Mobile Handset Subsidies

In: Business and Management

Submitted By utsav3188
Words 6531
Pages 27
Mobile Handset Subsidies
Strategy Implementation
Team 6
Bibin Bopan E011
Shirshendu Dutta E015
Suman Ghosh E019
Srihari Rao Kasaraneni E028
Satchit Sawant E045
Utsav Shah E045
Shubham Shukla E049

Contents Mobile Handset Subsidies 1 Part1 2 Introduction on handset subsidies and their purposes 2 Part 2 4 Different subsidy models used across different economies and firms 4 (Except India/Indian) 4 Part 3 6 Subsidies and Implementable Models for India 6 Part 5 9 Government Regulations on Mobile Handsets 9

Part1
Introduction on handset subsidies and their purposes

Handset Subsidy as defined by Technology Glossary is:
Handset Subsidy: Frequently, a wireless company will sell a phone (handset) below cost, with the hope of making up the loss later on customer usage fees. The amount of loss per handset is called the handset subsidy.
Purpose behind lowering upfront payment for mobile handset devices:
A lot of purposes could be attributed to models that lower upfront payments for handsets in return for longer term service contracts designed to recover fees in One to Three years. a. Upfront costs for new mobile handsets or tablets could be a barrier for people who are otherwise willing to pay in instalments. b. Ability to lock in customers or retain old ones or to attract them from other operators by giving them better handsets by more valuable contracts. c. Leveraging the capabilities offered by manufacturers on smartphones and the share of people using these features.
Technically this concept is not akin to the actual definition of subsidy in the proper sense. Subsidy means the transfer of value by cost with the loss to the transferor and gain to the transferee.
However, in the mobile handset-carrier business the subsidy is more of a bundled sale where the carrier…...

Similar Documents

Mobile Payment

...Mobile payments in Asia Pacific i n f o r m at i o n , c o m m u n i c at i o n s & e nt e rta i n m e nt Mobile payments in Asia Pacific  Contents 2 Introduction from Sean Choi and David Collins 3 Introduction from John Ure and Peter Lovelock 4 Introduction 6 Business models and the m-payments value chain – Business models behind different transaction types – Emerging business models by country – Industry perspectives on m-payments 22 Case studies – Smart in the Philippines – Yeepay’s B2B approach – The growing reach of Octopus – Gaming and virtual money – A view from the bottom of the pyramid – mHITs in Australia 29 Regulations and standards 40 Risks and challenges 44 About KPMG © 2007 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 2 Mobile payments in Asia Pacific Introduction from Sean Choi and David Collins Seung Hwan (Sean) Choi This KPMG thought leadership report explores the development of the market for mobile payment systems in Asia Pacific. We believe the significance of this market cannot be overstated, as new technologies have the potential to play a key role in the expansion of commerce to an ever-wider segment of the world’s population. This is especially true in Asia Pacific. The expansion of commerce and the growing reach of...

Words: 18276 - Pages: 74

Subsidies

...utilized. As a result, the burglary problem will be minimized, encouraging more people to travel to the city by car, thereby saving time and fostering economic growth. Though the mayor is responsible for his city’s wellbeing, the rationale does not fit into a government intervention to build and run a parking facility. In fact, during certain times of budget constraints, it could be costly for the local government to initiate such projects or sometimes government initiated projects could be delayed for a longer period of time due the longer bureaucratic processes existing in most government offices. In addition, privation will empirically reduce the burden of public borrowing, since public sector borrowing requires sometimes unnecessary subsidies and through privatization this could easily be eliminated. Moreover, microeconomic theory informs us that incentive and contracting problems create inefficiencies due to public ownership (Eytan Sheshinski 1999). This is widely depicted in many public offices, given that managers of government- owned enterprises could be lobbied to pursue objectives that differ from those of private firms due to political views which could lead to diverting the objective of having the parking facility properly managed and maintained for a longer time. Well- renowned economists have for sometime argued that governments sometimes end up employing managers who are unqualified for the particular job portfolio. These managers are mostly motivated by......

Words: 1504 - Pages: 7

Virgin Mobile

...Problem Definition: Develop a price strategy that would allow Virgin mobile to compete in the USA Mobile industry, which highly saturated. However, Virgin targets a market segment which is unsaturated- youth between 15-29 years of age. Also, they are looking for optimum pricing strategy to reach the goal of 1 million customers in 1 year and 3 million in 4 years. This is the issue or concern faced by Virgin, which will be discussed further in the paper. Analysis: Virgin which has huge capability of brand extension looks to enter the market with a non-traditional strategy (MVNO) which comes with an advantage of minimizing the huge amount of fixed costs. Though this particular model failed earlier in Singapore, Virgin still looks to ahead since there is a great opportunity to serve a market segment (youth between 19 and 25 years of age), which is underserved, has lower market penetration rate and high growth. (See page 5 and refer page 84 of text). Primarily they have considered various factors to implement this plan- different advertisement campaign, selling channels and value added services like VirginXtras (see page 3-6). Secondarily they have options of three pricing decision, each options have their own pros and cons. (see page 6-8). 1. Clone the industry prices Pros Cons Give customers more features for the same price Lower margins due to the expenses of value added services (page 19) Easy promotion using the current theme of existing carriers Advantage of low......

Words: 652 - Pages: 3

Virgin Mobile Pricing Strategy

...options. Which option would you choose and why? In designing your pricing plan, be as specific as possible with respect to the various elements under considerations (e.g., contracts, the size of subsidies, hidden fees, average per-minute charges, etc.). I will recommend third pricing strategy, which is to come up with a completely new plan, since we are trying to target a new market segment. The following will be the structure of the new price plan, which employs a revolutionary and aggressive approach. Subscription Type All of the plans will be prepaid thereby completely eliminating the need for indulging into contracts. The subscription will come into packages that resemble consumer electronic packaging and would be plug_and_play when you buy them. Contracts: Since the plans will be all prepaid, the services will be offered without indulging into a contract. This will allow e.g. the teenagers 14-17 to be able to get the subscription because otherwise they are not eligible to sign the contracts. This is clearly an untouched segment and will bring lot of new customers. However the risk of churn will be increased to 6% per month, but that will be catered into pricing calculations given in the end. Handset Subsidies: All customers will be offered handset subsidies at 50% of the handset costs. This will reduce the subscription price and hence enabling the young customers to afford the plan. Hidden fees and Off-peak hours: All plans will have no hidden fees or......

Words: 1292 - Pages: 6

Mobile Banking

...fundamental concepts and key authors associated with the subject matter. It includes “mobile banking” and “opportunities and challenges of mobile baking” as these are directly representative of the academic discussion on the subject of investigation. As a literature review needs to be sufficiently critical in a balanced way, the literature review for this study aims to do in the discussion of the opportunities and challenges of the subject matter through impartial assessment of the relevant concepts. 1.1. Opportunity & Challenges of Mobile Banking: 1.1.1. Mobile Banking: Today is the era of fast forward life style. Everything we need or want, we want it in a minimum time. Like all other things we also need a fast forward banking. The result of it is mobile banking. Mobile banking means the ability of making deposits, withdrawal and to send and receive funds from a mobile account. According to the Journal of Information Engineering and Applications (Vol. 1, No.6, 2011), Mobile Banking is a financial transaction conducted by logging on to a bank's website using a cell phone, such as viewing account balances, making transfers between accounts, or paying bills and this can be conducted through the internet browser on the phone, through a program downloaded from your bank, or by text-message (SMS). Since 2004, Dutch Bangla Bank Limited (DBBL) has introduced mobile and SMS banking. With a mobile phone, customers can perform many banking operations with their phone. ......

Words: 3733 - Pages: 15

Virgin Mobile

...Virgin Mobile USA is a brand extension of Virgin, a U.K.-based company founded by Sir Richard Branson. The company led by CEO Dan Schulman was founded under Virgin's mission statement which stated "we believe in making a difference. In our customer's eyes, Virgin stands for value, for money, quality, innovation, fun and a sense of competitive challenge... we look for opportunities where we can offer something better, fresher, and more valuable, and we seize them. We often move into areas where the competition is complacent... We are pro-active and quick to act, often leaving bigger and more cumbersome organizations in our wake." (1) Virgin Mobile USA had a number of things going for them despite a crowded cellular marketplace. For starters, they had a CEO who had experience in telecom as he was formerly an executive with AT&T. Schulman also had experience with successful pricing strategies and technology as former CEO of Priceline.com. The biggest plus for the startup was the support and backing by its management and stakeholders who genuinely wanted to garner success against the perception of another market saturated run poorly with complacency and poor customer service. The bar was set high for success, as Schulman's goal was to have acquired 3 million customers by their fourth year of operation. I believe that Virgin Mobile USA took a big gamble in targeting a niche that was essentially written off by the other players in the industry as being largely unprofitable.......

Words: 1408 - Pages: 6

Subsidy

...Background. What this paper endeavours to illustrate is that government funding is sometimes necessary for the sustainable functioning of the economy and society from a holistic perspective. Firstly, let us define the term “subsidy”, and how this fits in an economic context. Oxford Dictionary defines “subsidy” as follows: “a sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low” (OED Add. Ser. Vol. 3, 1997). Subsidising industry is anathema to the concept of free trade as the very foundation of free trade, as we know, is built on the cornerstone of “laissez-faire” capitalism and a limited role for government inasmuch as the market is out of the sphere of influence of the government. Another notion is invoked when discourse on the subject of government intervention regarding an under-performing market manifests; economists appeal to the term “market failure” to dub this phenomenon. A “market failure” can be defined as an occurrence in the market whereby resources are not efficiently allocated (Financial Times Lexicon, 2014). We’ll explore this notion further in the latter part of this essay. Underlying philosophies. The proponents of free trade and free markets, such as Adam Smith, do indeed possess and proliferate legitimate arguments concerning government intervention in the market. To be intellectually honest from a position of advocating government intervention, this admission will be......

Words: 1741 - Pages: 7

Mobile Money

...Mobile money An overview for global telecommunications operators Mobile money An overview for global telecommunications operators I About Ernst & Young’s Advisory Services Most businesses today are looking to solve two key challenges — improving business performance and reducing costs. This dual objective can deliver significant benefits and position your organization to emerge from the downturn with a stronger and more competitive profile. To help you meet these interconnected challenges and achieve your potential, we harness the diverse perspectives and experiences of our 18,000 advisory professionals — one of the broadest global advisory networks of any professional organization. We assemble seasoned multi-disciplinary teams to work with you to deliver a superior experience built on a consistent global methodology, a robust knowledge culture, and insights from our work around the world. We also understand that, to achieve your potential as an organization, you require services that respond to your specific issues, so we bring our broad sector experience and deep subject matter knowledge to bear in a proactive and objective way. It’s how Ernst & Young makes a difference. www.ey.com/advisory About Ernst & Young’s Global Telecommunications Center In a rapidly changing environment, telecommunications operators are facing the challenges of growth, operational efficiency, convergence, technology and increasing regulatory pressures. Ernst & Young’s Global......

Words: 10078 - Pages: 41

Comparison of Mobile Handset

...INTRODUCTION Definition of Mobile phone:- The cellular telephone (commonly “mobile phone” or “cell phone” or “hand phone’) is a long range portable electronic device used for mobile communication. In addition to the standard voice function of a telephone, current mobile phones can support many additional services such assess or text messaging, email, switching for access to the Internet, & MMS for sending and receiving photos and video. Most current mobile phones connect to a Cellular network of base stations which is in turn interconnected to the public switched telephone networks phones. Cellular telephone is also defined as a type of short- wave analog or digital telecommunication in which a subscriber has a wireless connection from a mobile telephone to a relatively nearby transmitter. The transmitter's span of coverage is called a cell. Generally, cellular telephone service is available in urban areas and along major highways. As the cellular telephone user moves from one cell or area of coverage to another telephone is effectively passed on to the local cell transmitter. A cellular telephone is not be confused with a codeless telephones. INTRODUCTION OF NOKIA Nokia Corporation is a Finnish multinational communications corporation that is headquartered in Keilaniemi, Espoo, a city neighboring Finland's capital Helsinki. Nokia manufactures mobile electronic devices, mostly mobile telephones and other devices......

Words: 4281 - Pages: 18

Handset Market

...differentiation, value proposition and service-oriented revenue streams will be eroded. And it must tailor its marketing and largely online sales channels accordingly. That said, Xiaomi does have the potential to be a disruptive force beyond China and international vendors should take note.’ Samsung’s slide to second place in China for the first time since Q4 2011 and 15% year-on-year decline, reflects rapidly shifting demand toward 4G handsets, helped by an ongoing push from China Mobile behind its 4G services. Samsung’s efforts to realign its channel inventory to meet changing demand during the quarter led to a reduction in its overall shipment numbers that is not expected to affect Q3 2014 to a similar extent, though with the market in China becoming even more competitive, it will not be straightforward to reestablish leadership. Meanwhile, Apple had a relatively strong year-on-year performance, up 58%, helped by the iPhone’s position as one of few high-end device options available to consumers looking to use 4G services from China Mobile. Worldwide, 292.4 million smart phones shipped in Q2 2014, representing 23% year-on-year growth and 5% growth on the first quarter. Despite challenges in China, Samsung retained its global lead with a 26% share, though it was its lowest global share in two and a half years – down from 32% in Q2 2013 and 31% in Q1 2014. It nonetheless remained ahead of Apple (12%), Huawei (7%) and Lenovo (5%). Xiaomi’s strong domestic performance......

Words: 793 - Pages: 4

Virgin Mobile

...Virgin Mobile USA PGXPM 10 – ARJUNAS – GROUP VI SERVICE MARKETING Assigned by Prof. D. Sriram MEMBERS: NIRANJAN DAUTKHANI Virgin Group Profile: * Virgin, a leading branded venture capital organization, is one of the world's most recognized and respected brands. * Conceived in 1970 by Sir Richard Branson, the Virgin Group has gone on to grow very successful businesses in sectors ranging from mobile telephony, to transportation, travel, financial services, leisure, music, holidays, publishing and retailing. * Virgin has created more than 200 branded companies worldwide, employing approximately 50,000 people, in 29 countries. [ “ We believe in making a difference. In our customers' eyes, Virgin stands for value for money, quality, innovation, fun and a sense of competitive challenge. We deliver a quality service by empowering our employees and we facilitate and monitor customer feedback to continually improve the customer's experience through innovation.” ------- Virgin Group Website Virgin Values: * Virgin stands for value for money, quality, innovation, fun, and a sense of competitive challenge. * Successful cellular operations in U.K.- 2.5 million customers in 3 years. * Unsuccessful operations in Singapore (2001) - Virgin hip and trendy positioning failed. Virgin Mobile......

Words: 853 - Pages: 4

Mobile

...What’s a mobile phone virus? A mobile phone virus or mobile malware - malicious mobile software - is a computer virus specifically adapted for the mobile phone environment and designed to spread from one vulnerable phone to another. A virus is a program code that replicates by being copied to another program. Viruses can be transmitted as attachments to an email or in a download file. Some viruses take effect as soon as their code is executed; other viruses can lie dormant. A virus that replicates by resending itself as an email attachment or as a part of a network message is known as a worm. Viruses can range from benign to quite harmful; they can erase data from the infected phone or send fake messages purporting to be from the phones owner. How prevalent are mobile phone viruses? The current security risk from mobile phone viruses and worms is low. Until many more smart phones or PDAs are in use, and users of these phones are regularly exchanging executable files, the risk will remain low. The mobile industry takes the threat of viruses very seriously and is continually monitoring its networks and working to protect users from any future risk from mobile phone viruses. There are also some simple measures that individual users can implement to protect themselves. What can I do to protect my phone? The following tips can help prevent problems with viruses on your phone: 1. Switch to Bluetooth hidden mode. If your phone has Bluetooth capability,......

Words: 3609 - Pages: 15

Virgin Mobile

...Virgin Mobile USA : Pricing for the Very First Time 1) Virgin Mobile targets the 14 to 24-year olds market. The case lays out three pricing options. Which option woul you choose and why ? All three options are very interesting for Virgin Mobile to introduce the American market. Considering Virgin Mobile’s background, goals and strategy, I would have choose the option 3 « A Whole New Plan » There are few reasons that explain this choice : Firstly, Virgin Mobile’s cultural values are to be innovative, fun. It also wants to make things different from its competitors and continuously improve customers’ experience through innovation. Indeed the options 3 offer something very different than competitors. Secondly, regarding the segment target, 14–24 years old, it is known that those categories can not pass the credit check with the current carriers due to their lack of revenue. The result is that this target market has been forgotten. Moreover, it is an age where teenagers are looking for “independence” and like to do things without parents. It is why the option 3 fit well. Thirdly, I believe that the option 3 is the one that fit the best selling model that has been chose by Virgin. In fact, it does not require any......

Words: 1730 - Pages: 7

Virgin Mobile

...retain customers in an already mature market. Recommended course of action Despite a mature US market, the cellular service industry has a market penetration of only about 15% in the segment comprising of users aged between 15 and 19 years. This segment is characterized by inconsistent cell phone usage, low credit ratings and usage pattern different from the typical businessperson. Hence, Virgin Mobile USA is looking to penetrate this segment and create brand loyalty through attractive pricing and additional feature in mobile entertainment. Based on our analysis, we recommend the following: 1. Aim for the non-contractual prepaid segment with a new pricing structure: Virgin Mobile USA should look to price at 20-30 cents per minute. 2. Increase the off peak hours: The company could extend the off-peak hours by 2 hours, starting at 7pm instead of 9pm. 3. Lowering of Acquisition Cost (AC): Virgin Mobile USA should keep its AC around $130 by passing on a part of the handset cost to the customers. Rationale for Recommendation We can see from Exhibits 1 & 2 that if Virgin Mobile opted for a contractual service plan with rates at par with industry average the Customer Life Time Value (LTV) will be considerably high. However, the pricing will act as a big deterrent in attracting new customers. The national players might be quick in introducing features similar to the ‘Virgin Extras,’ further diluting the differentiating factor. This leads us to a second option where......

Words: 1052 - Pages: 5

Virgin Mobile Usa

...Virgin Mobile USA: Pricing for the Very First Time Company Background Introduction Case Background Issue of Concern Market Research Analysis All Options Theory Application Calculation Virgin Response Conclusion Recommendations Inviting Questions 2 Introduction Analysis Conclusion Company Background • Virgin, a leading branded venture capital organization, is one of the world's most recognized and respected brands. • Conceived in 1970 by Sir Richard Branson, the Virgin Group has gone on to grow very successful business in sectors ranging from mobile telephony, to transportation, travel, financial services, leisure, music, holidays, publishing and retailing. • Virgin has created more than 200 branded companies worldwide, employing approximately 50,000 people, in 29 countries. Case Background Issue of Concern [Source: company website Available from: http://www.virgin.com/AboutVirgin/WhatWeAreAbout/WhatWeAreAbout.aspx] 3 Introduction Analysis Conclusion Company Background Case Background Issue of Concern 4 Introduction Analysis Conclusion Company Background Case Background Issue of Concern Sir Richard Charles Nicholas Branson (born 18 July 1950), is an English entrepreneur, best known for his Virgin brand, a banner that encompasses a variety of business organizations. The name Virgin was chosen because a female friend involved in setting down the initial record shop commented that there...

Words: 2616 - Pages: 11