India on the Go
India is likely to have mobile number portability in the first quarter of 2008. In the first stage, it will be introduced in four metros. The announcement came at a time when experts were debating over the right time for introducing MNP. It has got a mixed response from the operators' side. As expected, GSM operators are not among the happier lot. TV Ramachandran, director general, Cellular Operators' Association of India says, “Mobile number portability has been introduced to benefit a particular operator desirous of entering the GSM segment and thereafter poaching on the subscribers of existing GSM players.” The arrow has been marked toward Reliance Communications, which has got national licenses to start its GSM services.

MTNL has welcomed the steps taken by the government in announcing MNP. MTNL officials are confident that it will generate additional opportunities for MTNL as it is expected that some of the high-end customers will be facilitated to migrate to MTNL. MTNL had entered GSM mobile services almost six years later than the competitors, due to various reasons that included the court case filed by the competitors to prevent MTNL's entry into mobile services.

According to MTNL, the high-end customers, who had already subscribed to the competitors, could not migrate to MTNL since such customers do not prefer a change of number. The steps taken by the government to provide number portability will facilitate MTNL to cater to the needs of such customers. Reliance Communications chairman Anil Ambani also expressed his happiness over the announcement. “This is a forward-looking initiative. It is pro-competition, pro-consumer and, above all, pro-choice. For the first time, GSM operators will face real competition in the four metros,” says Ambani.

“For the first time, GSM operators will face real competition in the four metros” Anil Ambani, chairman, Reliance Communications	“Mobile number portability has been introduced to benefit a particular operator desirous of entering the GSM segment” TV Ramchandran, director general, COAI	“With increased awareness of MNP, we will see greater impact on porting, quality of networks and customer services” Syed Hasnat Masood, director, Corporate Communications, Telenor Pakistan

As expected, CDMA association AUSPI has also welcomed the decision. SC Khanna, secretary general, AUSPI says, “It is an important and effective tool for ensuring effective competition and improved quality of service in the mobile service sector, which will ultimately benefit the subscriber at large.” However, AUSPI also advocated number portability in the fixed line services. “There is hardly any competition in the fixed line segment since the incumbents account for nearly 89% of the market share,” he adds. Vodafone Essar and Bharti Airtal refused to comment on this when contacted.

The Future Ahead
In comparison to Pakistan, India is a bigger market. According to a TRAI report, the total number of mobile subscribers in India till June 2007 stood at 184.9 mn. GSM operators command 73% of the total number while the rest is with CDMA operators. Postpaid customers constitute around 12% of the total mobile subscribers. Considering the size, the market has enough opportunities. Talking about metros, the total number of mobile subscribers counts to 38.4 mn till October 2007. Bharti Airtal has got 22.7% of the total subscribers in four metros and is topping the chart, followed by Vodafone Essar with 22.4% share. The other two major players are Reliance Communications and TTSL with 16.42% and 14.77% share, respectively. A big fight among these players to attract customers of other operators is likely to take place.

Reliance Communications has already got the license to start national GSM services and an announcement is expected very soon. Similarly, Idea cellular is trying to roll out its services in Mumbai. Some other players also want a piece in the pie. If we summarize all this, the pressure on the operators to retain the customers will be excessive. New operators will initiate attractive offers and schemes to attract customers from existing operators once MNP comes into existence. But, with teledensity as low as 15%, it would be interesting to see whether the service providers will concentrate more on exploring new areas and adding more customers than retaining existing customers.

“Since the telecom market is far from saturated, the implementation of MNP is likely to face stiff resistance from operators” Romal Shetty, executive director, KPMG	“MNP is an important and effective tool for ensuring effective competition and improved quality of services in the mobile service sector, which will ultimately benefit the subscribers at large” SC Khanna, secretary general, AUSPI	“Customer awareness remains very low as no mass awareness and effective advertisement campaigns have been executed by the regulator or the operators” Omer Haider, general manager, Govt Relations and Regulatory Affairs, Warid Telecom

Improved Quality
Once MNP comes into existence in India, the customer will be the biggest gainer. Post-MNP, the operators will go the extra mile to insure better service quality to their subscribers. According to an IDC survey, only three service providers-Aircel, BPL Cellular, and Vodafone Essar-were able to meet the 95% satisfaction level in 2007 set by TRAI.

Despite an improvement in the overall satisfaction, customers were quick to jump at a better offer from a competing network, the study showed. The report further says that 31% of the mobile users are satisfied with their service providers, but they are willing to shift if something better comes up. Out of the whole bunch, 2% of the mobile users are not satisfied and are ready to shift to different operators. If we combine both of these, 33% mobile users are in a position to change and this is a huge market. This may set the alarm bell ringing for the operators.

However, these are the figures for the nationwide market, the situation might be very similar in all the metros taken together. “It appears that the service providers are not upgrading their infrastructure to match their growing customer base. This needs greater attention, and implementation of a well-defined customer care program is likely to benefit the service providers,” says Shailendra Gupta, senior manager, Consumer Research, IDC India. Once MNP becomes applicable, the operators are bound to invest more. According to an estimate, if 15% of the users go for a shift in the operator, an investment of Rs 1,000 crore would be required and borne by all the operators, who will form a joint consortium to handle the MNP following the Pakistan model. Though the fees for the customers have not been worked out, but, definitely, the investment will be recovered from the customers.

Service Providers' Efforts Not Making a Mark According to IDC's India Mobile Services Usage and Satisfaction Study 2007, service providers' efforts to retain subscribers have not been very effective, with the loyal subscriber base marginally decreasing to 65% in 2006-2007 as compared to the previous year's 67%* ('Ambassadors'). However, those who are satisfied but are still likely to shift ('Opportunists') have increased from 28% to 31%*. Base=4,434 respondents *Source: IDC's India Mobile Services Usage and Satisfaction Study 2007

Stiff Challenges
Amid all the good talks, no one can deny that the road for MNP is loaded with challenges. Many technical, commercial, and administrative issues are involved in it. It would also be required for all operators to exchange database and customer information, which may prove too be an enormous task as has been experienced by other countries.

The cost structure of the Indian telecom industry is among the highest in the world, while it offers one of the lowest mobile tariffs. MNP is likely to increase the costs of both porting subscribers and those not porting because there will be an infrastructure cost involved. “Since the telecom market is far from saturated, the implementation of MNP is likely to face stiff resistance from operators. The reason for this is high implementation costs, which the regulator might not allow firms to transfer to subscribers.

Secondly, India predominantly has been a prepaid market and it is more convenient to obtain a prepaid connection than to wait for the completion of the porting process,” feels Romal Shetty, executive director, KPMG. “Although MNP will be a challenge in terms of implementation, costs, pricing and benefits to the subscribers and operators, it will surface in India due to the growth of the market and increased competition,” he further adds.

From the experience of other nations, the first six months after the introduction will decide the euphoria of MNP. Once the operators arm themselves with better quality of service, the effect will be less visible. For all that, we will have to wait till the first quarter of 2008 when MNP will finally hit the door.

Kumar Anshuman
anshumank@cybermedia.co.in

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