced customer engagement into revenue generation assets Possibility of customer loyalty program Increased ARPU’s & enhanced perceived Creation of cross selling opportunities consumer value by guaranteeing better quality of service Data charges resulting from direct billing Increase consumer stickiness leading to to sponsored OTT players new revenue generation opportunities used differ providers for the same basic need but consumed different features of different providers. We found a conglomerate of Facebook chat service, WhatsApp, Viber and WeChat on the same mobile with equal percentage of usage per day (figure 5). Respondents used Facebook to chat with their Facebook friends, Whats app for the purpose quick and group chats. Viber was used more for the purpose of sending videos while WeChat for the purpose of over the top voice messaging. Telecom – OTT Partnership – Generating New Revenue Sharing Models 27 • Benefits to the operators are
• Transformation of data delivery channels into rev-
enue generation assets • Increased ARPU’s & enhanced perceived consum- er value • Data charges resulting from direct billing to spon- sored OTT players • Enhanced engagements translated to subscriber satisfaction and retention Figure 4 Figure 5 Figure 6 • Pre-paid to post-post conversion by premium Satisfaction Levels Time Spent on Services per Day Recharge Type Fig. 6: Recharge Type sponsored data offer on post-paid subscription
The other major finding is that Indian Community is price sensitive. We found that most of the respondents opted for unlimited data packs at Thehigher other price major findingwhile showingis that Indian an Community is price 5.2.2 The AT&T Case sensitive. We found that most of the respondents opted unsatisfactory behavior in its complete utilization (figure 4). AT&T, in Jan 2014 introduced a new service of sponsored for unlimited data packs at higher price while showing an data for its 4G customers to enjoy mobile content and unsatisfactory behavior in its complete utilization (figure 4). This is a concrete evidence of greater perceived value of the service in relation to pricing. apps over its wireless networks without impacting their From the two findings we are able to conclude that thereThis is ais prevalent a concrete needevidence of better of greater and perceived value of data plans. As per the program the AT&T would partner optimal offers at reduced price which could warrant the subscriberthe services into relationuse similar to pricing. but many From the two findings with the content providers who would pay to exempt their apps at the same time. It is here we suggest a service bundlingwe are model able anto concludeappropriate that diffusion there is a prevalent need of content or parts of services from consumer’s data plan. In advancement that brings benefits to the operators, OTTbetter players and optimal and consumersoffers at reduced while price which could return the content providers would be able to allure AT&T including charges from all parties based on sharing revenueswarrant and creating the subscribers value proposition. to use similar but many apps at consumers onto their services. How did it work exactly? If a customer while accessing an application come across the same time. It is here we suggest a service bundling an educational video with AT&T Sponsored Data name, 5.2 Sponsored Data (B2B approach) model an appropriate diffusion advancement that brings benefits to the operators, OTT players and consumers he identifies that the video as sponsored. When the customer clicks to play the video, the data usage incurred 5.2.1 The Concept while including charges from all parties based on sharing revenues and creating value proposition. while streaming the video is not applied to the customer’s monthly data allowance, but is billed directly to the Sponsored Data a business to business partnership approach is a service that entitles the sponsored company that provided the video. content providers to sponsor data for their services or content5.2 inSponsored return of priorityData (B2B data approach) traffic and guaranteed quality of service. The consumer in return enjoys the free data usage for the From the AT&T point of view sponsored data service services without being charged on his data allowance. 5.2.1 The Concept was a potential innovation. Ralph de la Vega, president Benefits to the content providers are and CEO, AT&T Mobility said “This is an exciting new Sponsored Data a business to business partnership opportunity for us and, most importantly, our customers. Promotion of their services approach is a service that entitles the content providers In its functionality it’s a win-win for customers and Enhanced consumer engagement to sponsor data for their services or content in return of Benefits to the operators are businesses”. Even though AT&T tried to persuade the Possibility of monetization of service priority data traffic and guaranteed quality of service. Transformation of data delivery channels world that this is the need of the hour the model flawed as through enhanced customer engagement The consumer in return enjoys the free data usage for the into revenue generation assets discussed below Possibility of customer loyalty program services without being charged on his data allowance. Increased ARPU’s & enhanced perceived • It failed to attract big OTT/app players and com- Creation of cross selling opportunities consumerBenefits value to the content providers are panies AT&T had hoped and for whom the model by guaranteeing better quality of service was basically devised Data charges • resultingPromotion from of their direct services billing Increase consumer stickiness leading to to sponsored • OTTEnhanced players consumer engagement • For the consumers a sponsored video seemed to be new revenue generation opportunities nothing more than “yet another advertisement” • Possibility of monetization of service through en- • It actually placed more burden on the content pro- hanced customer engagement viders by forcing them to incur an additional cost • Possibility of customer loyalty program just to get the content to people • Creation of cross selling opportunities by guaran- teeing better quality of service AT&T did not actually prioritize traffic, basing the model on the principal foundation of internet that is, its neutral- • Increase consumer stickiness leading to new rev- “no content can be prioritized over other” enue generation opportunities 28 Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016 5.2.2 Possible Revenue Models The above models lack in revenue generation schemes and are mostly designed for promotion activities. We see The existing models for sponsored data are sponsored data model as a collaboration arrangements of operators and OTT players based on three principles Zero rated content - operator partners with OTT service • Flexibility in prioritizing traffic and enhancing providers to offer their content to users free of charge. quality of service (for OTT players) The OTT service partner pays for any data used while through exclusive content delivery channels pro- accessing their content on the operator’s network. OTT vided by operators partners can also build loyalty programs for its high net worth customers Revenue by paying sharing for partnershipdata used by basedthem. on content rather• Sponsored than on datadata partnershipconsumption model as revenue gen- BasedRevenue on the sharing above partnership principles basedwe suggest on content following rather possible erationthan on revenuecentric data consumption than models promotion highlighting and advertising the Ad inserted Partial data subsidy - OTT partners can opt Basedrespective on the roles above of principlesoperators andwe suggestOTT players. following possiblecentric revenue models highlighting the to pay for a fraction of data for consumers accessing their • Revenue sharing partnership based on content servicesrespective while the restroles of of the operators revenue isand accrued OTT players.through Model 1: Operator-OTT player partnership model whererather revenues than on data are consumptionfirst generated by the inserting focusedsale of advertisementsrich content toor othersubscribers third party offered content at high quality of service. The sales revenue thus which isModel viewed 1 in: Operatorthe course- OTTof the playerbrowsing partnership session. modelBased where on revenuesthe above are principles first generated we suggest by the following salegenerated of rich iscontent then shared to subscribers between OTToffered players at high and quality operators of service.based on The the salesOTT revenueplayer’s thusrole of offering content and operator’s role of offeringpossible exclusive revenue and models prioritized highlighting data. theBest respective suited roles generated is then shared between OTT players andof operators operators andbased OTT on players. the OTT player’s role of offering content and operator’s role of offering exclusive and prioritized data. Best suited
Fig 7: Framework of Model 1 for bandwidth-hungry OTT services like video calling services, movie on demand, music Fig 7: Framework of Model 1 forservices. bandwidth In this-hungry model OTT operators services agree like tovideo offer calling their networkservices, resources movie on and demand, dedicated music data Fig. 7: Framework of Model 1 services.channels I nto this provide model enhance operators quality agree and to fast offer streaming their network of OTT resources player’s content.and dedicated In return data the Model 1:channelsOTT Operator-OTT player to provide gets player an enhance advantagepartnership quality tomodel sell and theirwhere fast contentstreaming bill theto ofthesubscribers OTT consumer player’s directly who content. for distinguishes the contentIn return through it theas a billing revenuesOTT value are player first added generatedgets product an advantage atby a cheaperthe tosale sell rate. of their Therich content subscri content capabilities tober the in consumerthis of themodel operators. who does distinguishes not For paye.g. fora three theit as hourdata a movie to subscribersvalueusage added offeredbut for product atthe high content at qualitya cheaper. The of operators service.rate. The Thebill subscri thecould OTTber inbe service thisoffered model for for the doessale data atnot Rs100at paya subsidized foron athe smartphone. data rate To sales revenueusagewhile but thusOTT for generated playersthe content billis .thenthe The subscribers sharedoperators between billdirectly the OTT accessfor the service the content movie for throughthe consumerdata billingat a subsidizedpays capabilities a onetime rate of payment OTT playerswhilethe operators andOTT operators players. For basedbille.g. thea threeon subscribers the h ourOTT movie player’s directly could for ofbe the Rs100offered content for for the throughsale movie. at Rs100 billing By doing on capabilities a smartphoneso the consumer of . is role of theofferingTo operators access content the. For movieand e.g. operator’s thea three consumer hroleour movieof pays offering acould onetime beprovided offered payment high for of salequality Rs100 at Rs100dedicated for the on movie.streaming a smartphone By for doing the. movie, exclusiveToso and access the prioritized consumer the movie data. is theBestprovided consumer suited high for paysbandwidth- quality a onetime dedicatedthe payment data streaming usage of Rs100 for for which thefor movie,theis not movie. charged the Bydata ondoing usage his/her data plan. In terms of revenue sharing the operator could earn hungry soOTTfor the whichservices consumer is likenot is videocharged provided calling on highhis/her services, quality data movie plan.dedicated In terms streaming of revenue for the sharing movie, the the operator data usage could on demand, music services. In this model operators Rs40 for delivering high quality service while video forearn which Rs40 is fornot delivering charged on high his/her quality data service plan. Inwhile terms video of revenue provider sharing could earnthe operator Rs60 as could movie agree to offersubscription their network charges. resources The modeland dedicated focuses data more onprovider revenue could sharing earn Rs60through as movie content subscription while data charges. channelsearn to provideRs40 for enhance delivering quality high and quality fast streaming service whileThe video model provider focuses could more earnon revenueRs60 as sharing movie through subscriptionis sponsored charges. at lower The rates. model We focusessee this modelmore on as revenuewin-win sharing for both through operators content and OTT while players data of OTT player’sthat bring content. to light In returnall the the benefits OTT player they couldgets havecontent discussed while data in istable sponsored 1 while at lowermonetizing rates. We on see this an advantageis sponsored to sell theirat lower content rates. to Wethe seeconsumer this model who as modelwin-win as win-winfor both for operators both operators and OTT and OTTplayers players that thatthe bring partnership. to light Thisall the model benefits can theyalso couldhelp OTT have playersdiscussed generate in table customized 1 while monetizing content for on its distinguishessubscribers it as a valueoffering added a fraction product of at i t aas cheaper free and commercializingbring to light all the on benefits the rest. they could have discussed in the partnership. This model can also help OTT tableplayers 1 while generate monetizing customized on the contentpartnership. for Thisits model rate. The subscriber in this model does not pay for the data usagesubscribers but for the offering content. a The fraction operators of i tbill as thefree OTT and commercializingcan also help OTT on theplayers rest. generate customized content Model 2: This revenue generation partnership model is based on OTT player’s loyalty service for the data at a subsidized rate while OTT players for its subscribers offering a fraction of it as free and Modelprograms 2: Thisand servicesrevenue that generation enable consumers partnership to commercializingwinmodel in theis formbased on of on thesome OTTrest. token player or coins.’s loyalty a programs and services that enable consumers to win in the form of some token or coins. a
Fig 8: Framework of Model 2 Fundamental principal on which revenue could be generated and latter shared is the enhanced Fig.Fig 8: 8Framework: Framework of of Model Model 2 2 Fundamentalquality of service principal provided on which as revenue sponsored could data be generatedby the operators. and latter This shared enhances is the enhanced consumer qualityexperience of service on the providedOTT service as sponsoredthat entice datahim toby spend the operators.more time Thison the enhances service whichconsumer could experiencebe translated on the into OTT earning service and that buyingentice himmore to spendloyalty more points time by on thethe serconsumers.vice which Through could beadvanced translated billing into capabilitiesearning and of thebuying operator, more the loyalty loyalty points points bycould the be consumers. converted intoThrough usable advanceddata or mbillingobile capabilitiesphone based of moneythe operator, (mobile the-pesa) loyalty which points consu couldmers be convertedcould use into for usabletrading datapurposes or mobile directly phone thus based building money a revenue (mobile generation-pesa) which scheme consu formers operators could useas wellfor tradingas OTT purposesplayers. directlyBased onthus the building above modela revenue we generationsee a suitable scheme collaboration for operators between as well e- commerceas OTT players.players Basedand operators. on the aboveOperators model could we provide see a suitablededicate collaborationd sponsored data between usage efor-commerce shopping , playersseparated and fromoperators. consumer’s Operators data could plan. provide The consumer dedicate earnd sponsored loyalty tokensdata usage on shopping for shopping which, separatedhe/she then from trades consumer’s off to buy data dat plan.a or tradesThe consumer it to receive earn mobile loyalty-pesa tokens, a revenue on shopping generation which for he/she then trades off to buy data or trades it to receive mobile-pesa, a revenue generation for Telecom – OTT Partnership – Generating New Revenue Sharing Models 29 Model 2:operators. This revenue In return generation the operator partnership gets modelto offer is exclusive5.3 Collaboration high quality data Platform for its customers Model at a based onsubsidized OTT player’s rate. loyalty In lieu programs of the andincreasing services con thats umer penetration on e-commerce apps Fig 5 we enable consumerssee this model to win a in beneficial the form ofoption some for token the or OTT 5.3.1 The players and Concept operators to attract consumers coins. while generating revenue. FundamentalKey differentiatorprincipal on ofwhi thech models revenue is thatcould they be would The help collaboration in developing platform long works term on partnerships the concept of APIs. API (Application Program Interface) is a set of routines, generatedand and hedging latter sharedinvestments is the againstenhanced sustained quality sourcesof of revenue whichis based on sharing. service provided as sponsored data by the operators. This protocols and tools for building software applications. enhances5 .3Collaborationconsumer experience Platform on the Model OTT service that In a collaboration platform model we see collaboration entice him to spend more time on the service which could arrangements where in operators and OTT players pool in be translated5.3.1 into The earning Concept and buying more loyalty points network resources and software tools respectively to first by the consumers. Through advanced billing capabilities create new APIs and then use the same APIs to develop of the operator,The collaboration the loyalty points platform could beworks converted on intothe conceptapplication of APIs. services API for the(Application consumers. Program usable dataInterface) or mobile is phonea set ofbased routines, money protocols(mobile-pesa) and tools for building software applications. In a which consumerscollaboration could platform use for trading model purposes we see collaborationdirectly 5.3.2 arrangements Outline of where the Model in operators and OTT thus buildingplayers a revenue pool in generationnetwork resources scheme for and operators software tools respectively to first create new APIs and as well asthen OTT use players. the same Based APIs on theto developabove model application we see servicesStage for1: theinvestment consumers. (monetary implications) and a suitable collaboration between e-commerce players and resource sharing by operators and OTT players to deploy operators.5.3.2 Operators Outline could of the provide Model dedicated sponsored collaborated platform for application development data usage for shopping, separated from consumer’s data plan. The consumer earn loyalty tokens on shopping which Stage 2: building the applications and services Stage 1: investment (monetary implications) and resource sharing by operators and OTT he/she then trades off to buy data or trades it to receive mobile-pesa,players a revenue to deploy generation collaborated for operators. platform In returnfor application Stage 3 development: sharing of revenue generated by the app the operatorStage gets 2: buildingto offer exclusive the applications high quality and dataservices for Stage 3: sharing of revenue generated by the appThis model helps the operator to give more value to the its customers at a subsidized rate. In lieu of the increasing partnership with OTT player by giving them access to APIs consumerThis penetration model helpson e-commerce the operator apps toFig give 5 we more see value to the partnership with OTT player by giving them access to APIs so that new services canso that be newdeveloped services which can be will developed help to which increase will help to this model a beneficial option for the OTT players and increase the subscriber base and help to generate more the subscriber base and help to generate more revenue. By implementing this model OTT operators to attract consumers while generating revenue. revenue. By implementing this model OTT players can build players can build the service app faster and integratethe service it faster app fastersaving and significant integrate it faster time savingas well significant Key differentiatoras cost. Cost of ofthe developments models is that of theyservices would on Collaborated platform is just 10% of the cost help in developing long term partnerships and hedging time as well as cost. Cost of developments of services on associated with the non-platform approach. (Asiainfo,Collaborated 2014) platform is just 10% of the cost associated with investments against sustained sources of revenue whichis based on sharing. the non-platform approach. (Asiainfo, 2014) The need for collaboration platform can be better explained by highlighting the following benefits: The need for collaboration platform can be better Operators can have significant control of the OTTexplained service by highlightingecosystem. theThey following get a chance benefits: to have their hands on the OTT service market.
Fig 9: Framework of Collaboration Platform Model
OTT players can Fig.have 9: accessFramework to advanced of Collaboration BSS, OSS Platform and networkModel capabilities which brings operational efficiency. It helps creation of better products through analytics of subscriber behavior provided by operators and used by OTT players 30 Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016
• Operators can have significant control of the OTT readers need to remember thatwe considered only clearly service ecosystem. They get a chance to have their determined population and sampling settings; the extent hands on the OTT service market. to which our findingscan be generalized certainly requires further investigation. Further research on the models will • OTT players can have access to advanced BSS, add to the understanding about the impact and provide a OSS and network capabilities which brings opera- feedback mechanism that will allow future efforts to more tional efficiency. fully meet the intended goals and objectives. • It helps creation of better products through analyt- ics of subscriber behavior provided by operators 8. References and used by OTT players Armstrong, G. (2014). Marketing: An introduction. • The end product ultimately lead to generation of Harlow: Pearson/Education more revenue by giving value added product or Gartner Inc. (2014). Market Share Analysis: Mobile service to the consumers Phones, Worldwide, 4Q13 and 2013. Retrieved from http://www.gartner.com/newsroom/id/2807017 5.3.3 Scope of Collaboration Platform Approach: GSMA (2014). The Mobile Economy 2014. Retrieved from http://www.gsmamobileeconomy.com/GSMA_ Multiple Partnerships: After the collaboration platform ME_Report_2014_R2_WEB.pdf is integrated into the IT architecture of the operator then operators can partner with multiple OTT players and IDC report (2014). Smartphone vendor market share digital service providers. Each partner can access the report. Retrieved from http://www.idc.com/getdoc. standardized APIs through the platform. It helps to bring jsp?containerId=prIN25045514 innovation in products, pricing and therefore increase in Jonason, A. (2002). Innovative pricing effects: theory and revenue and customer loyalty. practice in mobile Internet networks. European Journal of Innovation Management, 5(4), 185-193 Jonason, A., Mini Offers: Operators can launch mini offers for different & Eliasson, G. (2001). Mobile internet revenues: An market segments. In the current scenario most OTT paid empirical study of the Imode portal. Journal of Internet services are billed by monthly subscription. To attract Research Electronic Networking Applications and Pre-paid customers offer of the day can be done which is Policy, 11(4), 341-348. more appealing. The operator can leverage the subscriber intelligence and promote the right mini-offer to different Matthews, K. (2014). Quantity & Quality: The customers. business case for a profitable operator / OTT partnership model”. Asianfo. Version 1.0, September Service scale: The platform gives the operator to have 2014. Retrieved from https://www.asiainfo.com/ different types of partnerships such as bundling and Portals/0/New_Branded_Collateral/White_Papers sponsored data. So the other models suggested above can /2014.09.19_AsiaInfo_Northstream_WP.pdf be implemented by implementing collaboration platform. Marketer. (2014). E-marketer roundup: Global me- Thus this API collaboration platform model will help to dia trends. Retrieved from http://www.emarketer. bring innovation, increase subscriber base which in turn com/Article/2-Billion-Consumers-Worldwide- will increase the revenue. Smartphones- by-2016/1011694 MBit Index. (2014). MBit Index report, Nokia solutions. 7. Managerial Implications and Retrieved from http://networks.nokia.com/file/30596/ Limitation of the Research mbit-index-report-2014 Mobile squared. (2014). From Resistance to Partnership Operators shift into monetizing OTT. Retrieved from The research reveals enough insights for operators and http://tyntec.swhosting11.de/sites/default/files/up- OTT players to adopt partnership approach in current and loads/2014- 11_executive_summary_from_resistance_ future scenarios if they look forward to generate increased to_partnership_mobilesquared.pdf revenues. Our research has been able to successfully design the revenue sharing models to assist operators and Nielsen (report). (2014). Unstoppable! Smartphone surge OTT players in their demanding needs to not survive but in India continues. Retrieved from http://www.nielsen. to establish a paradigm shift to growth. Most importantly, com/in/en/insights/reports/2014/unstoppable--smart- phone- surge-in-india-continues.html
Dr Sujata Joshi is currently working as Associate Professor, Marketing, with Symbiosis Institute of Telecom Management, Pune, India, a premier institute under Symbiosis International University. She has a rich experience of around 20 years which includes academics as well as industry experience. Her research areas include Customer experience, Customer engagement, Telecom Business management, Strategy, Business Analytics, Social media, and Consumer Behaviour.
Telecom – OTT Partnership – Generating New Revenue Sharing Models 31
Lin, E. (2014). Global Smartphone User Penetration International University. He has completed his MBA Forecast by 88 Countries: 2007 to 2020. Strategy (Telecom Management) majoring in Marketing and Analytics, WSS report Finance. He has done his bachelors in Electronics & Rohit Dalal is an alumnus of Symbiosis Institute of Telecom Management Pune, a constituent of Symbiosis International Smith, T. J. (2012). Pricing Strategy, Mason: South- TelecommunicationsUniversity. engineering He has from completed Anna his University, MBA (Telecom Management) majoring in Marketing and Finance. He has done his bachelors Western Cengage Learning. Retrieved from http:// Chennai. in Electronics & Telecommunications engineering from Anna University, Chennai. www.toknowpress.net/ISBN/978-961-6914-09-3/pa- pers/ML14-566.pdf Spirit DSP. (2012). The Future of Voice. Retrieved from http://www.spiritdsp.com/ in- dustry-news/read-more-industry-news/article/ ott-voip-to-cost-telcos-479b-to-2020/ Venkatesh, R., & Mahajan, V. (2009). Design and pricing of product bundles: A review of normative guidelines and practical approaches, pp. 232-257, Handbook of Pricing Research in Marketing, Vithala R. Rao (editor). Northampton, MA: Edward Elgar Publishing Company Rohan Charles EgbertRohan is Charis lesan Egbertalumnus is is anof alumnus Symbiosis of Symbiosis Institute of Telecom Management Pune, a constituent of Symbiosis Visual Networking Index. (2015). Global Mobile Data Institute of TelecomInternational Management University Pune,. Hea constituenthas completed of his Master of Business Administration in Telecom Management with Marketing and Traffic Forecast Update 2014–2019 White Paper. Symbiosis InternationalFinance University. as specialization He Hehas completed completed his Bachelor of Science Physics (Honours) from St Stephen’s College, Delhi University, Retrieved from http://www.cisco.com/c/en/us/solutions/ his Master of BusinessIndia. His Administration research interests liesin in Telecomcomplex adaptive systems for business strategy, modelling business scenarios and consumer behaviour analytics. collateral/service-provider/visual-networking-index-vni/ Management with Marketing and Finance as specialization white_paper_c11-520862.html He completed his Bachelor of Science Physics (Honours) from St Stephen’s College, Delhi University, India. His research interests lies in complex adaptive systems Brief Bio of Aut hor/s: for business strategy, modelling business scenarios and consumer behaviour analytics.
Dr Sujata Joshi is currently working as Associate Professor, Marketing, with Symbiosis Institute of Telecom Management, Dr Sujata Joshi is currently working as Associate Pune, India, a premier institute under Symbiosis International University. She has a rich experience of around 20 years which Professor, Marketing,includes with academics Symbiosis as well as industryInstitute experience. of Her research areas include Customer experience, Customer engagement, Telecom Management,Telecom Pune, Business India, managem a premierent, Strategy, institute Business Analytics, Social media, and Consumer Behaviour. Akshara Chaudhary is an alumnus of Symbiosis Institute under Symbiosis International University. She has a rich of Telecom ManagementAkshara Pune, Chaudhary a constituentis an ofalumnus Symbiosis of Symbiosis Institute of Telecom Management Pune, a constituent of Symbiosis experience of around 20 years which includes academics International University. She has completed her Master of Business Administration in Telecom Management with Marketing and International University. She has completed her Master of as well as industry experience.Dr Sujata JoshiHer researchis currently areas working include as Associate Professor, Marketing, withFinance Symbiosis as specialization. Institute of Telecom She completed Management, her Bachelor of Technology specialized in Chemical Engineering and completed a Business Administration in Telecom Management with Customer experience,Pune, Customer India, a premier engagement, institute under Telecom Symbiosis International University. Shediploma has a inrich Network experience Security of around She is 20 actively years which involved in volunteer work. She also loves to travel and is a Cynophilist. Marketing and Finance as specialization. She completed Business management,includes Strategy, academics Business as well as industryAnalytics, experience. Her research areas include Customer experience, Customer engagement, her Bachelor of Technology specialized in Chemical Social media, and ConsumerTelecom BusinessBehaviour. management, Strategy, Business Analytics, Social media, and Consumer Behaviour. Engineering and completed a diploma in Network Security She is actively involved in volunteer work. She
also loves to travel and is a Cynophilist. Rohit Dalal is an alumnus of Symbiosis Institute of Telecom Management Pune, a constituent of Symbiosis International University. He has completed his MBA (Telecom Management) majoring in Marketing and Finance. He has done his bachelors in Electronics & Telecommunications engineering from Anna University, Chennai.
Rohit Dalal is an alumnusRohit Dalal of is anSymbiosis alumnus of InstituteSymbiosis Instituteof of Telecom Management Pune, a constituent of Symbiosis International Telecom ManagementUniversity. Pune, a Heconstituent has completed of hisSymbiosis MBA (Telecom Management) majoring in Marketing and Finance. He has done his bachelors in Electronics & Telecommunications engineering from Anna University, Chennai.
Rohan Charles Egbert is is an alumnus of Symbiosis Institute of Telecom Management Pune, a constituent of Symbiosis International University. He has completed his Master of Business Administration in Telecom Management with Marketing and Finance as specialization He completed his Bachelor of Science Physics (Honours) from St Stephen’s College, Delhi University, India. His research interests lies in complex adaptive systems for business strategy, modelling business scenarios and consumer
behaviour analytics.
Rohan Charles Egbert is is an alumnus of Symbiosis Institute of Telecom Management Pune, a constituent of Symbiosis International University. He has completed his Master of Business Administration in Telecom Management with Marketing and Finance as specialization He completed his Bachelor of Science Physics (Honours) from St Stephen’s College, Delhi University, India. His research interests lies in complex adaptive systems for business strategy, modelling business scenarios and consumer behaviour analytics.
Article can be accessed online at http://www.publishingindia.com
Valuation Techniques in Telecommunication Industry – An Alternative Approach based on Operating Cash Flow and Number of Subscribers Abhijit V. Chirputkar*, Prasanna Kulkarni**, ChintanVadgama***, Sandeep Prabhu**** *Assistant Professor, Symbiosis Institute of Telecom Management, Constituent of Symbiosis International University, Pune, Maharashtra, India. Email: [email protected] **Associate Professor, Symbiosis Institute of Telecom Management, Constituent of Symbiosis International University, Pune, Maharashtra, India. Email: [email protected] ***Assistant Professor, Symbiosis Institute of Telecom Management, Constituent of Symbiosis International University, Pune, Maharashtra, India. Email: [email protected] ****Assistant Professor, Symbiosis Institute of Telecom Management, Constituent of Symbiosis International University, Pune, Maharashtra, India. Email: [email protected]
Abstract The Indian economy has witnessed tremendous growth after liberalization. The valuation of telecom companies has gained specific importance after 2010. The government has received revenue of more than Rs. 1.06 lac crores through 3G/BWA spectrum auction from telecom operators. The operators raised debt to finance acquisition of spectrum in the above auction. Due to this almost all the operators had to raise debt and now it is impacting their profits, cash flow and valuation. Apart from this the telecom operators are highly regulated. There are various issues due to which the valuation of the telecom companies prior to 2010 (i.e. before auction) and post 2010 shows a huge difference. The valuation of telecom operators is very crucial and has invited special attention in the recent past. This article attempts to evaluate some special aspects of telecom valuation like valuation based on subscriber, per subscriber EV, PE ratios (EV ratios) etc. which may not be used while valuing other types of industries. This paper evaluates existing valuation techniques, assesses limitations of these techniques in the light of 3G auction. The valuation of the telecom companies under the conventional techniques may not depict fair results, considering the fact that the telecom sector witnessed an increase in number of subscribers, increase in revenue however a reduction in profits & valuation and heavy cost of debt involved in acquiring spectrum and upgrading technology during 2009 to 2015. The paper attempts to find out an alternative basis to arrive at valuation based upon operating cash flows and the number of subscribers. Keywords: Valuation, Number of subscribers, Operating Cash Flows, Telecom Industry
1. INTRODUCTION are also changing due to various reasons such as change in regulations, technology, opportunities for convergence etc. Telecommunications sector has witnessed structural, Telecommunications industry is one of the most profitable regulatory, technological and institutional reforms since and rapidly developing industries in the world and 1991. National Telecom Policy in 1994, 1999 and 2012 leading to overall economic growth. In the recent past, laid basic foundation for growth in terms of private sector telecom has become backbone of various other industries participation in this area. It has thus attracted private & and very useful in convergence with these industries. foreign investors. Wireless service provider is the most The industries include banking, healthcare, media, widely deployed mobile communications technology in entertainment etc. Due to such convergence the business India. There are many players offering wireless service model is also affected. The regulations play an important provider in India. The business models of the operators role in telecom sector. Similarly the growth opportunities Valuation Techniques in Telecommunication Industry – An Alternative Approach Based on Operating Cash Flow ... 33 are also increasing due to changes in technology and in case of Indian operators also. relevant business opportunities such as payment banks. The industry has in the past and is likely to have mergers Any financial activity leading to positive NPV creates and acquisitions in the years to come. value. In case of operators the investment (cost) of spectrum auction is not left as the decision purely at the The research involves studying the key trends in valuations discretion of the operators. The amount of investment in Indian telecom industry. It involves a study of current although was market driven, it was regulated and bound happenings in telecom industry, regulatory environment, with a policy decisions. valuation of each telecom operator based on different parameters like Enterprise value, ARPU, Discounted cash flow method. Finally it constitutes detailed valuation of 1.3 Valuation Drivers for Telecom Industry some of top telecom operators of India based on some new parameters like Average Cash margin per user, Enterprise According to the study conducted in 2009(E & Y report), value/EBITDA or cash flow per subscriber and analyzing the intangible assets represent on an average 30% of the their future prospects for mergers and acquisitions. telecommunication industry’s target Enterprise Value. These intangible assets include brand, technology, customer contract / relationships etc. It is important to 1.1 Objectives of the Study note that out of all intangible assets highest percentage The basic objective of the paper is to study present of impact on EV is represented by customer contracts / valuation practices and approaches and explore a new relationships, i.e. almost 1/3rd of all intangible assets. It approach to valuation for Indian telecom operators. The shows the importance of customer / subscriber base in paper evaluates various approaches in light of auction in terms of valuation i.e. EV – Enterprise Value. There are 2010, 2014 and its impact on valuation. The study does three main aspects i.e. number of subscribers, extent of not discard any of the existing methods however explores regulations and ARPU (i.e. average revenue per user) a new approach which might be useful in arriving at a fair value. The objectives of valuation are manyfolds which 1.4 Importance of Subscriber in Valuation includes mergers and acquisitions, divestment, strategic purpose etc. For a few industries, customer directly fetches value and income. The capacity of a customer base to give 1.2 Valuation in Indian Telecom Industry excess earning is also important. Customer and customer relationship is definitely treated as an asset. To arrive at One of the basic objectives of financial management is fair value of asset, excess earnings method is useful. Thus to maximize the value of the business. In finance, there customers / relationship will generate cash flows over a are three decisions i.e. starting from investment, how to period of time. In case of telecom operators, the quality finance investment and pay dividend out of profits. These of customers, retention of customers (by reducing churn decisions are taken with a view to maximize valuation of rate), offering quality of services and fair pricing will lead the companies. The above decisions are believed to be to excess earnings. The excess earning is thus attributable within the control of the organization. However in a few to the subscribers. These excess earnings are further cases, these decisions are affected due to Government discounted to arrive at fair value. policies and regulations. In case of Indian Telecom Operators, all the operators had to invest a huge amount To value customer base for telecom industry needs due to 3G / BWA auction process. The investment in attention to various factors such as multiple SIM spectrum auction was more than one lakh crores rupees, customers, non-active cards, the nature of customer base for all operators. In a few countries like Japan, Korea the (segmental revenue - mobile, fixed, internet etc.), growth spectrum was free of cost so there was no investment trends, margin levels, useful customer life and churn rates, from the companies’ point of view. In case of India, the bundled services, possibilities of new technologies and its operators had to invest in spectrum and for this they impact on acquisition of new customers or retention of had to raise debt from the market. The debt they raised existing one, regulatory issues like switching from one was due to spectrum auction.The spectrum auction took company to other, new competitors affecting business place in European countries where the operators in those model of operators. Thus the useful life of customer countries had to raise funds / debts which impacted their is significant along with how much cash flow it would profit margin and valuation. The similar issue happened generate for company. 34 Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016 1.5 Spectrum Auction in 2010 and 2014 which is subsequently used in discounting rate. It would affect the valuation of operators. The telecom industry has also contributed large amount to Government exchequer in the past. As against the expectation of a total Rs. 35,000 crores, the Government 1.7 Sample Selection earned more than Rs 1.06 lakh crores through this auction. At present, there seems to be uncertainty in revenues due The purpose of the study is to study the impact of to competition and MNP, delay in 3G launching, changing investment in spectrum auction and its impact on regulations and such related issues. One of the major valuation. Due to these investments, established methods concerns of industry is declining ARPU and with 3G it of valuations are not useful to arrive at valuation of Indian is likely to increase. Post 3G auction the situation has Telecom Industry. Thus the study is related to Telecom resulted into ‘Winning Curse’ for most of the operators. Industry and the sector of Indian Telecom Operators only. There are 16 operators in India namely Bharat Sanchar For spectrum allocation, auctions could be a mechanism Nigam Ltd., Mahanagar Telephone Nigam Ltd., Reliance to decide entry, maximize social efficiency, revenue Communication Ltd., TATA Teleservices Ltd., Idea maximization or price discovery. The objectives for Cellular Ltd., Videocon Communications Ltd., Quadrant Government of India as mentioned on DoT website, Tele ventures Ltd., BharatiAirtel Ltd., Vodafone Ltd., include maximizing revenue for the government, efficient Aircel, Loop Mobile Ltd., Spice Communication Ltd., use of spectrum, stimulate competition, and promote 3G S Tel Ltd., Unitech Wireless Ltd., Etisalat DB Telecom roll-out and help resolve 2G congestion Issues. However Pvt. Ltd., Sistema Shyam Teleservices. Thus out of 16 these revenues for auction depend upon number of companies, only 8 companies have invested in 3G / BWA subscriber and ARPU. auction. The auction took place in 2010 and 2014. The lists of companies who have invested in either of these 1.6 Impact of 3G Auction on Operators auctions are Vodafone Essar Limited., Bharti Airtel Limited., Reliance Telecom Limited., Idea Cellular The telecom operators had to invest in spectrum auction Limited., Tata Teleservices Limited., Aircel Limited., S Tel which is a huge investment for all operators. These Private Limited., and Reliance JIO. Out of the above eight investments were funded out of debts and the debt burden companies, the data required for the purpose of study is a was increased to a large extent. (Expected to be around financial data and is available of those companies which Rs 3, 00,000 crore). This increasing debt load will place are listed on a stock exchange. Thus for the purpose of our increasing margin pressures on operators due to higher study we have selected three listed companies as follows; interest expenses. Idea Cellular raised about $740 million, Tata Teleservices raised about $973 million, Airtel, had 1. Bharti Airtel Limited raised 85 billion rupees. Telecommunications companies 2. Reliance Communication Limited have raised around $4 billion rupees via short-term 3. Idea Cellular Limited debtand syndicated loans, a large chunk of it this week, to help fund their 3G spectrum purchases. 1.8 Approaches to Valuation The major concern was the debt amount raised by telecom operators. This industry has loan of around Rs. 2.5 trillion. There are various methods of valuations and the methods One of the major reasons of debt was tariff war along with include are; huge investments in 3G, BWA auction. An average net debt to EBITDA was around 2-3 times. • Book Value • Market Capitalization Table 1: Cost of Debt for Telecom Operators Post 3G • Enterprise Value Auction (in %) • Discounted Cash flow • Free Cash Flow 2007-08 2008-09 2009-10 2010-11 2011-12 6.04 7.88 4.8 5.95 10.24 There are various advantages and limitations of the same and these methods can be applied to valuation of telecom Cost of Debt: Finance Charges / Total debt x 100. It service providers. indicates pressure on cost of debt and cost of capital also Valuation Techniques in Telecommunication Industry – An Alternative Approach Based on Operating Cash Flow ... 35
The main features of Telecom Service Providers So in case of Indian operators, they had taken debt for 1. It is a capital intensive industry; spectrum auction resulting into more risk and beta affecting their valuation. Since the risks of operators have increased, 2. Huge investment in spectrum auction driven by it is reflected in beta coefficient and ultimately affects market forces and Government regulations; discount rates used in valuation of companies. 3. The investment are made out of huge debts; 4. The revenue depends upon number of subscribers; 1.10 Other Approaches 5. The industry is highly regulated so predicting fu- In EV to EBITDA approach, EV is arrived at as market ture profits or cash flows is difficult; capitalization plus debt and preference share capital as reduced by cash and cash equivalents. To put it simply, 6. The capitalization rate which is based upon weight- it is the price you will pay if you want full control of the ed cost of capital is also driven by huge debts due firm. By paying off all shareholders and bondholders you to 3G auction can enjoy full control of the firm and quite understandably you can enjoy the cash the way you want. Hence, EV 1.9 Methods of Valuations for Telecom consists of all types of capital but deducts cash and cash Operators equivalents. The denominator is EBITDA. In a profit and loss statement, an investor can simply deduct cost There are various approaches to valuation. Although most of goods sold from net sales. In plains terms, EBITDA of the approaches can be directly applicable to telecom represents operating profit. It talks about the profit a operators, in view of above issue i.e. 3G and BWA company makes by being in the business. It does not take auction and its subsequent impact on company’s financial into account various factors like the cost of financing, rate statement, valuation need to be analyzed from different of tax and non-cash expenditure such as depreciation. perspective. According to Prof. Ashwath Damodaran, in Many a time companies in sectors such as airlines, general terms, there are four approaches to valuation i.e. infrastructure and other capital-intensive businesses discounted cash flow valuation, liquidation and accounting which earn more revenues due to high debt, the EV/Sales valuation, relative valuation, contingent claim valuation financial parameter is more useful. uses option pricing models. Out of the stated available methods, most commonly and widely used methods are enterprise value and valuation based on cash flows. 1.11 Various Approaches to Valuation and Their Limitations in View of Auctions In discounted cash flows valuation, the value of an asset is the present value of the expected cash flows on the Value maximization is the central theme or objective of asset, discounted at a rate which represents the riskiness financial management. Thus the crucial issue is to arrive at of these cash flows. Assets with high and predictable cash fair valuation for a company. Although main approaches flows should have higher values than assets with low are applicable to all companies, the changes are required and volatile cash flows. In case of telecom operators if considering the nature of industry and its environment we treat customers as asset which generates cash flows such as government policies, regulation, industry growth and profits, then the valuation of customers is crucial. etc. The following approaches describe the method of In this context, we need to analyze cash flows generated valuation and its discussion on 3G auction and its impact out of subscribers / customers, whether they are high and on operator’s valuations: predictable in relation to a telecom operator. Adjusted book value approach: It is a balance sheet A few findings from E & Y study for telecom operators approach. The assets as reduced by liabilities will reflect indicate that key performance indicators are ARPU, this valuation. Due to 3G auction, all the operators had Enterprise value to number of subscribers, Enterprise value invested huge amount in 3G auction. So the valuation to Line Installed; subscriber acquisition cost and subscriber based on adjusted book value may not reflect the correct retention cost. The finding from the report says that large valuation. This valuation ignores the importance of Telco’s that operate in emerging markets have higher organizational capital i.e. employees and mainly the valuation multiples than their peers in mature markets. The customers which brings value to business. This approach operators in emerging markets face additional risk and thus is suitable in case of industries which are highly regulated are reflected by higher betas. The higher betas convert into and derives value mainly from owning natural resources. higher costs of capital for operators in emerging markets. In case of telecom operators this valuation is partially 36 Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016 applicable. However the operators are not the owners Free cash flow to equity valuation: In the entire valuation so valuation has its own limitations. In our opinion, in considering the scope of debt, this valuation may give an absence of ownership of spectrum and ignoring the value appropriate result. Arriving at cash flow is difficult due to customers this valuation is not relevant. to various reasons such as changing subscriber base (due to mobile number portability), changing business models Stock and Debt Approach: Under this approach when the (due to integration of businesses i.e. payment banks), securities of the company are publicly traded then the changing regulations related to rates and taxes etc. valuation is arrived at by adding value of equity and debt. In case of operators, all operators are not listed on stock exchange and their debts are not traded on exchanges. 1.12 Alternate Valuation Approach for Telecom Similarly for those operators who had raised huge debt Operators for subscribing to 3G auction, this approach would give huge valuation due to debt structure which is not fair. The Telecom companies can be valued based on market valuation will be meaningless when we compare pre- capitalization and Enterprise value. However considering auction value and post – auction valuation. Similarly it the impact of debt driven by Government policy of pre supposes efficient market hypothesis. spectrum auction which is more than Rs. 2 lacs crores, these two valuation methods may not represent a true Direct Comparison Approach: One of the fundamental valuation. Considering the importance of subscribers, principles is that similar assets should sell at similar price. we propose another approach i.e. valuation based on The valuation is based on detailed analysis including customers to Indian telecom operators. The German identification of multiples. There are various multiplies telecommunication company Deutsche Telekom (2001) and the value indicator must be consistent with the acquired US wireless carrier Voice Stream resulting into financial variable chosen. The multiplies include firm acquiring 2.3 million customers. In this deal, Deutsche value to sales, book value of assets, PBDIT, PBIT etc. Telekom acquired it for $35 billion. Thus it has paid This approach is not suitable for operators. However a few $15,200 were paid per customer. This is arrived at by ratios are very useful such as EV / Sales or subscribers. dividing total annual EBITDA-margin by the total number Market Capitalization and Enterprise Value: The market of customers at the end of that year (Skiera and Wiesel, capitalization is relevant however most of the operators 2002). This approach employs disaggregated cash flows are not listed. The enterprise valuation of operators is on the level of individual customers. high due to debt component. So these criteria may not be If we observe similar business valuations such as CATV directly relevant to operators. In our opinion, instead of valuations they are valued based upon multiple of cable ARPU, average cash margin per user is more important. cash flow and value per subscriber. Cable cash flow And we suggest one more multiplier i.e. EV / Average is defined as operating income before depreciation, cash margin per user which is discussed subsequently. amortization, interest and taxes. Cable acquisition prices Discounted Cash flow approach: This approach is most in Canada and US were based on multiplication of next suitable to operators since it is based on cash flows of years’ cable cashflow. the company. Here the value of the firm is present value of cash flow during explicit forecast period plus present 1.13 Enterprise Value / Operating Cash Flow value of cash flow after explicit forecast period. However Method of Valuation in a discounted cash flow method, for discounting purpose we need to calculate discounting rate which is based upon weighted cost of capital from all sources. Thus it includes One method of valuation is Enterprise Value to operating cost of equity and cost of debt. In case of operators who cash flow. Operating cash flow in which one can understand have paid huge amount for auction and raised the debt, pure cash flows. In EBITDA there is likely to have cost of debt would be high along with weighted cost of accounting distortions. So operating cash flows are more capital. Even due to these debts the proportion of debt to meaningful than EBITDA as valuation multiples. EV/OpCF equity will be high resulting into high discounting rate. is preferable to EV/EBITDA for comparing companies For DCF method, more thrust is on revenue and which within a sector, or for comparing companies across sectors is derived from subscribers. Valuation is done to guide or markets where companies have widely varying degrees of certain management decisions such as acquiring company, capital intensity. For example, the UBS Warburg European divestment decisions or similar strategic decisions. telecom team favors using EV to operating free cash flow over EV/EBITDA and is more useful in predicting future Valuation Techniques in Telecommunication Industry – An Alternative Approach Based on Operating Cash Flow ... 37 performance of telecom operators. value. Thus we recommend average cash margin per user (ACMPU) or operating cash flow per subscriber due to two reasons i.e. subscriber is most important asset 1.14 Enterprise Value to Cash Flow Per and cash flow are superior to profits. In finding out the Subscriber better method, we have compiled data of three operators’ st After reviewing various methods of valuations, we arrive enterprise value as of 31 March of every year from at conclusion that subscribers are the most important 2009 to 2015. The data was related to enterprise value, element which drives valuation of telecom operators. The EV to EBITDA per subscriber and EV to cash flow per milestones in valuation were earlier based on number of subscriber. The data was gathered for seven years and of subscribers, then average revenue per user, average margin three operators resulting into 21 samples. After analyzing per user. In the current situation, we propose average the data, following correlation was arrived at. The result cash flow per subscriber which is linked to enterprise of correlation is as follows;
Table 2: Correlations
Operating EBIDTA/ Cash flow/ EV EBIDTA Cash Flow Subscribers Subscriber Subscriber EV Pearson Correlation 1 .940** .926** .724** .577** .730** Sig. (2-tailed) .000 .000 .000 .006 .000 N 21 21 21 21 21 21 EBIDTA Pearson Correlation 1 .935** .700** .662** .716** Sig. (2-tailed) .000 .000 .001 .000 N 21 21 21 21 21 Operating Cash Flow Pearson Correlation 1 .754** .511* .821** Sig. (2-tailed) .000 .018 .000 N 21 21 21 21 Subscribers Pearson Correlation 1 -.032 .284 Sig. (2-tailed) .891 .213 N 21 21 21 EBIDTA/Subscriber Pearson Correlation 1 .694** Sig. (2-tailed) .000 N 21 21 Cash flow/Subscriber Pearson Correlation 1 Sig. (2-tailed) N 21 **. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).
Relationship between EV to EBIDTA per subscriber (0.577 ); and cash flow per Subscriber EV (0.730) is References checked using correlation significance. Both correlations Mishra, M., Varshney, G., & Karandikar, A. (n.d.) are significant at 0.01 levels. Since correlation between Analysis of the 3G and BWA Auctions in India. Cash flow/ Subscriber with EV of 0.730 is stronger; it is Abbas, M. (2014, 25 Oct). ET Bureau. better indicator of strength of relationship. Thus while valuing Telecom companies it is better to consider cash Article on 3G Spectrum auction in India. Retrieved from flow per subscriber to arrive at valuation. www.cci.in/pdfs/articles/3G-Spectrum-Auction -in-India. Pavri, Z. (198). Valuation of a cable television system. Price Waterhouse, Toronto Cable Communications Magazine.
Designation: Deputy Director and Assistant Professor
Email: [email protected] Designation: Deputy Director and Assistant Professor Contact no.: 9822073090 Email: [email protected]
Contact no.: 9822073090
Relationship between EV to EBIDTA per subscriber (0.577 ); and cash flow per Subscriber EV (0.730) is checked using correlation significance. Both correlations are significant at 0.01 levels. Since correlation between Cash flow/ Subscriber with EV of 0.730 is stronger; it is better indicator of strength of relationship. Thus while valuing Telecom companies it is better to consider cash flow per subscriber to arrive at valuation.
Mr. Prasanna Kulkarni is a Management Faculty at Symbiosis Institute of Telecom Management, Pune. A
References: Fellow Chartered Accountant by profession, he is B.Com, M.Com and currently pursuing his Ph.D 38 Telecom Business Review: SITM Journal Mr. VolumePrasanna 9 Issue Kulkarni 1 September is a 2016 Management Faculty at Symbiosis Institute of Telecom Management, Pune. A 1. Mishra, M., Varshney, G., & Karandikar, A. (n.d.) HeFellowAnalysis has Chartered industry of the 3G experienceAccountant and BWA of byAuctions 25 profession, years in andIndia. he post is B.Com, graduate M.Com teaching and experiencecurrently pursuing around his 19 Ph.D years. His core Study Paper No 50 / 2.2013,Abbas, Telecom M. (2014, Regulatory 25 Oct). ETMr. Bureau. Prasanna Kulkarnicompetence is a Management lies in subjects Faculty like atFinancial Management, Financial Accounting, Cost Accounting, Direct Taxes, Authority of India, Study3. paperArticle on onShareholding 3G Spectrum pat- auctionSymbiosis in IndiaInstitute. Retrieved ofTelecomHe Telecom has from industryBusiness Management, www.cci.in/pdfs/articles/3G experienceFinance, Pune. Costing of A 25 in years Telecom- Spectrumand Business post- graduate. teaching experience around 19 years. His core tern, Financing pattern, andAuction capital -structurein-India .of Indian Fellow Chartered Accountantcompetence by profession, lies in subjects he is B.Com, like Financial Management, Financial Accounting, Cost Accounting, Direct Taxes, Private Telecom Access Service Providers). M.Com and currently pursuing his Ph.D 4. Pavri, Z. (198). Valuation of a cable television system.Designation:Telecom Price Business Waterhouse, Associate Finance, TorontoProfessor Costing Cable in Telecom Business. http://www.trai.gov.in/Content/PerformanceIndicators Communications Magazine. He has industry experienceEmail: of pkulkarni25 years [email protected] post graduate Reports/1_1_PerformanceIndicatorsReports.aspx 5. Study Paper No 50 / 2013, Telecomteaching Regulatory experience Authority aroundContactDesignation: 19 ofyears. no.: India, 9860675665 HisAssociate Study core competence paper Pro fessor on Shareh olding pattern, Financing pattern, and capital structure of Indian Private Telecom Access Service Providers). Kulkarni, P., & Abhijit, C. (2011). Valuation lies in subjects like, Email:Financial pkulkarni Management,@sitm.ac.in Financial 6. http://www.trai.gov.in/Content/PerformanceIndicatorsReports/1_1_PerformanceIndicatorsReports.aspx Techniques for M & A in Telecommunication Accounting, Cost Accounting,Contact no.: Direct 9860675665 Taxes, Telecom 7. Kulkarni, P., & Abhijit, C. (2011). Valuation Techniques for M & A in Telecommunication Industry. In: Industry. In: Proceedings of International Finance Business Finance, Costing in Telecom Business. on Infrastructural DevelopmentProceedings, pp: 499-512 of International (ISBN: Finance on Infrastructural Development, pp: 499-512 (ISBN: 978-81- 924302-3-2). 978-81-924302-3-2). Designation: Associate Professor 8. Www. stern. nyu.edu Email: [email protected] Www. stern. nyu.edu 9. www.hollandlaw.nl Contact no.: 9860675665 www.hollandlaw.nl 10. Qcpages.qc. edu
Qcpages.qc. edu 11. Bauer.bwl.uni. mannheim.de Bauer.bwl.uni. mannheim.de12. www. eoy.dk www. eoy.dk 13. www. scribd. Com 14. www.readbag.com www. scribd. Com 15. www. Bvstrategy.com www.readbag.com 16. www.economywatch.com Mr. ChintanVadgama is a Management Faculty at Symbiosis Institute of Telecom Management, Pune. He is www. Bvstrategy.com 17. Bauer. bwl. uni.mannheim.de Mr. ChintanVadgamaB.Com, is a ManagementM.B.A. and currently Faculty pursuing at his Ph.D and UGC- NET Certified. www.economywatch.com18. www. cci.in Symbiosis Institute of Mr. Telecom ChintanVadgama Management, is Pune. a Management He Faculty at Symbiosis Institute of Telecom Management, Pune. He is Bauer. bwl. uni.mannheim.de19. www.moneycontrol.com is B.Com, M.B.A. andHeB.Com, currently has M.B.A. industry pursuing and experience his currently Ph.D and ofpursuing 2 years his and Ph.D post and graduate UGC- NET teaching Certified. experience around 6 years. His core www. cci.in UGC- NET Certified. competence lies in subjects like Financial Management, Financial Accounting, Cost Accounting, Income Tax www.moneycontrol.com andHe Security has industry Analysis experience & Portfolio of 2Management years and post graduate teaching experience around 6 years. His core He has industry experience competence of 2 years lies and in subjectspost graduate like Financial Management, Financial Accounting, Cost Accounting, Income Tax Brief Bio of Author/s teaching experience aroundDesignation:and Security 6 years. HisAssistAnalysis coreant competence &Professor Portfolio Management lies in subjects like , Email: Financial cvadgama Management,@sitm.ac.in Financial Accounting, Cost Accounting,ContactDesignation: no.:Income 9555050008 Assist Taxant and Professor Security Analysis & Portfolio Management Email: [email protected] Designation: Assistant ContactProfessor no.: 9555050008 Email: [email protected]
Contact no.: 9555050008 Mr. Abhijit Chirputkar is a Management Faculty at Symbiosis Institute of Telecom Management, Pune. A Mr. Abhijit Chirputkar is a Management Faculty at Chartered Accountant by profession, he is B.Com, M.Com, CISA (USA), MBF and SET certified. Symbiosis Institute of Telecom Management, Pune.
A Chartered AccountantHe hasby industryprofession, experience he is B.Com, of 10 years and teaching experience around 12 years. His core competence lies in M.Com, CISA (USA),subjects MBF and like SET Strategic certified. Corporate finance, Taxation, StrategicMr. SandeepFinancial Prabhu Management, is a Management Business FacultyModeling at Symbiosisand Institute of Telecom Management, Pune. He is BE (Mech), MBA (Marketing), MBA (Finance), and UGC-NET Certified. He has industry experiencePlanning of. 10 years and teaching Mr. Sandeep Prabhu is a Management Faculty at Symbiosis Institute of Telecom Management, Pune. He is BE experience around 12 years. His core competence lies in subjects like Strategic Corporate finance, Taxation, Mr. Sandeep Prabhu(Mech), is a ManagementMBA (Marketing), Faculty MBA at (Finance), and UGC-NET Certified. Designation: Deputy Director and Assistant Professor Strategic Financial Management, Business Modeling and Symbiosis Institute of Telecom Management, Pune. He Planning. Email: [email protected] is BE (Mech), MBA (Marketing), MBA (Finance), and Contact no.: 9822073090 UGC-NET Certified. Designation: Deputy Director and Assistant Professor Email: [email protected] He has industry, business, and teaching experience of Contact no.: 9822073090 over 19 years. He has been teaching Business Analytics, Services Marketing. He has a special interest in Structural Equation Modeling. Designation: Assistant Professor Email: [email protected] Contact no.: 9049006727
Mr. Prasanna Kulkarni is a Management Faculty at Symbiosis Institute of Telecom Management, Pune. A Fellow Chartered Accountant by profession, he is B.Com, M.Com and currently pursuing his Ph.D
He has industry experience of 25 years and post graduate teaching experience around 19 years. His core competence lies in subjects like Financial Management, Financial Accounting, Cost Accounting, Direct Taxes, Telecom Business Finance, Costing in Telecom Business.
Designation: Associate Professor Email: [email protected] Contact no.: 9860675665
Mr. ChintanVadgama is a Management Faculty at Symbiosis Institute of Telecom Management, Pune. He is B.Com, M.B.A. and currently pursuing his Ph.D and UGC- NET Certified.
He has industry experience of 2 years and post graduate teaching experience around 6 years. His core competence lies in subjects like Financial Management, Financial Accounting, Cost Accounting, Income Tax and Security Analysis & Portfolio Management
Designation: Assistant Professor Email: [email protected] Contact no.: 9555050008
Mr. Sandeep Prabhu is a Management Faculty at Symbiosis Institute of Telecom Management, Pune. He is BE (Mech), MBA (Marketing), MBA (Finance), and UGC-NET Certified. Article can be accessed online at http://www.publishingindia.com
Literature Review of Service Failure, Service Recovery and their Effects on Consumers and Service Employees Roshan Kazi*, Sandeep Prabhu** *Allana Institute of Management Sciences, Savitribai Phule Pune University, Pune, Maharashtra, India. Email: [email protected] **Symbiosis Institute of Telecom Management, Symbiosis International University, Pune, Maharashtra, India. Email: [email protected] Introduction Service failure is a situation when a service provider delivers the service performance Abstractfar below the adequate service expectations of the consumer; and service recovery is a This review aims to analyze literature related to service failure;subsequent firm’s attempted act of service service provider recovery; to improve and effects upon ofthe failure failure. & recoveryService management literature on consumer and employees. The study identifies important extensivelythemes emerging discusses in servicethe topic. failures Chronologically and its effects arranged and reactions literature from is the consumer as well studied for themes, using relevance to the topic. The study identifies three important themes related to; service failure, service as the service employee. The literature also extensively discusses service recovery recovery and its effects on consumer and employees. First theme is about effect of service failure on consumer value & experience through; negative emotions, emotional labor, and emotion contagion.mechanisms Second for effective theme is handling emerged of as complaints. customer reactions to service failure in terms of; justice & fairness, consumer forgiveness, consumerThe first revenge, step to opportunisticservice failure claiming,management recovery is avoiding satisfaction, failures itself by operational and switching behavior. Third theme is about managing service recovery using; compensation & apology, speed of response & positive ending, and customer relationship management.improvements. Services being Continuous simultaneous incremental processes or radical involving change consumer strategies andlike; total quality employees, control of service failures and subsequent servicemanagement, recovery are implementation important functions of six-sigma of managers. process, reengineering Lastly, this study of business processes, lean lists failure & recovery management methods for effective usethinking, by service improvements manager. using benchmarking, are recommended for avoiding service failures Keywords: Service Failure, Service Recovery, Emotion, Consumer(Johnston Behavior, & Clark, Services 2001). Figure Marketing 1 indicates, process improvement to improve service operations and reduce failures.
1. INTRODUCTION
Service failure is a situation when a service provider delivers the service performance far below the adequate service expectations of the consumer; and service recovery is a subsequent act of service provider to improve upon the failure. Service management literature extensively discusses service failures and its effects and reactions from the consumer as well as the service employee. The literature also extensively discusses service recovery mechanisms for effective handling of complaints.
The first step to service failure management is avoiding failures itself by operational improvements. Continuous incremental or radical change strategies like; total quality management, implementation of six-sigma process, reengineering of business processes, lean thinking,Figure 1. Service Failure, Controlling for Service Process improvements using benchmarking, are recommended for avoiding service failures (Johnston & Clark, 2001). Fig. 1. Service Failure, Controlling for Service Figure 1 indicates, process improvement to improveObjectives Process service operations and reduce failures. The objectives of this review of service management literature is to identify themes in; service failure, its effects on, and reactions from service consumers & service employee; and identify effective measures of service recovery. 40 Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016 2. Objectives important factors affecting customers response (Nicolau- gonza & Casado-dı, 2009).
The objectives of this review of service management Socio-emotional selectivity theory, suggests that intensity literature is to identify themes in; service failure, its of negative emotions has a reciprocal relationship with effects on, and reactions from service consumers & demographic factor of age. People tend to regulate service employee; and identify effective measures of their negative emotions better as they grow old. Young service recovery. customers are likely to express stronger negative emotions than the older lot. Satisfaction through service 3. Methodology recovery strategies (compensation, apology, and speed of service recovery) can also affect negative emotions. Thus The study adopts systematic literature review of the themes effective recovery strategies are important for consumer in service failure and recovery; by using chronologically recovery satisfaction (Concepcion Varela-Neira & organized literature. Later the literature is reorganized on Vazquez-Casielles, 2010). People from different culture topic relevance and then on citation counts. The study may react differently to negative service encounters. In uses SCOPUS literature database to identify research general, a negative service encounter is viewed with anger. articles, relevant themes developed in the area of service Compared to others, people from African origin reported failure and recovery. (“Scopus,” 2016). sadness and feeling of ‘being let down’ and humiliated at the hands of service employees during negative service 4. Discussion encounters (Smith, 2006). The difference in emotions across cultures is a result of variance in the interpretation Literature discusses three broad areas; first, related of appraisal of situations. In collectivist Asian cultures; to service failure and its effect on customer value & showing of dissatisfaction is discouraged, in order experience; second related to customer reactions to to maintain harmony and protection of interpersonal incidence of service failure; and lastly about, managing relationships. Such harmony discourages open display of service failure using effective service recovery. negative emotions (Laroche, Ueltschy, Abe, Cleveland, & Yannopoulos. Peter P., 2004). Service failure leads to generation of range of negative emotions in service 4.1 Service Failure and Customer Value & consumer, service employee; and causes emotional Experience contagion between them. Under this theme literature is grouped in three subthemes; negative emotions of First theme arising out of review is effect of service failure service consumer, emotional labor of service employee, on customer value and customer experience. On incidence and emotion contagion between service employee & of service failure, emotions play negative role in customer consumer. experience. Depending upon customer’s perception of cause of service failure, customer experiences negative 4.2 Negative Emotions of Service Consumer emotions, thus affecting consumer behavior directly by negative emotions and indirectly by perception of The service management literature lists, various emotions the cause (Harrison-Walker, 2012). Emotions are an generated during service encounters as; anger, fear, important ingredient of individual personality, and acts to sadness, happiness, disgust, and surprise (Robbins & create customer value, which in turn affects behavioral Judge, 2013). Early research work identifies eight types of response. Service recovery is an important activity, as emotional episodes; classified in four groups;—positive customer value is also created during service recovery emotions: happiness & delight;—situation-attributed process (Chang & Hsiao, 2008) through perceived risk and negative emotions: anxiety & fear;—other attributed perceived justice based on emotional value. In a situation negative emotions: anger & frustration; and— self- where the firm fails to respond to customer’s complaint, attributed negative emotions of: guilt & shame (Menon & then the situation is described as double deviation situation Dubé, 1999).During service failure, anger of the customer (initial service failure then a failed service recovery). is found to be important predictor of consumer behavior Under incidence of double deviation;—size of service than satisfaction (Bougie, Pieters, & Zeelenberg, 2003). failure,— recovery plans,— justice system,— emotions Delays in service delivery negatively affect service associated with recovery, and— recovery satisfaction; are evaluation; mediated by affective reactions to delay. Literature Review of Service Failure, Service Recovery and their Effects on Consumers and Service Employees 41
Control exercised by the service provider, and efforts contagion; a sequential incidences of negative and to fill in the time of delay also has effect on evaluation; positive emotions.This series of emotions called multiple mediated through affective reactions of uncertainty and sequential emotional displays; also effects consumer anger (Taylor, 1994). Researchers has also identified a emotions.More intense the display of employees’ regret emotion as a negative cognitive based emotion negative emotions; more are subsequent increase in experienced by customer when the alternative approach is customer’s negative emotions.If employee displays thought better than the one selected by him—this happens positive emotions, customer adopts positive emotions; when selection consequences in an unexpected result if employee display negative emotions, customer adopts (Liao, Liu, Liu, To, & Lin Hong-Nan, 2011). negative emotions(Du, Fan, & Feng, 2011).
4.3 Emotional Labor of Service Employee 4.5 Customer Reactions to Service Failure Employee empowerment, emotional dissonance, service quality, and customer satisfaction are interconnected Extensive literature discusses customer reactions to concepts. While employee empowerment influences service failure and deliberates on; expectations of emotional dissonance; a positive relationship is expressed justice & fairness, consumer forgiveness, consumer in empowerment, service quality, and satisfaction (Aziz, revenge, opportunistic claiming, recovery satisfaction, 2008). The concept of emotional labor though mainly and switching behavior. Literature reflectson series of discussed in relation to employee; is equally applicable consumer reactions under condition of service failures to the customer. Emotional labor is conceptualized as the and recovery as; justice & fairness expectations, consumer effort, planning, and control required to express expected forgiveness, consumer revenge, opportunistic claiming, emotions during interactions. Authenticity of employee recovery satisfaction, and switching behavior. labor display is found to affect customer emotions & perceptions (Hennig-Thurau & Groth, 2006).Effect of 4.6 Expectations of Justice & Fairness emotional labor in case of frontline employees and customers is extensive. They are required to alter their behavior to Emotions during service failure may not directly, but perform to the designed emotion-display by internalizing indirectly affect overall customer satisfaction through— elements of the value positioning (Sirianni, Bitner, Brown, cognitive evaluation of distributive justice (outcome & Mandel, 2013). Similarly customers are also required to equity),—procedural justice (policy & procedure equity), display self-control during service encounters, especially and—interactional justice (treatment justice). (Concepcion during service failure situation. Emotional labor can create Varela-Neira, Vazquez-Casielles, & Iglesias-Arguelles, stress in employees and customers. 2008). Various fairness aspects (price, procedure, Continued episodes of multiple work-related stressors outcome, interaction) effects positive & negative states during customer interaction can cause employee burnout of emotions, and eventually effects purchase behavior making him emotionally drained with lack of energy. as well (Namkung & Jang, 2010). One of the factors Literature proposes burnout structured as; — emotional affecting service recovery satisfaction is recovery justice exhaustion, — de-personalization, and— perceived and emotions (Wen & Chi, 2013). Preferential treatment reduced personal accomplishment. Personality traits are after service failure has important connectwith customer said to impact burnout dimensions (Harris & Lee, 2004). satisfaction-dissatisfaction (Concepción Varela-Neira, Vázquez-Casielles, & Iglesias, 2010). Continued emotional stresses during service encounters may lead to hostile behavior between the customer and the 4.7 Consumer Forgiveness service employee. Hostile behavior is detrimental to service quality; especially during poor technical performance of high utility interaction service (Doucet, 2004). Under the situation of service failure and subsequent service recovery; literature conceptualizes forgiveness as customer coping strategy under incidence of service 4.4 Emotion Contagion between Service failure. Situational factors of; novelty, outcome uncertainty, Employee & Consumer time;— and contingent factors of history of relationship, social influence, competitor density, switching cost Under situation of service failure and subsequent recovery facilitates forgiveness process (Tsarenko & Tojib, 2011). process; consumer and employees exchange multiple 42 Telecom Business Review: SITM Journal Volume 9 Issue 1 September 2016 4.8 Consumer Revenge affected by strong negative emotions; if consumer believes that service provider has control over situation; and Literature discusses; when service failure occurs, customer could have prevented the failure (Lin, 2012). Customers, develops a tendency to revenge against firm. Customer who have switched service providers and taken up new perception of the firm’s greed (opportunistic intent); provider on account of dissatisfaction, differ from other may generate feeling of customer revenge. Customer customers in their satisfaction and loyalty behaviors. The revenge can be direct (face to face) act of aggression most recent switch and mere a presence of an emotionally and vindictive complaining, or indirect (behind the back) taxing dissatisfied switch in the past, also affect current acts (Grégoire, Laufer, & Tripp, 2010). Customer delight satisfaction. (Ganesh, Arnold, & Reynolds, 2000). & outrage emotions are considered to more intense and dynamic than satisfaction & dissatisfaction (Schneider & 4.12 Managing Service Recovery Bowen, 1999). The third group of literature is about management 4.9 Opportunistic Claiming of service recovery;three subgroups are identified as compensation, apology, speed of response & positive An interesting first of a kind article Wirtz & McColl- ending, customer relationship. The most important part Kennedy (2010), theorized perceived fairness or justice,as of service provider’s responsibilities during situation of playing a key role in opportunistic claiming behavior of service failure is to effectively handle customers angered customers. Justice worked as a trigger and justification because of incidence of service failure. This anger can be of opportunistic claiming. Even the claim size was found effectively managed by sincere attempt of service recovery, to have direct relation with the size of the firm. Deeper specifically through pre-service recovery and during customer-firm relations are said to prevent customers phases of service recovery (Nguyen & McColl-Kennedy, from opportunistic claiming, but opportunistic claim 2003). Preferential treatment after service failure can cannot build service recovery satisfaction. explain customer satisfaction or dissatisfaction. Negative emotions during service failure affects relationship of cognition and dissatisfaction (Concepción Varela-Neira et 4.10 Recovery Satisfaction al., 2010). These encounters consists of acts, also called as moments of truth like; pre-sales, in-sales, and post-sales Customer experiences negative emotion on service failure interactions which may include; phone calls, plant visits, which further affects consumer satisfaction. Efforts taken service calls, service failures, service recovery (Grönroos, for attempted service recovery positivelyaffect recovery 2007). satisfaction (Concepcion Varela-Neira & Vazquez- Casielles, 2010). Failure emotions indirectly affect customer satisfaction through distributive, procedural, 4.13 Compensation, Apology and interactional justice. Lack of preferential treatment explains customer dissatisfaction and resulting negative Service recovery using financial compensation and social emotions mediates relationship of cognitive antecedents comparison with others positively improves satisfaction and dissatisfaction (Concepcion Varela-Neira et al., 2008). and behavioral intentions (Vazquez-Casielles, Iglesias, While quality of the past service performance develops & Varela-Neira, 2012). Customers experience negative causal attributes, emotions generated after the service emotions after service failure, and it may affect customer failure mediate the relationship between causal attributes satisfaction significantly. Service recovery efforts of; (stability & control) and overall customer satisfaction Compensation, apology, and speed of recovery has (Vázquez-Casielles, Rio-Lanza, & Diaz-Martin, 2007). significant positive relation with; recovery satisfaction. In a situation of negative emotion during service failures a free gift or an apology can convert a negative emotion 4.11 Switching Behavior into a positive emotion (Golder, Mitra, & Moorman, 2012). Research in customer’s “nasty’ negative emotional Emotionally taxing customer switch can also affect current retail shopping experiences like shoplifting accusation satisfaction significantly. More than uncontrollable service violates implicit trust, distrust provoked moral emotions, failure, customer expects proactive improvement in damages identities, and fuels retaliations (Friend, Costley, controllable service failures. Consumer is more likely to be & Brown, 2010). Literature Review of Service Failure, Service Recovery and their Effects on Consumers and Service Employees 43 4.14 Speed of Response & Positive Ending Bougie, R., Pieters, R., & Zeelenberg, M. (2003). Angry customers don’t come back, they get back: the expe- Speed of response compensation process also affects rience and behavioral implications of anger and dis- customer satisfaction, but speed of response to apology satisfaction in services. Journal of the Academy of may not contribute to satisfaction. Thus the effective Marketing Science, 31(4), 377–393. recovery strategies should be used to check negative Chang, H.-S., & Hsiao, H.-L. (2008). Examining the ca- emotions caused by service failures (Concepcion Varela- sual relationship among service recovery, perceived Neira & Vazquez-Casielles, 2010).Within the sequence justice, perceived risk, and customer value in the ho- of various emotions during service encounter, a positive tel industry. The Service Industries Journal, 28(4), emotion at the end of the encounter is considered as a 513–528. better predictor of satisfaction (Dalakas, 2006). Dalakas, V. (2006). The importance of a good ending in a service encounter. Services Marketing Quarterly, 28(1), 35–53. http://doi.org/10.1300/J396v28n01 4.15 Customer Relationship Doucet, L. (2004). Service provider hostility and service quality. Academy of Management Journal, 47(5), 761– On the incident of service failure; customer relationships 771. http://doi.org/10.2307/20159617 and post-consumption behavior is affected by perceived justice as well asemotions related to consumption. Du, J., Fan, X., & Feng, T. (2011). Multiple emotion- Recovery justice and emotions (positive or negative) al contagions in service encounters. Journal of the influences service recovery satisfaction, trust, intentions Academy of Marketing Science, 39, 449–466. http:// to repurchase, and spread of word-of-mouth (Wen & doi.org/10.1007/s11747-010-0210-9 Chi, 2013). During service failures; angry and frustrated Friend, L. a., Costley, C. L., & Brown, C. (2010). customers have to cop up with feeling of helplessness. Spirals of distrust vs spirals of trust in retail custom- Providing informational support and retrospective er service: consumers as victims or allies. Journal explanation can mitigate the feeling (Gelbrich, 2010). of Services Marketing, 24(6), 458–467. http://doi. org/10.1108/08876041011072573 5. Conclusion Ganesh, J., Arnold, M. J., & Reynolds, K. E. (2000). Understanding the customer base of service providers: One of the extensively discussed literature topic in an examination of the differences between switchers services marketing is service failure, and service recovery and stayers. Journal of Marketing, 64(July), 65–87. as a proactive measure. Three service failure effects are Gelbrich, K. (2010). Anger, frustration, and helpless- identified as; negative emotions generated in service ness after service failure: coping strategies and effec- consumer, the effect of emotional labor faced by service tive informational support. Journal of the Academy employees, and emotion contagion exchanges between of Marketing Science, 38(5), 567–585. http://doi. service employees and consumers. The literature also org/10.1007/s11747-009-0169-6 suggests customer reactions to service failure like; Golder, P. N., Mitra, D., & Moorman, C. (2012). What expectations of justice & fairness, consumer forgiveness, is quality? an integrative framework of processes and possibility of consumer revenge, opportunistic claiming, states. Journal of Marketing, 76(July), 1–23. recovery satisfaction, and switching behavior of Grégoire, Y., Laufer, D., & Tripp, T. M. (2010). A compre- consumers. Lastly, literature themed around management hensive model of customer direct and indirect revenge: of service recovery is discussed as; compensation understanding the effects of perceived greed and cus- &apology speed of response & positive ending, and tomer power. Journal of the Academy of Marketing customer relationship. 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Wirtz, J., & McColl-Kennedy, J. (2010). Opportunistic Management from Indian Institute of Management customer claiming during service recovery. Journal of Indore. He has national and international publications the Academy of Marketing Science, 38, 654–675. http:// to his credit. His papers have been published in referred doi.org/10.1007/s11747-009-0177-6 journals like Journal of Marketing and Communication, Indian Journal of Management, Prabandhan, International Brief Bio of Author/s Journal of Management Cases, Darwen, Lancashire, UK.”
“Dr. Roshan is a Professor and Head of Department,MBA Mr. Sandeep Prabhu is a Management Faculty at Programme at Allana Institute of Management Sciences, Symbiosis Institute of Telecom Management, constituent Pune. He specializes in Marketing and Quantitative of Symbiosis International University Pune. He is BE methods. He has taught Marketing and Business Statistics (Mech), MBA (Marketing), MBA (Finance), and UGC- over several years. He is a sought-after trainer, in statistical NET Certified. software SPSS. He has industry, business, and teaching experience of He has a Ph.D. in Business Administration from over 19 years. He has been teaching Business Analytics, the University of Pune and Post-Doctoral fellow in Services Marketing. He has a special interest in Structural Equation Modeling. Guidelines For Author
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A Journal of SITM (TBR) is an annual journal of Symbiosis Institute Of telecom Management. TBR is a referred journal with a process of double blind review ISSN: 0973-9114 The Journal is published every year by SITM with the objective of participating and promoting research in the field of Telecom, IT and Business. TBR contains valuable inputs in the different areas related to 1. Profitable Solution to Emerging Market Challenges through technology as well as business and helps the readers to keep abreast of the current trends in the area of 'Internet of Things' telecom business. Papers are invited from authors in varied areas related to telecom business such as: Swarnabha Shankar Ray, Amardeep Verma 1
·Wire-line & Wireless Networks. 2. Implicit Testing - An Improved Way of Testing Software ·Telecom Regulation, Spectrum Allocation, Interconnection, Quality of Service (QoS) etc. Shraddha Avhad Bahalkar, Shankar Ramamoorthy 9 ·E-Governance. ·Marketing: Trends in Telecom / IT at Global/ Indian Level. 3. Decoding DA-Vinci Code: TMMI Assessment Model ·Financial, Accounting Issues in Telecom/ IT. Revisited 17 ·OSS/BSS, Network Security, Telecom Network Management. Shankar Ramamoorthy ·Project Management in Telecom/ IT. ·IT Risk Management and IT Infrastructure Management. 4. Telecom-OTT partnership –Generating New Revenue Sharing Models 21 Sujata Joshi, Rohit Dalal, Rohan Egbert, Journal in Association With: T elec Akshara Chaudhary om Business R 5. Valuation Techniques in Telecommunication Industry- an Publishing India Group Alternative Approach based on Operating Cash Flow and Plot No. 56, 1st Floor, Deepali Enclave Number of Subscribers 32 Pitampura, New Delhi-110034, India Abhijit V. Chirputkar, Prasanna Kulkarni,
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Email: [email protected] w Website: www.publishingindia.com 6. Literature Review of Service Failure, Service Recovery and their effects on Consumers and Service Employees Roshan Kazi, Sandeep Prabhu 39
ISSN 0973-9114
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Constituent of Symbiosis International University (SIU). (Established under Section 3 of the UGC Act 1956, by notification No. F 9-12/2001-U 3 of the Government of India ), Accredited by NAAC with “A” Grade Symbiosis Knowledge Village, Village Lavale, Mulshi Taluka, Pune-412115. Phone: +91-20-3911 6177 (Office Direct), 39116180. Fax: 39116181 Email: [email protected], Website: www.sitm.ac.in Volume 9 Issue 1 SEPTEMBER 2016