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After years of discussions and apprehensions by major telecom operators, MNP or mobile number portability, is finally going to make inroads into the Indian telecom market. Trai has approved the pan-India implementation of MNP, and DoT has framed the timeline of its implementation; it is expected to hit the market by year-end.

Initially, MNP would be available for cellular subscribers in the metros-Delhi, Mumbai, Kolkatta and Chennai-and later in other circles. Therefore, by end-2009, nearly 18% of the total cellular subscriber base shall be given an option to change their operators without changing the number. It is expected that MNP would push operators to improve the existing quality of service in order to avoid the threat of losing customers to rival operators.

Is it the Right Time?
Globally, nearly forty countries have introduced MNP till now and have different implementation models and strategies. Being a late entrant, India is expected to learn from the mistakes and challenges experienced in other markets. The impact of MNP, thus, would be driven by a number of factors which include penetration levels, transition times for MNP implementation, service level contracts of pre-paid and post-paid subscribers and the overall marketing initiatives by service providers.

Considering this, not all are convinced with MNP having any striking impact in the current business scenario. “Though MNP is a good thing for consumer, there are a number of things still unclear. For instance, does the subscriber understand number portability and know that it is available? How easy is it to port a number and how long will the process take? Who would pay for what service, quality parameters, database sharing, etc? It would take some time to understand the impact of MNP in the India market,” says Vish Iyer, VP, service provider, West, Cisco India and SAARC.

Agrees Satya N Gupta, president ACTO and chief regulatory advisor, SAARC region, BT, “I would not say that MNP would create any wonders or a revolution for the Indian telecom market; however, it is a forward looking service and would put pressure on operators to improve the existing quality of services.”

However, Kuldeep Goyal, CMD, BSNL feels, “It would certainly offer opportunities in the Indian telecom market. We are positive with our market share and would be eyeing more customers once things are in place.”

There is no denying that MNP is a win-win situation for a customer and would also help to increase the overall competitiveness, but is it the right time to invest in MNP? With a large proportion of the market still untapped, will major SPs promote MNP to increase reach?

In the current scenario of dwindling ARPUs, what would be the RoI for SPs like Bharti and Vodafone who might suffer the most after MNP implementation? And more importantly, with a penetration level of just 30%, that too dominated by the pre-paid segment, will MNP impact the churn significantly?

Explains Aakash Moondhra, head, telecom and retail verticals, Baring Private Equity Partners, “I don't think any operator can claim to have superiority over another. Most of them are doing pretty much the same job, especially on customer issues. And this is the time to invest on customer services rather than make strategies for MNP. In the short term there could be an impact but in the long run it would be minimal.”

“It's difficult to say if MNP would really have an impact in the Indian market. However, for subscribers it would be an opportunity which will provide an alternative,” says Aviel Tenenbaum, executive VP global sales and marketing, ECI Telecom.

Till date, most operators are offering the same sort of plans and/or services. And therefore it is difficult to bet upon a single operator.

High Ambition
Globally, Singapore was the first country to implement MNP in 1997, followed by Hong Kong in 1999 and Australia in 2001. Off late, many countries have adopted the MNP model to prevent market doldrums and putting pressure on service providers to furnish more services at a competitive price level. However, it has not been able to produce any significant results in these markets.

“Around the world, MNP has been a mixed bag of success and failure. It has been there in several parts of world but has not taken off in a big way. However, we are ready and believe that it allows more and more customers to come to our network and enjoy the services,” says Dr Jai Menon, director (customer service and IT), Bharti Airtel and group CIO, Bharti Enterprises.

While it has worked in markets like Hong Kong and Australia, it failed to bear fruit in the UK, France, Germany, Pakistan, Ireland, Malta, among others. MNP worked in Hong Kong due to the speedy porting process and the availability of already implemented solution (for fixed-line services). In Australia, the regulator effectively promoted number portability and was able to maintain the maximum porting time of just under three hours.

“The turnaround time for a number getting ported could become a bone of contention for subscribers. It is stipulated that in India the maximum time required will be three working days but its efficacy will need to be tested given the fact that human responsiveness to a query or clarification process is much slower in India,” says Siddhartha Kataki, associate vice president, Patni.

Furthermore, in Finland, where initially the implementation was viewed as a success due to dearth of minimal contract periods and high migration incentives, operators failed to sustain the momentum.

“The quicker and seamless the porting process of MNP implementation, the higher is the likelihood of churn. Consumers would feel it to be too much of a pain if porting process takes weeks and hence, may not opt for MNP,” says Phani Nagarjuna, founder & CEO, Nuevora.

The failure in most markets where MNP was implemented is attributed to factors like half-hearted implementation, issues related to contract, lack of consumer awareness, overboard of paperwork, technical difficulties and poor customer service.

Consider the case of UK. The regulator had initially pushed for MNP to boost competition but failed to play a substantial role during the implementation phase. In addition, there was only a single operator who was in favor of portability at that point of time. These factors coupled with low awareness level and high porting timespan contributed to the failure of MNP in this market.

“It's difficult to say if the big SPs would go for intensive campaigning, however, it would be the responsibility of greenfield operators to drive this initiative,” says Atul Agarwal, senior GM, IT, Datacom.

It is more of an opportunity than a threat. However, looking at the experiences of global markets, the influence on the change in the market shares is not very dramatic Vsevolod Rozanov, President and CEO, Sistema Shyam Teleservices

According to experts, MNP implementation is expected to be more productive for markets that have reached at least 50% cellular penetration level. The reason being that at this level, service providers can attempt to compete better due to a smaller untapped pool.

And hence the attention remains centered around the already penetrated customers. India, which is still below a 35% penetration level, does not seem to be an ideal business case in this scenario.

The neighboring country Pakistan, the first country in Southeast Asia to introduce MNP in March 2007, experienced less than 1% portability. One of the reasons for such poor response is the pitiable customer service and time consuming process during porting the number. Pakistan has over 90 mn cellular subscribers with approximately 95% of them pre-paid.

“It is usually the post-paid customers who opt for MNP. So MNP has not impacted the Pakistan telecom industry in a big way,” says Nagarjuna of Nuevora. The lesson here is that MNP alone is hardly sufficient to expand end-user options and make markets more competitive.

“If a market is not competitive to begin with, MNP will have a limited impact. Indeed, the markets in which MNP has driven up churn rates are markets that already exhibited high churn and low subscriber loyalty; MNP just made the switching process easier. To be effective, MNP should therefore not be used in a vacuum, but along with other regulatory tools,” says Neeraj Vyas, AVP, Arcient.