Although India was among the late entrants into the mobile number portability (MNP) space, the service received an overwhelming response, with the total porting requests crossing the 100 million mark recently. Launched in January 2011, the aim of MNP was to empower telecom users by allowing them to retain their numbers when switching to another operator within the same circle. Globally, it has been observed that users are often reluctant to give up their existing numbers and do not switch operators to avoid the trouble of informing their associates and acquaintances about the number change. MNP not only gets around this problem, it also serves as an important tool to ensure that operators consistently improve their service quality to build customer loyalty.

The increasing uptake of MNP in India indicates growing user maturity, as well as declining tolerance for inferior service and patchy coverage. The Telecom Regulatory Authority of India (TRAI) has played an active role in ensuring that the porting process is affordable, expeditious and hassle-free. The port-in fee charged to subscribers has been fixed at Rs 19, which is one of the lowest in the world. Moreover, operators have been mandated to complete the entire porting process in no more than seven days. Notably, CDMA customers have the option of switching to GSM networks and vice versa while retaining their numbers; they may, however, have to change their handsets. Recently, TRAI allowed corporate porting as well. Mobile numbers that are registered in the name of a company can be ported if authorised by the company’s representative.

Experience so far

India is divided into two regions for MNP implementation. Zone 1 includes the northern and western regions, comprising the Delhi, Gujarat, Himachal Pradesh, Haryana, Jammu & Kashmir, Maharashtra, Mumbai, Punjab, Rajasthan, and Uttar Pradesh (East and West) circles.  Zone 2 covers the eastern and southern regions, comprising Andhra Pradesh, Assam, Bihar, Karnataka, Kerala, Kolkata, Madhya Pradesh, the Northeast, Odisha, Tamil Nadu and West Bengal. Syniverse and Telcordia (acquired by Ericsson in 2012) have been providing MNP services in the country. While Syniverse manages MNP transactions in Zone 1, Telcordia provides these services in Zone 2 through its joint venture, MITS.

As of March 31, 2014, the sector registered a total of 117.01 million porting requests by subscribers. This represents 12 per cent of the total wireless user base of the country. Of the total MNP requests, 61.98 million were received from Zone 1, while the remaining 55.02 million requests were from Zone 2. Among the circles, Karnataka led the pack with 13.37 million porting requests registered till March 31, 2014. It was followed by Rajasthan (11.78 million), Andhra Pradesh (10.78 million) and Gujarat (10.04 million). Operator-wise, Idea Cellular emerged as the consistent gainer (net) in the MNP race, with Bharti Airtel and Vodafone India vying for the second spot. As of March 31, 2014, Idea registered a net gain of 9.14 million subscribers on its network through MNP.

In terms of porting trends, post-paid customers accounted for a bigger share of the MNP pie compared to prepaid subscribers. In the case of prepaid subscribers, service price is one of the major considerations for switching networks. They are not very particular about retaining their numbers and would rather get a new connection when they run out of balance or get a better tariff option from a rival operator. Given that most operators are already offering services at the lowest possible price points, limited MNP requests were received from prepaid users. Further, subscribers are unlikely to wait for seven days to retain their numbers when they can switch providers in minutes by giving up their existing number. In contrast, post-paid customers are generally not driven by price flexibility of plans. Instead, they are highly conscious of the nature and quality of service being offered to them, as well as the strength of customer care support, etc.

Policy and regulatory developments in the past two years have introduced interesting twists into India’s MNP story. The Supreme Court’s landmark verdict in February 2012, leading to the cancellation of 122 2G licences, resulted in a mass exodus as subscribers opted out of the networks of new players. Between March 2012 and October 2012, a total of 38.01 million MNP requests were registered, translating into a monthly average of 4.75 million. It was only in November 2012, after the first round of 2G spectrum auctions, that the monthly additions stabilised in the range of 2 million to 3 million.

Another key regulatory development, the ban on intra-circle 3G roaming agreements has also resulted in an increase in MNP requests. Since no operator managed to acquire pan-Indian 3G spectrum during the 2010 auction, service providers entered into roaming pacts with one another to offer seamless 3G services to customers in their unlicensed circles. However, the Department of Telecommunications’ ban on such agreements resulted in a mass migration of subscribers from non-3G operators to 3G operators in a given circle.

Initial hurdles

One of the key points of dissonance during the initial months of MNP implementation was the high rate of rejection of porting requests. Operators can reject porting requests on account of outstanding bills, unverifiable identity and existing contractual obligations. Also, as per TRAI’s mandate, a user becomes eligible for MNP only after 90 days of using the existing number. In 2011, when MNP was introduced, almost 40 per cent of porting requests were rejected by operators. The number has, however, come down to 11 per cent in 2014, following several directives and orders issued by TRAI. In addition, financial disincentives of about Rs 80 million have been levied on various service providers wherever they have been violating the MNP regulations on account of wrongful rejection of porting requests.

Impact on operators

MNP results in a huge churn in subscriber base. This proves unfavourable for companies such as Vodafone India and Bharti Airtel, which have a high post-paid user base, or for operators such as Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited, which are already facing a steep decline in their subscriber base.

However, the launch of MNP has not resulted in any significant disruption in operator market shares. The Indian market has been characterised by significant fragmentation and subscriber churn across operators has always been high. For instance, the market share of Bharti Airtel has not undergone much change in the past three years. It stood at 19.65 per cent in January 2011 and increased to 22.5 per cent by January 2014. Facing a prospective increase in churn rates, the incumbents have strengthened their product and service offerings over the past three years. They now focus on offering differentiated services, improving service quality, enhancing customer support and increasing network coverage in order to attract and retain customers.

Meanwhile, smaller operators can leverage MNP potential to expand their user base by improving their service offerings and customer support.

Towards nationwide portability

Currently, the MNP facility is restricted to the local service area. In order to port outside the local circle, a user has to either get a new number or pay additional roaming charges. TRAI, in line with the objectives of the National Telecom Policy, 2012, had suggested the implementation of nationwide MNP in 2014, but movement on that front is still awaited. The process will be extremely challenging as there are likely to be issues relating to reconfiguration of networks, call routing, call scenario testing, circuit provisioning, international carrier notification, inter-carrier settlements, customer billing and notification.

Conclusion

The encouraging response to MNP services in India reinstates the merit of the age-old marketing adage – the customer is king. Going forward, operators with superior quality of service will emerge as the clear winners in the MNP race, while those that fail to realign their offerings with consumer preferences will stand to lose.

Akanksha Mahajan