**2.3. The features of the Russian telecommunication market and the customization of telecommunication service products**

The customization is the adaptation of the mass products or services to the needs of the individual consumer. At the core of customization lies the individualization of consumer demand, prepared by the development of modern technology, which created the prerequisites for personifying of the service conditions.

The personalization of the supply requires the increasing of the telecommunication industry companies' flexibility, which could not be achieved in the conditions of the natural monopoly, classically justified for the communications industry. The experience of many countries shows that the modern telecommunication services market is undergoing the transformation toward imperfect competition. This market is an oligopoly in Russia (**Table 9**).

Currently, the Russian telecommunications market is formed by four main public corporations with 80% of the market approximately: "MTS," "Megafon," "VimpelCom" (brand "Beeline," currently within the EON Ltd. group of companies), and "Rostelecom." These companies are actively competitive among themselves within the whole period of their existence.

a certain minimum set of services of an established quality that are accessible to all users regardless of their geographical location at an acceptable price, established depending on certain national conditions. A universal service is a minimum guaranteed telecommunications service product. Universal service does not imply the customization, being

**Table 9.** The comparative analysis of the signs of the natural monopoly and oligopoly in relation to the Russian market

**In the Russian telecommunication market**

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The weakening of the institutional and

Constant updating of the technologies used

products

Customization of the Telecommunication Market Based on the Application of the Concept…

technological barriers

by new market participants

The high level of competition, the saturation of the market and the sophistication of consumers stimulate telecommunication companies to differentiate their supply. However, the copying of the claimed components of the service product leads to the fact that gradually a number of services are offered by the majority of participants in the telecommunications market, for example, the services of the promised payment or the possibility of changing the mobile operator with the maintaining of the mobile phone number. In this situation, the advantage is gained by the market participant who realizes more efficiently the customization

The formation of the service products allows to solve the following tasks to telecommunica-

• to provide the consumers with discounts on services, tariffs for which are regulated by the

• to develop a wide range of niche offers, which is economically unjustifiably when they are individually representing at the market. At the same time, the service products may differ in the possibility of price management, the form of payment and the composition of the

The service products can perform on the telecommunications market in the following forms:

• integrated service packages [22], combining the voice services and the DATA-services in the tariff plans for at a fixed monthly fee, which provides a guaranteed return for the company;

• to differentiate the standard set of the telecommunication services;

essentially mass.

4 The source to low the average costs

of telecommunication services.

tion companies [16]:

state;

of the service products offered to the consumer.

**No The sign name The sign demonstration**

**monopoly**

3 The barriers to entry High barriers are associated with

supply

**In the conditions of a natural** 

significant institutional constraints

Increase of the volume of service

1 The Supply Formation One company Several communication operators 2 The service substitutes None Differentiation of services and service

services provided in the service product.

On the Russian telecommunications market, there are also several dozens of independent mobile phone operators. The largest is "T2 Mobile (Tele2)"company, which is in the competition with the "big three" of federal operators. However, ComNews Research analysts agree that the market share of the independent mobile phone operators will be reduced in the future in favor of the federal level players.

An important feature of the Russian telecommunication services market is the State protectionism, which manifests itself in the foreign investment restricting into the telecommunication industry, which the Russian government considers as strategic industry [20].

The main tasks of the government policy in the sphere of telecommunications in Russia can be as follows:


Another important feature of the Russian telecommunication services market is their social significance, generated by numerous external effects, including the effects in the field of personal and public security [21]. For these purposes, the concept of universal service has been formed in the regulatory framework. Such a service is characterized as


**2.3. The features of the Russian telecommunication market and the customization** 

The customization is the adaptation of the mass products or services to the needs of the individual consumer. At the core of customization lies the individualization of consumer demand, prepared by the development of modern technology, which created the prerequisites for per-

The personalization of the supply requires the increasing of the telecommunication industry companies' flexibility, which could not be achieved in the conditions of the natural monopoly, classically justified for the communications industry. The experience of many countries shows that the modern telecommunication services market is undergoing the transformation toward

Currently, the Russian telecommunications market is formed by four main public corporations with 80% of the market approximately: "MTS," "Megafon," "VimpelCom" (brand "Beeline," currently within the EON Ltd. group of companies), and "Rostelecom." These companies are

On the Russian telecommunications market, there are also several dozens of independent mobile phone operators. The largest is "T2 Mobile (Tele2)"company, which is in the competition with the "big three" of federal operators. However, ComNews Research analysts agree that the market share of the independent mobile phone operators will be reduced in the future

An important feature of the Russian telecommunication services market is the State protectionism, which manifests itself in the foreign investment restricting into the telecommunica-

The main tasks of the government policy in the sphere of telecommunications in Russia can

• the improvement of the system of regulatory legal regulation of the industry aimed at

• the integration of the Russian telecommunication complex into the European and world

Another important feature of the Russian telecommunication services market is their social significance, generated by numerous external effects, including the effects in the field of personal and public security [21]. For these purposes, the concept of universal service has been formed in the regulatory framework. Such a service is characterized as

• the development of the competitive environment in the telecommunications market;

actively competitive among themselves within the whole period of their existence.

tion industry, which the Russian government considers as strategic industry [20].

• the construction of modern national telecommunications infrastructure;

telecommunication complexes taking into account national interests.

• the increasing of the telecommunications industry investment attractiveness; • the development of new technologies supporting telecommunication services;

imperfect competition. This market is an oligopoly in Russia (**Table 9**).

**of telecommunication service products**

14 Telecommunication Networks - Trends and Developments

sonifying of the service conditions.

in favor of the federal level players.

developing of telecommunication services market;

be as follows:

**Table 9.** The comparative analysis of the signs of the natural monopoly and oligopoly in relation to the Russian market of telecommunication services.

a certain minimum set of services of an established quality that are accessible to all users regardless of their geographical location at an acceptable price, established depending on certain national conditions. A universal service is a minimum guaranteed telecommunications service product. Universal service does not imply the customization, being essentially mass.

The high level of competition, the saturation of the market and the sophistication of consumers stimulate telecommunication companies to differentiate their supply. However, the copying of the claimed components of the service product leads to the fact that gradually a number of services are offered by the majority of participants in the telecommunications market, for example, the services of the promised payment or the possibility of changing the mobile operator with the maintaining of the mobile phone number. In this situation, the advantage is gained by the market participant who realizes more efficiently the customization of the service products offered to the consumer.

The formation of the service products allows to solve the following tasks to telecommunication companies [16]:


The service products can perform on the telecommunications market in the following forms:

• integrated service packages [22], combining the voice services and the DATA-services in the tariff plans for at a fixed monthly fee, which provides a guaranteed return for the company;

• asymmetrical packages [23], covering the service with low profitability that leads in terms of customer loyalty, and driven high profitability service with low consumer loyalty.

reduction in average prices per minute and per transfer of one megabyte of data and by

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Despite the fact that the technologies provide the continuous improvement of the quality of telecommunication services, the key aspect of interaction between the customers and the companies is currently the characteristics of the customer service process. In the conditions of saturation of the telecommunications services market, customization can be achieved through the formation and supply of the service products. By combining a set of products and services, the service product allows to satisfy simultaneously the needs of various groups of consumers due to the "floating" nature of the primary and secondary perceived utilities, as well as due to the interdependence of the invariant and variable attributes of the service product. In terms of secondary utility in the service product, it is necessary to distinguish additional, accompanying and derivative services. From the economic point of view, the telecommunication service can be described by the benefits to the consumer, reflected in the invariant and variable attributes of the service. These attributes are combined in the service products in such a way to ensure demand on the basis of maximum possible compliance with consumers' expectations. The interchangeability of telecommunications services, due to the availability of various methods of the information transferring, usually leads to the emergence of new services on the market with improved quality parameters. Complementarity of services in the telecommunications market is sup-

The "floating" nature of the primary utility and the digitalization of the economy led to the formation of three types of the service products involving telecommunications services. Domestic telecommunications products, formed on the basis of packet sales technology, combine products and services produced by enterprises and organizations of the telecommunications industry. The external telecommunication service products in terms of resources include the provision of equipment and mobile applications, including the network applications. To ensure this, the telecommunications companies, as a rule, have their own online stores. They

The prerequisite for the formation of the external telecommunication service products in terms of target function is the digitization of services in the modern economy. It is these services that represent the primary utility for the consumer. The telecommunication services can form the secondary utility for the consumer when they are a part of the service product

The main characteristics of the modern Russian market of telecommunication services should be considered the transition from a natural monopoly to an oligopoly, a strategic character of the telecommunication services market to ensure the implementation of state interests, the social significance of this market. The main forms of customization of the telecommunication

The development of service products of all types plays an important role to increase the performance of telecommunication companies' activity. It is the service products that are the tools that make it possible to increase in the modern market conditions the attractiveness of both telecommunications services and telecommunications companies themselves for exist-

increasing the exactingness of consumers of the telecommunication services.

ported by its network nature.

ing and potential customers.

also introduce themselves into the social resources network.

together with the additional, accompanying, derivative services.

services market offer are integrated and asymmetric packages of services.

The use of service products in the form of integrated packages of services from the point of view of the consumer is essentially the purchase of services in bulk (a single tariff including voice, Internet, text messaging), which is much cheaper than connecting services separately. For sales offices of telecommunications companies, the implementation of integrated packages is also convenient, since in this situation they offer a single integrated package of service. Previously, in addition to sell the basic service, it was also necessary to sell additional options, depending on the client needs.

In the service product, created in the form of an asymmetric package of services, the differences between the leading and the driven services, which are usually very noticeable when sold separately, are smoothed out. A leading service with the high loyalty can level out the low loyalty for slave, profitable service, when the consumer is interested in acquiring the leading service in any form, either separately or as part of a service product. Thus, such a service product increases customer loyalty primarily to a profitable service, as its consumption grows with the growth in sales for a "leader" service. As a result, the total revenue on two services, taken separately, is less than the revenue for the service product. The application of the concept of the service product developing for the telecommunication services market in the three types of telecommunications service products should take into account the following trends in changes in consumer preferences in the current state of technologies:


To strengthen the market positions, the telecommunications companies should:

