Customers may be rejoicing at the power of mobile number portability, which will soon be in their hands. But are operators ready for the churn?
Take Amit Rishi for instance, who is a senior manager with an MNC. Rishi says that he would change his operator depending on the value added services (VAS) offered by others while keeping in mind factors such as cost, efficiency and service. He says, "At present mobile phone users are unable to shift to another service provider offering better services because they do not want to change their numbers which they have been using for years. But with MNP this issue would be addressed."However, amidst all celebrations, one wonders whether the mobile operators are actually going to bear the brunt of the entire portability scenario in the country. The operators are already under a lot of pressure owing to the intense tariff war and constant delay in 3G spectrum auction, and the MNP might just make it more acute.
The Government of India has decided to implement MNP from December 31, 2009 in metros and Circle A (Gujarat, Andhra Pradesh, Karnataka, Tamil Nadu, Maharashtra and Goa) areas, and by March 20, 2010 in the rest of the country. As per the regulations laid down by TRAI, the MNP facility shall be available only within a given licensed service area. Also, a subscriber holding a mobile number is eligible to make the request only after three months of the date of activation of his mobile connection. The process should be completed in four days, except in Jammu & Kashmir, Assam and North East licensed areas, where it may take up to 12 days. As the process of porting starts, subscribers who have applied for change in operator will have no mobile phone connection for 2 hours, specified for the ‘no service period', to carry out the disconnection and activation of the number.
The Mobile Consumer Insights study was conducted by Nielsen with 12,500 mobile subscribers across 50 locations in India. Among the respondents, one in four Reliance Communications and Tata Indicom subscribers would be keen to change their operator when MNP is introduced, followed by close to one in five (19 per cent) BSNL subscribers. The numbers would vary though, depending on the subscriber base of operators. The current churn rate according to the study is 17 per cent in the industry. Bharti Airtel currently has a churn rate of 15 per cent (numbering about 16 million subscribers ) and, as per the findings of the study, this is not likely to change post MNP. Reliance is at risk of losing 25 per cent of its subscriber base, that is, about 21 million subscribers intend to move to another operator.
In another study conducted in 7 metros with 40,000 respondents by IMRB International, an average 20 per cent of subscribers intended to change their existing operators post MNP commencement. According to the survey, Delhi could see the highest churn at 24 per cent and Bangalore the lowest at 18 per cent. It also says that the propensity to switch is relatively higher among postpaid subscribers where three out of five postpaid subscribers intended to switch compared to one in three prepaid subscribers.
Hansal Savla, insights director, IMRB, says that operators will resort to better marketing strategies and improving the quality of service in order to prevent churn among subscribers. He says, "Not only would operators want to use MNP to their advantage by attracting subscribers of competing operators, they would also need to prevent the churn. For example, some leading operators are calling their subscribers, especially high ARPU (average revenue per user) ones, and proactively offering them plans with discounted rates."
He adds, "CDMA operators are expected to be hit the hardest, as subscribers have showed interest to switch to GSM connections."
To get a brand consultant perspective on the issue, Telecom Yatra spoke to Santosh Desai, managing director and chief executive officer, Future Brands. Desai was of the view that MNP will change the rules of the game and all telecom operators, who earlier focused on acquisition of subscribers, will now go into a retention mode. He said that once MNP becomes the norm, operators will take out schemes which are long term and which give an incentive to subscribers to stick to their network. He further said that MNP will also lead to "greater service orientation" from operators, who are currently "low in service standards".
Operators too have different views. Kuldeep Goyal, chairman and managing director, BSNL, says that the churn will be significant only initially and will cease to exist later. He, however, did not comment on how the state owned telco is planning for MNP.
However, a senior spokesperson from a leading operator said that the churn from MNP will not be significant as the quality of services provided by all operators is almost the same. He also says that unless there is a major differentiation in the services, both voice and data, subscribers will not change operators.
Another industry analyst thinks that newer operators and regional players stand to gain from MNP, which gives them an opportunity to cut out a share from the large subscriber base created by the older players. Bharti Airtel, for instance, has over 110 million subscribers and Vodafone has 85 million.
Lloyd Mathias, chief marketing officer, Tata Teleservices, says that the MNP churn will come from postpaid subscribers who form only a small percentage of the total. According to him, the prepaid customers are already contributing to a large volume of churn as they keep on moving from one operator to another depending on tariffs. He also says that GSM subscribers will be most likely to shift rather than CDMA as the latter are bound by long term plans and operator- bundled handsets. Speaking on the company's plans to combat churn, Mathias says, "We are ready for MNP and we already have a team in place."
The views of the industry experts and operators make it clear that churn will not affect telcos' revenues in a big way. It will just kick off a more intense competition amongst them. However, it will definitely be promising for subscribers as they would be able to get a better deal with regards to tariffs and plans as well as improved service quality.
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