Freedom of choice

Last Updated 31 January 2010, 16:01 IST

This has driven them to plan new strategies to woo customers and achieve profitability. Now, the operators are gearing-up to face the next challenge— MNP or Mobile number portability.

Mobile Number Portability (MNP) is the ability for mobile phone subscribers to retain their phone numbers even when they change their service provider irrespective of the mobile technology of GSM or CDMA. In short, if a Airtel customer want to switch to Vodafone, or the reverse, he or she can retain the same number. With over 50 crore mobile subscribers, India will have the largest MNP implementation in the world, when it happens. Like many of the developing countries, India too has a very high prepaid subscriber base (about 90 per cent). The porting fee, that a subscriber have to pay, which was expected to be as high as Rs 300 couple of years back, has been attractively set at a maximum of Rs 19 by the regulatory authority to make sure porting fee does not inhibit subscribers to switch operators.

Global trends

MNP roll-out in India is being planned for close to three years, it is now expected to start in April 2010. In fact, MNP roll-out globally has been delayed anywhere between four months (in Finland) to over fifty months (in Germany) due to various reasons like non-availability of a feasible technical solution, general apprehension from the mobile operators, cost to be incurred by operators and the realistic time required to set-up the infrastructure.

Empirical Studies have shown MNP implementation to be more productive for markets that have at least 50 per cent Mobile Tele-density (Number of phones per 100 people).
 India, with current Mobile Tele-density of over 45 per cent, will hover around the 50 per cent mark during the actual MNP roll out. MNP has been implemented in over 40 countries across the world spread over 12 years starting with Singapore in 1997. MNP has received lukewarm response in most of the countries.

In the UK, MNP did not take-off due to low awareness, long wait period and long term contract with the current service provider.  Among the SAARC nations, Pakistan was the first country to introduce MNP in March 2007 and it experienced less than 1 per cent porting (churn-rate). The poor response was attributed to time consuming porting process and poor customer service. Among the BRIC countries, while China and Russia have deferred the MNP implementation, Brazil implemented both Fixed line and Mobile Number portability during late 2008. Mobile tele-density of Brazil is about 90 per cent.
Even though MNP porting is carried out free of cost to the subscribers, less than 2 per cent of the mobile subscribers have opted for porting over the past 16 months.  

However, only Finland, Hong Kong and Australia have been successful in achieving high percentage of Porting. Finland experienced over 10 per cent churn rate due to regulatory prohibition on SIM-locked phones (operator locked phones are extremely popular in the rest of Europe). Hong Kong effectively utilised its fixed line number porting experience which helped quick turn-around of porting requests. In Australia, the regulator has ensured porting to be completed within three hours.

India may follow global trend

Will MNP lead to a huge churn? Churn rate largely depends on country’s mobile penetration, awareness of the portability process, cost, customer service and most importantly on seamless and quick porting experience for the subscribers.

Many surveys conducted in India predict up to 50 per cent porting rate with postpaid subscribers and 10 to 20 per cent for pre-paid subscription. In fact, telecom regulator TRAI has estimated an overall 10 per cent porting rate for the first 15 months and a gradual decrease to 7, 6 and 5 per cent for the successive three years.

Considering the global trends, achieving 10 per cent porting requests in India seems unlikely. There would certainly be interest among subscribers to bargain hunt for the best deal during the initial period. But the euphoria may die down as there is no significant difference in terms of network coverage or cost among the incumbent operators, especially the larger ones.

But the new entrants, and there are four of them, could attract subscribers by offering attractive pricing and exciting vale added service (VAS) offerings. However their poor network coverage and unproven quality of service could become a deterrent for subscribers to switch. Although the international mobile market trends show that MNP has not made much difference to the incumbent service providers, it will be interesting to see the impact on the new entrants.

Availability of affordable and good quality dual sim phones could also prevent subscribers to avail MNP. Dual sIM phones, hitherto limited to cheaper phone manufactures, have started gaining popularity with the leading manufacturers. Dual sim may soon become the industry standard in India where a subscriber may retain old number for receiving calls and use new and cheap connection for making calls.  

Benefits to the subscribers

Number portability would be a very effective tool for ensuring competition and keeping the service providers on their toes. MNP implementation will certainly motivate operators to constantly improve their quality of services in order to retain existing customers and attract new subscribers. All the service providers, no matter how big or small, would have an inherent fear of losing customers. Operators could offer loyalty-based benefits to their existing subscribers and offer subsidised phones with attractive tariff plan with fixed period contract in order to retain the high ARPU (average revenue per user) post paid subscribers.

This may even encourage some of the pre-paid customers to switch to postpaid plans. Subscribers planning to switch can certainly look forward to migration benefits from the recipient operators.

MNP would certainly not revolutionise the Indian telecom market; however, it is a step towards pushing the service providers to improve their quality of service and fostering competitiveness. This could serve as a catalyst to spur further growth in the mobile industry. Subscribers are sure to benefit from the introduction of MNP and importantly it positively affects subscribers’ psychology with the option to switch “anytime”.

The writer is Director and Head of Engineering, Teleca Software Solutions

(Published 31 January 2010, 16:01 IST)

Follow us on