High-value post-paid subscribers are more likely to use number portability in India where the market is dominated by pre-paid subscribers who look for the cheapest service.
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Vsevolod Rozanov, President and CEO, Sistema Shyam Teleservices Limited
'After an initial spurt of activity among subscribers, the MNP trend will soon confine itself to a small percentage of the total high-end or post-paid subscribers'
India has reached another major milestone in terms of its unprecedented growth in the number of mobile phone subscribers and, just this month, it added its 500 millionth customer. There is still a lot more steam left in the market and it is estimated that another 600 million potential subscribers wait to be connected by mobile phones, and so there are serious efforts on to woo them by both the existing as well as the new telecom operators in the country.
The customer is truly king in the mobile phone space and he/she has all manner of choice, not just as far as telephone service providers, but even as far as a host of subscriber-billing plans are concerned. After the new operators came in, they introduced concepts like pay-per-second billing and this forced the incumbent players to follow suit and offer similar tariff plans.
The latest in the effort to fulfil the customers' needs is the proposal of Telecom Regulatory Authority of India to implement mobile number portability from January. Till now, a lot of subscribers in the post-paid category have been hesitant to change their operator even though they may want to, given the large number of call drops and poor reception quality on their existing networks because they stand to lose their telephone number.
Now, with Trai's mobile number portability facility, subscribers can retain their telephone numbers when they move from one access provider to another irrespective of the mobile technology or from one cellular mobile technology to another of the same access provider.
Overall churn rates - the proportion of customers who move from one mobile phone operator to another each month - is around 3-4 per cent already, a sign of just how dissatisfied customers are with their current mobile phone service providers.
As a new operator, we welcome any move to make the customer feel more comfortable and ensure smooth access for better services. The MTS network was adjudged among the best in terms of various quality parameters by Trai in its last survey.
A congestion-free network, fewer call drops, high levels of voice clarity with high-speed data service are the hallmark of our service. We are sure that number portability will make our network a preferred choice for the discerning Indian customer. The move to introduce mobile number portability is one that favours the operator who provides better quality voice/data services along with attractive tariff plans.
Since the Indian mobile phone market is predominantly a pre-paid one, it has to be recognised that the dynamics of number portability will also be different from that seen in other major mobile phone markets across the globe. Pre-paid customers tend to be less fussy about retaining their phone numbers as compared to the post-paid segment.
Also, mobile number portability comes with a small fee which will keep away the ultra-price conscious pre-paid customer. Besides, there will be a few days of blackout as customers shift from one operator to another.
There can be an initial spurt of activity among subscribers in the first phase leading to a churn of sorts in the first few months. This trend will then taper off to near normalcy, or a small percentage of the total high-end or post-paid subscribers. This has been the international trend too.
In an intensely competitive market such as India, of course, even that small percentage churn becomes attractive and several of the new players will have planned for this in their business plans.
However, we know that it is not mobile number portability that will give us the required numbers, but the quality of our voice services and tariffs offerings that will do the trick. Number portability is a move which gives the subscribers a choice, and thus empowers them.
The choice that this gives to customers, along with the increased competition that has occurred with new access providers coming in, will ensure that all operators will have to deliver good value to customers, both in terms of the quality of services as well as in terms of the tariff plans offered.
As a new operator, we are committed to quality and confident that it is the quality of services that will determine which access provider the subscriber finally settles for.
Samaresh Parida, Director, Strategy Vodafone Essar
'India has more new operators than any other market. High-value customers are likely to be nervous about moving to new networks with untested coverage and quality'
Vodafone Essar supports Mobile Number Portability as it is good for customers. It might look as though MNP will give new operators a big opportunity to acquire customers from incumbent players by luring them with low tariff plans. But customers, particularly higher value customers, aren't interested in the cheapest offer if the "total experience" is uncertain or poor. Network quality, innovative products and services, customer service and brand are more likely to influence their decisions.
In a competitive market, customers move towards the operator who provide them the best experience on all dimensions. This is the experience in markets across the world where MNP has been implemented. In India, we expect this trend to be even more pronounced.
That's because prices are so low that they are no longer a sustainable source of competitive advantage. Besides, India has more untested new entrant operators than any other market in the world. High-value customers are likely to be understandably nervous about moving to one of several new networks with poor or untested coverage and quality.
Competitive markets mean pressure to deliver for customers. Leading operators have worked hard on improving their network, processes and service delivery, as is evident from the improved showing on critical quality of service parameters in recent months. This puts them in a strong position to retain existing customers and attract new ones. Operators who play the price game alone are likely to continue attracting only price-sensitive customers who will leave as soon as the next cheapest offer comes along.
Globally, more than 50 developed and developing markets have implemented MNP. In most markets, the number of customers porting was usually surprisingly low - less than than total churn in India of over 30 per cent per annum today. Understandably, customers analysed the various options before deciding to port.
Established operators made efforts to improve their network and service structures in the run-up to MNP, thus reducing the reasons for customers to port.
According to recent studies, consumers with high average revenue per user and post-paid customers show a greater tendency to switch if MNP is introduced. This is logical since these customers have invested the most in their mobile numbers: They've usually had the number for longer, they have a broad network of contacts who know the number, and/or they have invested in business cards, stationery and other forms of listing and advertising.
International experience and our internal research have suggested that these customers are sophisticated and seek overall value, not simply the cheapest price. They are highly focused on network coverage, quality of service and brand affinity.
We also expect that many post-paid consumers who are currently with providers who have remained local or regional players will use this opportunity to move to larger operators who they know will provide sustained value. Again, this is a big opportunity for leading national players.
When MNP was introduced in markets such as the US, price/promotions were the leading drivers of porting. However, in India, with so many operators, and prices already so low, it will be quality, and smart, targeted marketing that will win the day. The leading players in India have been able to provide more targeted products and value for segmented customers than the challengers, who have relied more on price.
In India, there is another factor at play which is likely to mean they switch even less compared to other markets - customers already have their own version of MNP - the multiple number portfolio. Many customers have already opted for a multiple-SIM strategy, temporarily shifting across their personal SIM portfolios depending on the best tariff package. For low-usage customers in multi-SIM markets, porting will not be directly relevant. Further, MNP imposes costs which will have to be considered.
In conclusion, we expect that high-value post-paid subscribers are likely to use MNP more than pre-paid subscribers. Bigger brands with better overall customer experience are likely to gain such high-value porting subscribers. Established, large operators are already under pressure to fine-tune their processes and service delivery. They are likely to be net gainers as discerning value-seekers port to a provider most likely to give them sustained value.
