Benchmarking telecommunication service in India: An application of data envelopment analysis

Technological modernization is increasingly viewed as a premeditated necessity in today's era of growth and prosperity for any country. Telecommunications has entered a new age of development with advanced technology and increased competition with established players. The technological advances in the telecommunication sector are associated with an uninterrupted growth of the mobile sector. The prime focus of the service providers is to create a loyal customer base by benchmarking their performances and retaining existing customers in order to benefit from their loyalty. The paper aims to address these issues.

This paper employs the method of data envelopment analysis (DEA) to compare the relative efficiency of mobile service providers in India. The identification of the strongest and the weakest service providers could be very useful in improving their efficiency and performance. Mathematically, DEA determines the best weights for each input and output for a particular unit under study so as to maximize its relative efficiency.

The results are insightful to the telecom policy planner as benchmark them in terms of their efficiency. It also identifies the inefficient service providers who can improve their efficiency by making the efficient providers as their role model. The paper also identifies some generic insights.

This research paper contributes to the literature in two ways: firstly, this research identifies the different parameters for the mobile service providers in India for the benchmarking of the service providers. It also categorises them into various input and output parameters contributing towards the number of subscribers for different service providers. In the next stage, this research takes a further step and examines whether there are differences between the number of subscribers and the performance of the service providers. Benchmarking of the service providers would depend on the efficiency and quality of service. There is still great diversity in the relative performance of various service providers, which is a matter of concern to the telecom planner in this country.

This paper is one of the few published studies that benchmark the performance of Telecom Services in India.