Study of Mnp (2)

8/2/2019 Study of Mnp (2)

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Reliance communication, PATNA, BIHAR (INDIA) Page 1

STUDY OF MOBILE NUMBER PROTABILITY:

OPPORTUNITY AND CHALLENGES

Prepared by-

Ankit Kumar

PGPIB/2010-2012/17

Under the Guidance of-

Mr. Vikram Anand Prof. Kalyan Shankar ray

Corporate Guide Faculty Guide

Submitted to

Asian School of Business Management, Bhubaneswar

In the Partial fulfillment of

Post Graduate Diploma in Management (International Business)

Year - 2010-2012


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CERTIFICATE

This is to certify that Ms. Preeti Kumari, a student of Asian School of

Business Management, pursuing PGDM-IB, has worked under my guidance

and supervision on his Project entitled STUDY OF MOBILE NUMBER

PROTABILITY : OPPORTUNITY AND CHALLENGES w.r.t RELIANCE .

To the best of my knowledge this is an original piece of work.

Date:-

Place: - (Prof. Kalyan Shankar Ray)

Dean, Asian School Of Bossiness Management, BBSR


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DECLARATION

I do here indentify my research work to be authentic and original in all

respects of the process carried out in this project. I further declare that it

has not been submitted elsewhere by any other person in any of the

institutes for the award of any degree or diploma.

Place :- (Ankit Kumar)

Date :-


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ACKNOWLEDGEMENT

I owe a great many thanks to a great many people who helped and supported

me completing this project.

I would like to express my sincere heartfelt and profound gratitude to Mr.

Pranav Sharma (DGM, Reliance communication, Patna) for providing me an

opportunity to undertake this project. I am heartily indebted to MR.

Vikaram Anand (Reliance communication, Patna) whose guidance and

cooperationenlightened the way to accomplish this project. Thanks and

appreciation to the helpful people at Reliance communication, Patna.

I want to express my deepest gratitude to the all respondent for giving their

insight on this sector and sharing their experience and knowledge. Without

their cooperation this task would have been difficult.

I take this opportunity to express my heartfelt gratitude to my faculty guide

Prof. Kalyan Shankar Ray, Dean, Asian School of Business Management,

BBSR. I am thankful to sir for his valuable support and motivationthroughout the project.

I am thankful to all my friends and well wishers for their full fledged and

tremendous support in completing this project successfully.


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CERTIFICATE .2

DECLARATION -------------------------------------------------------------------------------------- 3

ACKNOWLEDGEMENT --------------------------------------------------------------------------- 4

EXECUTIVE SUMMARY ----------------------------- ERROR! BOOKMARK NOT DEFINED.

CHAPTER-I -------------------------------------------------------------------------------------- 9-49

Company profile ------------------------------------------------------------------------------------------------------------------- 9-21

Reliance Communications Limited: At a glance--------------------------------------------------------------- 9Founders dream and vision ----------------------------------------------------------------------------------------------- 15

Our chairmen ---------------------------------------------------------------------------------------------------------------------------- 25

Vision --------------------------------------------------------------------------------------------------------------------------------------- 20

Mission ------------------------------------------------------------------------------------------------------------------------------------ 20

Indian Telecom sector scenario --------------------------------------------------------------------------------------- 22-25

Mobile services -------------------------------------------------------------------------------------------------------------------------- 22

Broadband and internet services -------------------------------------------------------------------------------------------------- 23

Value added services ------------------------------------------------------------------------------------------------------------------ 24

Industry Trends -------------------------------------------------------------------------------------------------------------------------- 24

New frontiers for growth: 3G and BWA ----------------------------------------------------------------------------------------- 25

MOBILE NUMBER POTABILITY (MNP) ------------------------------------------------------------------------------------------------ 26

Definition --------------------------------------------------------------------------------------------------------------------------------- 26

Types of MNP ---------------------------------------------------------------------------------------------------------------------------- 27

Basic Terms ------------------------------------------------------------------------------------------------------------------------------- 28

Salient features of the MNP --------------------------------------------------------------------------------------------------------- 29

Process of MNP: How to change Mobile Operator --------------------------------------------------------------------------- 30

Review of Literature ------------------------------------------------------------------------------------------------------------------ 32-42

History ------------------------------------------------------------------------------------------------------------------------------------- 32

Need of MNP ----------------------------------------------------------------------------------------------------------------------------- 33

The rationale for implementing MNP -------------------------------------------------------------------------------------------- 34

Measuring the success of MNP ----------------------------------------------------------------------------------------------------- 37

Preconditions for implementing MNP-------------------------------------------------------------------------------------------- 39

MNP in India ---------------------------------------------------------------------------------------------------------------------------- 42-47

Why MNP? -------------------------------------------------------------------------------------------------------------------------------- 43

Is the timing right for MNP in India? ---------------------------------------------------------------------------------------------- 43

Potential implications ----------------------------------------------------------------------------------------------------------------- 45


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Need for the Study ------------------------------------------------------------------------------------------------------------------------- 48

Statement of the problem --------------------------------------------------------------------------------------------------------------- 48

Objective of the study -------------------------------------------------------------------------------------------------------------------- 49

Scope of the study ------------------------------------------------------------------------------------------------------------------------- 49

Geographical Area ------------------------------------------------------------------------------------------------------------------------- 50

Limitations ----------------------------------------------------------------------------------------------------------------------------------- 50

CHAPTER-II -------------------------------------------------------------------------------------- 51-53

Research Methodology ------------------------------------------------------------------------------------------------------------------- 51

Research design ----------------------------------------------------------------------------------------------------------------------------- 51

Research problem -------------------------------------------------------------------------------------------------------------------------- 51

Data source ---------------------------------------------------------------------------------------------------------------------------------- 51

Sample design ------------------------------------------------------------------------------------------------------------------------------- 52

Framework of the analysis -------------------------------------------------------------------------------------------------------------- 52

CHAPTER-III ANALYSIS & INTERPRETATION------------------------------------------- 53-76

CHAPTER-IV FINDINGS & RECOMMENDATIONS --------------------------------------- 77-79

Findings ------------------------------------------------------------------------------------------------------------------------------------ 77

Recommendations --------------------------------------------------------------------------------------------------------------------- 79

BIBLIOGRAPHY -------------------------------------------------------------------------------------- 80

ANNEXURE --------------------------------------------------------------------------------------- 81-83


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EXECUTIVE SUMMARY

India is amongst the fastest growing telecommunications markets across the

globe. The average monthly mobile subscriber growth over the past year has

been 15-17 million customers. Currently, the mobile subscriber base is

approximately 860 million (as of April 2011). The overall teledensity for India

has already surpassed 70 percent and the market continues to exhibit

unabated growth.

Amid this the introduction of Mobile Number Portability (MNP) would benefit

subscribers as they will be getting improved services that too at a lesser cost.

MNP enables the subscriber to retain his/her phone number, when

switching from one mobile service provider to another. In the absence of

MNP, customers have to give up their number and must adopt a new one

when they switch operators. As a result, customers face switching costs

associated with informing people about changing their number, printing newbusiness cards, missing valuable calls from people that do not have the new

number, etc. Based on these considerations, many regulatory authorities

have imposed mandatory MNPor are about to require its introductionso as

to reduce customers switching costs, attempting to make mobile

telecommunications more competitive The worlds first country to introduce

MNP was Singapore in 1996.As penetration is increasing in india,

competitive pressure to attract new customer and retain existing one

resulted in concerted effort by most service provider to continuously improve

the quality of services . Due to enhancement in service quality, there is an

increase in the possibility for a subscriber to port to better service provider

with MNP.


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This study focuses on the implementation and evaluation of MNP in Indian

market, charges, benefits of MNP to customers and telecom service

providers, prospective effects of MNP on telecom subscribers, suggestions for

telecom service providers etc. The competition will intensify because ofimplementation of MNP and telecom service providers will be compelled to

innovate their services to retain existing market share. This study was done

to know pros and cons of mobile number portability (MNP) from both

customer as well as service provider perspective. The report includes

recommendations to increase and decrease porting rate to and from

Reliance.

Data were collected through survey method in Patna .two questionnaire wereprepared one for retailer and second for customer. After study it was found

that customer will get the maximum benefit whereas operators are not yet

ready with concrete strategy to deal with this new phenomenon. There is

lack of awareness and information among retailer and customer regarding

the MNP offer provided by the operators specially Reliance due to

communication gap between customer, retailer, distributor and operator.

Advertisement about MNP is less visible compare to new technology 3G.Operator are trading very cautiously as MNP presents opportunities as well

as challenges.Survival of the fittest, the mobile operators will be forced tofollow this theory in serving the customers. Either they have to satisfy their

customers with the service or lose them to their competitors without any

problem to the customers


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CHAPTER-I

COMPANY PROFILE

Reliance Communications Limited:

At a glance

We are not just about scale and size;

we are also about the pursuit of

excellence, the integrity of our values

and the quality of our services.

Reliance Communications Limited is the flagship Company of

Reliance Anil Dhirubhai Ambani Group, Indias third largest business house.Reliance Communications is Indias foremost and truly integrated

telecommunications service provider. The Company, with a customer base of

109 million including over 2.5 million individual overseas retail customers,

ranks among the Top 4 Telecom companies in the world by number of

customers in a single country. Reliance Communications corporate clientele

includes 2,100 Indian and multinational corporations, and over 800 global,

regional and domestic carriers.

Reliance Communications has established a pan-India, next generation,

integrated (wireless and wireline), convergent (voice, data and video) digital

network that is capable of supporting best-of-class services spanning the

entire communications value chain, covering over 24,000 towns and 600,000

villages.


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Reliance Communications owns and operates the worlds largest next

generation IP enabled connectivity infrastructure, comprising over 2, 77,000

kilometers of fiber optic cable systems in India, USA, Europe, Middle East

and the Asia Pacific region. With a customer base of 109 million, RelianceCommunications has entered the prestigious league of being one of the only

4 telecom operators in the world to have more than 100 million subscribers

in a single country. RCOM completed this feat in less than 7 years of

launching our pan-India mobile services and within only 2 years of

launching pan-India GSM services the fastest ever ramp-up of mobile

customers anywhere in the world. We are now closer than ever to achieve

our goal of becoming one of the worlds leading Telecom service providers

across the entire value chain of telecom businesses.

Over the past year, RCOM has launched several path-breaking initiatives,

leading to new revenue streams that compensate for the expected decline in

ARPU as more and more customers, including those less affluent, take up

mobile services. We look forward to strengthening our leadership in data

services in addition to driving to a leadership position in voice services.

Business strategy of reliance has been based on aligning ourselves to thechanging dynamics of technology, while providing our subscribers with cost

effective and innovative services, accompanied by simplicity and

transparency in tariffs.

Reliance Communications, through its wholly owned subsidiary company,

has won 3G spectrum for 13 key Circles in the auction recently completed by

the Department of Telecommunications, Govt. of India. 3G telecom services

will provide customers faster connectivity and offer a host of applications likemobile TV, video-on-demand, video calls and high-speed internet access. Our

win of 13 3G circles, the highest number of circles won by any operator in

the auction, maximises Companys 3G coverage on a much more

conservative spend. Today, Company is the only operator in India that has


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both the highest 13 circle coverage in 3G as well as having pan India 3G-like

capability in CDMA.

Growth platform

Reliance Communications has established a pan-India, next

generation, integrated (wireless and wireline), convergent (voice, data

and video) digital network that is capable of supporting best-of-class

services spanning the entire communications value chain, covering

over 24,000 towns and 600,000 villages. Our customer base exceeds

109 million (including over 2.5 million overseas retail customers and

2.4 million BigTV DTH customers).

RCOM rank among the top four telecom companies in the world, by

number of customers in a single country.

RCOM corporate clientele includes 2,100 Indian and multinational

corporations, and over 800 global, regional and domestic carriers. Our

enterprise customers include 850 of the top 1000 enterprises in India.

RCOM have the largest portfolio of multi-tenancy towers offering

integrated infrastructure solutions.

RCOM operate the worlds largest submarine cable network with a

presence in over 60 countries.

RCOM are a one-stop-shop across the entire range of enterprise

connectivity solutions.

RCOM have captured about 12% of the DTH market in India within a

short span of launch achieved by the fastest ramp-up ever by any

DTH operator in the world

RCOM is Indias first telecom service provider offering nationwide

CDMA and GSM mobile services with digital voice clarity.


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Indias leading integrated telecom company

Reliance Communications is the flagship company of the Anil Dhirubhai

Ambani Group (ADAG) of companies. Listed on the National Stock Exchange

and the Bombay Stock Exchange, it is Indias leading integrated

telecommunication company with over 105 million customers. Our business

encompasses a complete range of telecom services covering mobile and fixed

line telephony. It includes broadband, national and international long

distance services and data services along with an exhaustive range of value-

added services and applications. Our constant Endeavour is to achieve

customer delight by enhancing the productivity of the enterprises and

individuals we serve.

Reliance Mobile (formerly Reliance India Mobile), launched on 28 December

2002, coinciding with the joyous occasion of the late Dhirubhai Ambanis

70th birthday, was among the initial initiatives of Reliance Communications.

It marked the auspicious beginning of Dhirubhais dream of ushering in a

digital revolution in India. Today, we can proudly claim that we were

Instrumental in harnessing the true power of information and

communication, by bestowing it in the hands of the common man at

affordable rates.

LOOKING BACK, LOOKING FORWARD

RelianceAnil Dhirubhai Ambani Group, an offshoot of the Reliance Group

founded by Shri Dhirubhai H Ambani (1932-2002), ranks among Indias top

three private sector Business houses in terms of net worth. The group has

business interests that range from Telecommunications (RelianceCommunications Limited) to financial services (Reliance Capital Ltd) and the

generation and distribution of power (Reliance Infrastructure Limited).

Through its products and services, the Reliance - ADA Group touches the life

of 1 in 10 Indians every single day. It has a business presence that extends


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to over 20000 towns and 4.5 lakhs villages in India, and 5 continents across

the world. Reliance ADA Groups flagship company, Reliance

Communications, is India's largest private sector information and

Communication Company, with over 100 million Subscribers. It hasestablished a pan-India, high-capacity, integrated (wireless and wireline),

convergent (voice, data and video) digital network, to offer services spanning

the entire infocomm value chain. Other major group companies Reliance

Capital and Reliance Infrastructure are widely acknowledged as the

market leaders in their respective areas of operation.

SEGMENTS

1) Wireless

We are among Indias top two operators with over 105 million wireless

subscribers across a comprehensive portfolio of services, including mobile,

PCO, fixed wireless and data card segments. During the year, we saw our

minutes of usage increase from 277 billion to 350 billion, a rise of 26% as

compared to last year.

We have been at the forefront of innovation in the wireless sector:

Effectively broken the clutter of tariffs by introducing the Simply

Reliance plan.

Spearheaded the wireless broadband revolution with our market-

leading high speed data-card offering.

Leading the national roll out of 3G services, which will see anotherwave of growth opportunities.

Unique world class infrastructure network spread across the country

giving us a strong platform to launch our 3G services in very short

time.


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4) Home

Our Home business currently comprises Direct to Home (DTH) services

targeting one of the largest and fastest growing markets for pay television

services in the world.

We have commenced the roll-out of Indias first High Definition set-top box

with Digital Live TV Recording capabilities. Reliance Big TV is rolling out its

HD DVR set-top box across top 100 cities in India.

5) Infrastructure

Reliance Infratel Limited (RITL), RCOM infrastructure subsidiary, RITL

customers now include the existing top five as well as five new incumbents

out of the total of 15 operators in the market.

RITL total tenancy stands at 1.75 per tower, the highest in the

Industry.

RITL now owns 190,000-Km optical fiber network, providing a more

economical and better quality link for tenants compared to microwave.

RCOMs current utilisation of tower slot assets is 40-50 per cent. This

gives RITL significant potential for 3rd party tenants. It also

complements our existing passive infrastructure and provides an

integrated solution to tenants.

As such, RITL offer its customers an extensive and diverse portfolio of

well-positioned assets and we believe that our wide and expanding

portfolio of tower sites puts us in a unique position to handle the

needs of national, regional, local and emerging wireless service

providers in India.


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FOUNDERS DREAM AND VISION

Dhirubhai H. Ambani

(Reliance Group - Founder and Visionary)

Few men in history have made as dramatic a contribution to their countrys

economic fortunes as did the founder of Reliance, Sh. Dhirubhai H Ambani.

Fewer still have left behind a legacy that is more enduring and timeless.

As with all great pioneers, there is more than one unique way of describing

the true genius of Dhirubhai: the corporate visionary, the unmatched

strategist, the proud patriot, the leader of men, the architect of Indias

capital markets, the champion of shareholder interest.

But the role Dhirubhai cherished most was perhaps that of Indias greatest

wealth creator. In one lifetime, he built, starting from the proverbial scratch,

Indias largest private sector enterprise.

When Dhirubhai embarked on his first business venture, he had a seed

capital of barely US$ 300 (around Rs 14,000). Over the next three and a half

decades, he converted this fledgling enterprise into a Rs 60,000 crore

colossusan achievement which earned Reliance a place on the global

Fortune 500 list, the first ever Indian private company to do so.

Dhirubhai is widely regarded as the father of Indias capital markets. In

1977, when Reliance Textile Industries Limited first went public, the Indian

stock market was a place patronised by a small club of elite investors which

dabbled in a handful of stocks.

Undaunted, Dhirubhai managed to convince a large number of first-time

retail investors to participate in the unfolding Reliance story and put their


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hard-earned money in the Reliance Textile IPO, promising them, in exchange

for their trust, substantial return on their investments. It was to be the start

of one of great stories of mutual respect and reciprocal gain in the Indian

markets.

Under Dhirubhais extraordinary vision and leadership, Reliance scripted

one of the greatest growth stories in corporate history anywhere in the world,

and went on to become Indias largest private sector enterprise.

Through out this amazing journey, Dhirubhai always kept the interests of

the ordinary shareholder uppermost in mind, in the process making

millionaires out of many of the initial investors in the Reliance stock, and

creating one of the worlds largest shareholder families.

A dream come true

The late Dhirubhai Ambani dreamt of a digital India an India where the

common man would have access to affordable means of information and

communication. Dhirubhai, who single-handedly built Indias largest private

sector company virtually from scratch, had stated as early as 1999: Make

the tools of information and communication available to people at an

affordable cost. They will overcome the handicaps of illiteracy and lack of

mobility.

It was with this belief in mind that Reliance Communications (formerly

Reliance Infocomm) started laying 60,000 route kilometres of a pan-India

fibre optic backbone. This backbone was commissioned on 28 December

2002, the auspicious occasion of Dhirubhais 70th birthday, though sadly

after his unexpected demise on 6 July 2002.

Reliance Communications has a reliable, high-capacity, integrated (both

wireless and wireline) and convergent (voice, data and video) digital network.

It is capable of delivering a range of services spanning the entire infocomm


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(information and communication) value chain, including infrastructure and

services for enterprises as well as individuals, applications, and

consulting.

Today, Reliance Communications is revolutionizing the way India

communicates and networks, truly bringing about a new way of life.

Think big. Think different. Think ahead.

Dhirubhai preached and personally practiced one mantra throughout

his life: Dream with conviction.

He built the Reliance empire from scratch and, in a short span of 25 years, it

catapulted to become one of the top Fortune 500 corporations of the world

an achievement unparalleled in history.

He was deeply rooted in traditional Indian values, and at the same time,

Dhirubhai possessed a very modern outlook - truly that of a 21st century

person. His corporate philosophy was short, simple and incredibly effective:

Think big. Think different. Think fast. Think ahead. Aim for the best. This

was clearly reflected in his passion for mega-sized projects, as well as his

fascination for cutting-edge technology and desire to always achieve the

highest possible productivity. At Reliance, Dhirubhai was a pillar of

inspiration for one and all. By practicing what he preached, he inspired and

encouraged everyone to surpass the best in the world.

Dhirubhai fully realised that true empowerment of the people is possible

only through education. Being an effective communicator, he continued to

inspire, guide, educate and motivate everyone through his communications.He was a firm believer in the power of information and communication, and

how it can be utilised and turned to the advantage of one and all, by making

time and distance irrelevant.


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He would always say that if a telephone call could be made cheaper than a

postcard, it would transform every home, empower every Indian, remove

every obstacle to opportunity and growth, and tear apart every barrier that

divides Indian society. He was convinced that infocom could energiesenterprises, drive governance, and render learning an interesting experience,

apart from making life exciting.

Keeping his conviction as our credo, Reliance Communications is committed

to transform Dhirubhais dream into a reality.

CHAIRMANS PROFILE

Anil D. Ambani

Regarded as one of the foremost corporate leaders of

contemporary India, Shri Anil D Ambani, 50, is the

chairman of all listed companies of the Reliance ADA

Group, namely, Reliance Communications, Reliance

Capital, Reliance Energy and Reliance Natural

Resources limited.

He is also Chairman of the Board of Governors of Dhirubhai Ambani

Institute of Information and Communication Technology, Gandhi Nagar,

Gujarat.

Till recently, he also held the post of Vice Chairman and Managing Directorof Reliance Industries Limited (RIL), Indias largest private sector enterprise.

Anil D Ambani joined Reliance in 1983 as Co-Chief Executive Officer, and

has been centrally involved in every aspect of the company's management.


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He is credited with having pioneered a number of path-breaking financial

innovations in the Indian capital markets. He spearheaded the countrys first

forays into the overseas capital markets with international public offerings of

global depositary receipts, convertibles and bonds. Starting in 1991, hedirected Reliance Industries in its efforts to raise over US$ 2 billion. He also

steered the 100-year Yankee bond issue for the company in January 1997.

He is a member of:

Wharton Board of Overseers, The Wharton School, USA

Central Advisory Committee, Central Electricity RegulatoryCommission

Board of Governors, Indian Institute of Management, Ahmadabad

Board of Governors Indian Institute of Technology, Kanpur

In June 2004, he was elected for a six-year term as an independent member

of the Rajya Sabha, Upper House of Indias Parliament a position he chose to

resign voluntarily on March 25, 2006.

Awards and Achievements:

Conferred the CEO of the Year 2004 in the Platts Global Energy

Awards

Rated as one of Indias Most Admired CEOs for the sixth consecutive

year in the Business BaronsTNS Mode opinion poll, 2004

Conferred The Entrepreneur of the Decade Award by the Bombay

Management Association, October 2002Awarded the First Wharton

Indian Alumni Award by the Wharton India Economic Forum (WIEF)

inrecognition of his contribution to the establishment of Reliance as a

global leader in many of its business areas, December 2001


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Selected by Asiaweek magazine for its list of Leaders of the Millennium

in Business and Finance and was introduced as the only new hero in

Business and Finance from India, June 1999.

Vision

We will create world-class benchmarks by:

Meeting and exceeding Customer expectations with a segmented

approach

Establishing, re-engineering and automating Processes to make them

customer centric, efficient and effective

Incessant offering of Products and Services that are value for money

and excite customers

Providing a Network experience that is best in the industry

Building Reliance into an iconic Brand which is benchmarked by

others and leads industry in Intention to Purchase and Loyalty

Developing a professional Leadership team that inspires, nurtures

talent and propagates RCOM Values by personal example.

Mission: Excellence in Communication Arena

To attain global best practices and become a world-class

communication service provider guided by its purpose to move

towards greater degree of sophistication and maturity.

To work with vigour, dedication and innovation to achieve excellence

in service, quality, reliability, safety and customer care as the ultimate

goal.

To earn the trust and confidence of all stakeholders, exceeding their

expectations and make the Company a respected household name.

To consistently achieve high growth with the highest levels of

productivity.


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To be a technology driven, efficient and financially sound organisation.

To contribute towards community development and nation building.

To be a responsible corporate citizen nurturing human values and

concern for society, the environment and above all, the people. To promote a work culture that fosters individual growth, team spirit

and creativity to overcome challenges and attain goals.

To encourage ideas, talent and value systems. To uphold the guiding

principles of trust, integrity and transparency in all aspects


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INDIAN TELECOMMUNICATION SECTOR SCHANERIO

The Indian telecommunications market has continued to show consistent growth

during the last one year, with exciting developments such as rollout of newer circles

by operators, successful auction of 3G and BWA spectrum, growing push by

telecom operators to rollout network in rural areas and increased focus on the value

added services market. Telecom continues to be one of the fastest growing sectors of

the Indian economy, becoming a strong contributor to Indias overall GDP and is

expected to grow further.

Overall teledensity in India has risen to the levels of 72% (as of April 11). With a

large part of the population yet to obtain access to the telecom market, there is

immense potential for the sector to grow, especially in non-urban areas. The mobile

services space which has seen exponential growth in urban areas, has not yet

reached the vast majority in rural areas with rural teledensity of approximately

32%, indicating huge untapped potential for the sector.

Broadband is yet to reach a critical mass despite rapid growth; the numbers have

risen from 10.08 million in August 2010 to 12.01 million by April 2011. With

subscriber penetration under 2 percent5, the sector has potential for aggressive

growth in the future.

Mobile services

The Indian mobility market can be characterized as one with a very large subscriber

base (826 million as of April 2011), high growth (addition of 16-18 million

subscribers every month in last six months), low ARPUs (INR 122 per month in

June, 2010) and significant churn rates. The Government of India opened up

mobile services to private participation in 1994-95 by inviting bids for providingservices in the four metropolitan cities and 18 non-metro circles. The government

also setup the Telecom Regulatory Authority of India (TRAI) in 1997 and Telecom

Dispute Settlement and Appellate Tribunal (TDSAT)IN 2000.The Calling Party Pays

regime was introduced in 2003- 04 which allowed free incoming calls for the


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subscribers. This revolutionary change can be designated as one of the watershed

milestones in the growth of the Indian telecom sector.

The 22 telecom circles in India have been classified into 4 categories viz. Metros,

Category A, B and C. With penetration rates in metros touching 150%, the marketin Metros is nearly saturated. However, there is still immense potential in other

circle categories, particularly B and C.The current subscriber base of 826 million

(April 2010) comprises 547 million urban subscribers (teledensity of 152%) and 279

million rural subscribers (teledensity of 33%). The market is highly competitive with

some of the telecom circles having more than 10 operators. Competitive intensity in

the market has contributed to reduction in tariffs and launch of innovative schemes

like lifetime prepaid and low cost handset bundling which further reduced the entry

cost for a new subscriber. With downward spiraling ARPUs, changing economic

profile of subscribers and the need to meet the aggressive roll-out targets, the

operators have been under tremendous pressure to bring in operational efficiencies.

Active sharing is a newer area which is being looked at by telcos to reduce costs of

rollout further.

Broadband and internet services

Internet subscriber base in India, though currently at a low level, has been

experiencing significant growth over the last 2-3 years. This growth is being driven

by the growing popularity of broadband, increasing user comfort with usage of

internet applications, continuous fall in PC prices and decreasing costs of

internet/broadband access plans.While there are a number of technologies being

used by service providers to provide broadband services, DSL continues to be the

most preferred technology and constitutes nearly 86.6% of total broadband

subscribers. Wireless technologies have carved a unique niche in terms of

connectivity to internet with a share of nearly 7.6% which is a significant shift in

the last two years. Newer access technologies like BWA and 3G can completely

transform the character of Internet/ broadband scenario in India. 3G has the

potential to make the mobile phone, a ubiquitous device for accessing the internet.


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Value added services

Currently, the VAS market is worth INR 110-120 billion, which translates into

approximately 10 % of wireless industry revenues. The share of VAS in wireless

revenue is likely to increase to 12-13 percent by 2011. This growth would be drivenby increased operator focus on VAS due to continuous fall in voice tariffs,

increasing penetration of feature rich handsets, and increased user adoption of VAS

applications.This is expected to go up further, as operators focus more on VAS,

especially with the launch of 3G services and with the availability of differentiated

and customized content. The addressable market for SMS VAS has historically been

dominated by ringtones and caller ring back tones (CRBT),

Industry Trends

1. Sustained High Growth

India will continue to be the fastest growing telecom market in the world in terms of

the total number of new subscriber additions. This exponential growth phase is

expected to last for a few years before the rate of growth starts leveling off.

2. 3G and WiMax Roll-out

With 3G and WiMax (BWA) spectrum auctions under progress, there is a greatpotential for the take-off of data access and broadband services.

3. Innovations in internet technology

Innovations in internet technology will have a material impact on the mobile

communications industry.

4. Rural Penetration

Rural coverage will be key to an operators growth strategy. Rural tele-density is stillunder 25 per cent with significant growth potential, whereas urban tele-density has

already crossed the 100 per cent mark.


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5. Infrastructure sharing

There will be a greater potential for tower sharing / outsourcing model with the

entry of new telecom players into India and also due to the advent of 3G and

WiMax.

6. Competition

There will be fierce competition among existing and new telecom operators, leading

to substantial benefits for the subscribers.

New frontiers for growth: 3G and BWA

The last 5 years have been transformational for Indian telecom industry and the

next few years are expected to bring about more stimulating and aggressive

changes. One of the key frontiers which would make the journey in coming years

even more exciting is the launch of 3G and BWA technologies. The highly successful

auctioning of 3G and BWA spectrums and entry of new telecom players in BWA

auction has ensured that telecom market will see more exciting times going

forward. The market is likely to witness a wide variety of value added services being

offered, which were not possible over the current 2G/2.5G network. The ARPU is

expected to get a boost given the increased revenue contribution from data and

value added services. Potential challenges that 3G players could face would span

across the value chain covering innovative Product development, Network

deployment and management, Sales and Marketing etc. In the first wave, operators

would be able to provide rich data services to working professionals, enterprise

customers and youth. They would be specifically targeting current users of 2.5G

and/or owners of 3G enabled handsets.

At the same time operators would be actively looking at providing 3G services to

other income groups, as this will help spread the investment in technology/licenseover a wider subscriber base. The Ministry of Communications had specified that

BWA spectrum allocation would be technology neutral. High speed broadband on

BWA spectrum also has the potential to provide connectivity for the growing small

and medium enterprises (SME) segment.


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MOBILE NUMBER POTABILITY (MNP)

Definition

Mobile Number Portability means the facility

which allows a subscriber to retain his mobile

telephone number when he moves from one

Access Provider to another irrespective of the

mobile technology or from one cellular mobile

technology to another of the same Access

Provider; (TRAI)Retaining the same number is possible .

If it is from one mobile technology to another of the same service

provider

It is applicable intra-circle

It is applicable only to mobile services, not to landline (except FWP 93

series)

This facility will be applicable for both prepaid and postpaid customers

Also in case of datacards, where the instrument needs to be changed

If the subscribers are not satisfied with the services of their service provider,

they can change their service provider while retaining the existing phone

number. This infuses competition among service providers and forces them

to improve their service standards to check subscriber churn. Many

countries have made number portability mandatory to liberalize competition.

Many others are in the process of implementing it. A significant technical

aspect of implementing number portability is related to the routing of calls or

mobile messages (SMS, MMS) to a number once it is ported to some other

network


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Since in most countries different mobile operators are provided with different

area codes and, without portability, changing one's operator would require

changing one's number.

Types of MNP

There are three basic types of number portability-

Operator portability: It is the ability of an end user to retain the same

telephone number as he/she changes from one operator to another. It is also

referred to as service provider number portability and is equally applicable

to fixed telephony, mobile telephony and non-geographic number service

providers. These forms of number portability are known as, respectively:

Local number portability or LNP (for geographic numbers in fixed

telephony networks);

Mobile number portability (for GSM and other mobile system

numbers);

Non-geographic number (NGN) portability (for services such as free

phone and special rate services).

Geographic portability: It is the ability of a fixed telephony end user to retain

the same telephone number as he/she moves from one physical location to

another.

Service portability: It is the ability of an end user to retain the same

telephone number as he/she changes from one type of service to another.


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Basic Terms

Porte inUnder MNP, when a customer moves into a new service provider

from his existing provider it is called as Port in or porting in.

Porte out - Under MNP, When a customer leaves the existing service

provider into another provider it is called as Port Out or Porting out.

Unique Porting Code (UPC) -The 8 digit Alpha numeric code allocated by the

Donor operator for facilitating porting on request by customer through SMS

Recipient Network Operator (RNO) Recipient Operator" means the new

service Provider who will be providing mobile telecommunication service to

the subscriber after porting and includes his authorized agent

Donor Network Operator (DNO) Donor Network Operator means the

existing /Old Cellular Mobile Telecom Service provider or Unified Access

Service provider, to whose network the mobile number belongs at the time

the subscriber makes a request for porting.

Mobile Clearing House (MCH) - MCH is an entity who has been granted a

license under Section 4 of the Indian Telegraph Act, 1885 (13 of 1885) for

providing Mobile Number Portability Service & facilitates MNP. MCH is a

Private party appointed by the Government. For example Syniverse is one of

the MCH appointed by Government.In the MNP process, MCH is responsible

for negotiation between the RNO and DNO. It aids in the smooth transition of

user from one operator to other

Participant A Participant is a service provider who is not related to the

porting process in any way and still needs the routing information for call

routing and various other activities


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Salient features of the MNP

MNP facility shall be available only within a given licensed service

area.

A subscriber holding a mobile number is eligible to make a porting

request only after 90 days of the date of activation of his mobile

connection. If a number is already ported once, the number can again

be ported only after 90 days from the date of the previous porting.

The subscriber who wishes to port his mobile number should

approach the Recipient operator (the operator to whom the subscriber

wants to port his number). The Subscriber may be required to pay

porting charges, if any, to the Recipient Operator.

The subscriber making the porting request is required to have cleared

all the bills issued prior to the date of porting request. He shall give an

undertaking that he has already paid all billed dues to the Donor

Operator as on the date of the request for porting and that he shall

pay dues to the Donor Operator pertaining to the mobile number till

its eventual porting and that he understands and agrees that in event

of non-payment of any such dues to the Donor Operator, the ported

mobile number shall be liable to be disconnected by the Recipient

Operator.

A subscriber may withdraw his porting request within 24 hours of its

submission to the Recipient Operator. However, the porting charges

shall not be refundable.

Access Providers are required to implement All Call Query method.

The Originating operator shall be responsible to route the call to

correct terminating network.


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Process of MNP: How to change Mobile Operator

Earlier the subscribers were hesitant to

change their operators due to fear ofloosing their existing mobile number,

but now with MNP subscribers can

easily switch to new operator while

retaining same mobile number. Theres

a catch though. You cannot switch

operator and retain number if you have been with that operator for less than

three months. Prepaid users must remember that their balance talk time will

disappear if they switch to a different operator. TRAI has forwarded the

responsibility to the Department of Telecommunications (DoT) to select an

operator who will be licensed to manage an end-to-end MNP solution.

Subscribers must pay up all pending bills before making an application for

MNP.

The porting fee is to be paid to the new operator.

No payment is required to be given to the operator you are leaving.

TRAI said that porting between mobile operators should be accomplished

within a seven days.

Porting Procedure

Porting of the number to new service provider involves the below mentioned steps:

Step 1: You need to Send a SMS to 1900 as, PORT for example

PORT 90964XXXXX.

Step 2: Soon after your message you will get the Unique Porting Code (UPC)

Step 3: Now, you have to go to the old service outlet to clear the pending bills

or any due so far, if any.


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Step 4: Go to NEW service providers outlet fill out the formalities and your process

for shifting mobile operator will begin here.

Step 5: Once the request has been sent to the new service provider it will take a

total of 5 days for transfer to be done.(12 days for J&K, NESA) Customer will beable to use the services during this period except for a black-out period of 3-4 hours

on the final day.

Step 6: Customer will be given a new sim card

Step 7: Current Service provider will tell you the date of shifting the services.

Rejection Criteria

MNP request can be rejected in the following scenarios:

If a customer has signed a contract with his current service provider

and the contract is still active

In case if the out-standing bill amount is not cleared

Minimum 90 days in the network

Once a customer has port out, he cannot shift again for the next

90 days

The customer must have completed 90 days on the network

before applying for port out

The connection is sub-judice / legal issues with the current provider

If any change of ownership request is pending with the service provider


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REVIEW OF LITERATURE

History

Globally, the introduction of MNP across markets has witnessed a mixed

response from customers. The push for MNP implementation has always

been led by market regulators in an effort to provide mobile customers with

the freedom to move between service providers and drive healthier

competition. India is no different. In fact, operators have in the past opposed

MNP on the grounds that there is already enough competition in the market

and that penetration is still low. Nonetheless, in the interests of customers,

this has been brushed aside. Globally also, mobile service providers have

been opposed to MNP, fearing higher customer churn rates.

Globally, among the major countries, Singapore was the first to implement

MNP In 1997, followed by Hong Kong in 1999, Australia in 2001, Germany

in 2002, the US and France in 2003, South Korea in 2004, Taiwan in 2005,

Japan in 2006 and Canada in 2007. Among the latest countries to

implement MNP have been Mexico (July 2008), Malaysia (August 2008),

Brazil (September 2008), Romania (October 2008), Turkey (November 2008)

and Ecuador (February 2009). Most of these markets had already achieved,

or were near, the 50% mobile penetration rate (with the exception of

Singapore) during the implementation phase. The first implementation of

MNP starts in late 1990swith Singapore implementing the MNP (limited)

functionality in 1997 followed by Hon Kong in 1999, Spain in 2000,

Australia in 2001 and list continues to grow. Now, years after playing the

waiting game, MNP finally arrived in India on 20th Jan, 2011 after the

Telecom Regulatory Authority of India (TRAI) issued a draft of various

regulations for its introduction.


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Need of MNP

Mobile subscribers incur switching costs when changing operators to take

advantage of lower call rates and potentially better services. Several articles

discuss the composition of switching costs and most suggest that it consists

of the time and money expended in moving to a different operator, including

having to inform contacts of a number change and the loss of or having to

give up a phone number. Such an action is perceived as a risk, both

financially and psychologically. For business enterprises, the costs of

switching operators and changing phone numbers are far greater. This is

because they end up having to reprint business cards, sign boards, and

websites have to be updated with the new contact information. They alsorisk losing business opportunities through missing calls from those who are

unaware of their number changes. These costs, therefore, act as a barrier to

changing operators by reducing the attractiveness of switching to better

alternatives; the greater the switching costs, the more likely a subscriber will

not move to another carrier. For new operators in the mobile sector, high

switching costs act as a barrier to winning over subscribers from competing

networks; furthermore, operators have to offer tariffs low enough to outweigh

the cost of switching networks. As a result, regulator has found it necessary

to introduce MNP services, as they reduce switching costs and facilitate

consumer choice and ensure effective competition. Given its presence in the

market for many years, it is clear that this type of service is hardly a new

feature in the telecom industry. Local number portability, which facilitates

porting from one local fixed operator to another while retaining the callers

phone number, was introduced as early as in the mid- 1990s in Hong Kong,

the US, Canada and Europe. In fact, there are several types of portability

services that have been implemented across the world, including service,

service provider and location-based/geographic portability. Furthermore,

while the most common application of number portability is between mobile

to mobile and fixed to fixed markets in Europe, and USA provides


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subscribers with the opportunity to port between both fixed and mobile

service providers.

The rationale for implementing MNP

Existing literature on portability contains extensive discussions on the

rationale for introducing these services. Among the most commonly cited

motives is the lowering of switching costs. Mobile customers who switch

operators in return for better quality of service (QoS) and/or call rates, are

benefited by the MNP facility as they do not incur costs to update their

networks about a number change. In addition, they are less likely to missout on phone calls (except during the short period when the actual number

porting from one operator to another takes place). Customers put a value on

their phone numbers, especially when they have used that number for an

extended period of time, and would rather stay with an unsatisfactory

service provider in an effort to retain that phone number. This in itself is a

cost to the user, who has to put up with poor QoS and maybe even make

calls at uncompetitive rates. The existence of portability, therefore, enables

such customers to make a simple change to an operator of their choice as a

result of lower switching costs. It must be noted, however, that MNP cannot

completely remove these costs mobile subscribers will almost certainly

incur some cost in switching operators, in terms of time taken to make the

switch (it is possible that they may miss a few calls) and money spent on

porting the number (the porting process involves a lot of technicalities, the

costs of which must be covered by regulators and operators). However, these

are onetime costs, while the costs of a poor service and the compulsion to

carry on may have huge implicit costs and may reduce consumer welfare.

Following from this discussion, the introduction of the MNP service is said to

drive competition; the rationale of introducing mandatory MNP is simple: it

is expected to bring about considerable benefits to consumers of mobile


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services. MNP facilitates the movement of customers between service

providers, putting the latter under pressure to provide greater levels of

service. The introduction of MNP entails a rethinking of business strategies

beyond price wars alone, which result in competitive tariffs among industryplayers, as they will not be enough to retain subscribers; instead, operators

will have to improve their QoS and even offer innovative services and

features in order to prevent customers from changing networks. This is

perceptibly beneficial to mobile subscribers, but operators have to undertake

expensive marketing campaigns and advertising costs, and increase

investment costs. The potential for high churn rates and loss of subscribers

adds to this pressure. While MNP may have a significant impact on market

dynamics, it is difficult to distinguish the absolute effect of the service on the

market. Another benefit from this service is that it helps to create a level

playing field for small and new entrants. Every service provider is given the

opportunity to attract customers regardless of how young or how established

the operator is. While MNP is expected to reduce switching costs and

increase competition among industry players, the extent of these effects is

contingent on how accepting operators are to the introduction of MNP

services. Service providers can engage in attempts to stifle the effects of MNP

by penalizing subscribers who break their contractual agreements or by

imposing hefty charges for porting their numbers. Operators can even

provide phones that are locked in to their own networks, making it difficult

for subscribers to make a switch to another network, without having to

purchase a new phone. Some are even guilty of suppressing information on

porting.

The MNP service also encourages churn, as mentioned above, which service

providers generally strive to keep at a minimum. High churn rates are

especially useful for new entrants into the mobile market, because they are

able to acquire subscribers to their networks. MNP helps these firms to

acquire new subscribers, but operators are faced with the task of having to


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retain their existing subscribers, which may sometimes be harder to do.

Service providers have to take extra efforts to ensure that they do not lose

their own subscribers while trying to entice subscribers from other networks

to take up their services, and striking this balance can be tricky. There are,therefore, both positive and negative consequences to high churn rates. On

the other hand, there are several downsides to using MNP services. In the

past, operators have had a specific number code before the remaining

numbers that comprise a phone number, in order to make it easy for callers

to identify which network they are calling. With the use of MNP, however,

this code serves very little purpose as it does not mean that a customer with

such a code still belongs to the corresponding network. This, therefore,

defeats the purpose of having such a code and has implications on national

numbering plans. Additionally, since mobile subscribers are most likely to be

unaware of which network they are making calls to and operators can take

the opportunity to increase termination charges. In fact, mobile subscribers

will be unable to know the price of any call and cannot take advantage of on-

net and off-net rate differences too; however, the easiest way to overcome

this problem would be to enforce a single rate tariff plan for all operators.

The service also tends to be technically costly to implement and many times

the benefits achieved by the introduction of MNP are far lower than the costs

incurred. As mentioned previously, operators can sometimes engage in anti-

competitive behavior to tie in their customers into long-term contracts, and

this is an issue that requires intervention from the relevant authorities. Not

only does it stifle competition to a large extent, but with the introduction of

MNP, it can also create large numbers of unused handsets. In many cases,

when people switch operators they have no choice but to buy a new phone

as their old handset is incompatible with the new network. Given the

benefits of implementing this facility and the drawbacks as described above,

the decision to introduce MNP into a mobile market is a rather significant


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one. The tricky part is that its success is not guaranteed, as it is dependent

on several factors.

Measuring the success of MNP

The successful implementation of MNP is associated with high porting rates.

This is because high porting rates signify that the facility is being utilized

and confirms that mobile subscribers are in demand of the service. The

adoption of MNP in Hong Kong, South Korea and Australia has been touted

among the most successful implementations of the facility, simply because

these countries have achieved high porting rates, of over 6 percent, and have

reaped significant economic returns. Spain and Sweden have also been as

successful. The reasons for these successes can be attributed to several

factors, including low porting times, low or even no charges allocated to

subscribers for porting their numbers, promotion of the service by regulators

and subscriber awareness of the service, and the entrance of new or

disruptive operators. In the case of Hong Kong, waiting time for porting a

number was between1 to 2 days only. Furthermore, the timing of

introducing the MNP facility played a large role in its success; four new

mobile operators entered the market at the same time that MNP was

introduced, resulting in increased competition and therefore high porting

rates. Similarly, in Australia, the regulator played a significant role to

educate subscribers about the service, and porting times were limited to a

matter of few hours. However, the adoption of MNP has more often than not,

failed to achieve high porting rates let alone economic success, contrary to

the expectations of many. This is true of Ireland, Finland, Malta, UK and The

Netherlands. MNP has also been rather unsuccessful in Taiwan, Japan andSingapore. High porting charges, long-winded applications, lengthy porting

times, and handset subsidies have suppressed the change of networks on a

large scale. Operators in France even stipulated that customers who wanted

to break their contracts had to provide up to three months notice before


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doing so. The porting process in The Netherlands took up to 5 weeks

resulting in a failure of MNP in the country. The longer the time taken for

porting, it is easier for donating operators (i.e. operators who are giving up a

subscriber) to win back their customers through special promotions andpersonalized packages. Another reason for low porting rates is because

subscribers have no need to switch networks because of the homogeneity of

services on offer. The lack of competition in Ireland meant that subscribers

did not perceive any benefits from a move from one operator to another,

leading to low porting rates and economic failure of MNP. In Finland,

operators imposed minimum contract periods which drove down porting

rates from approximately 40 % to 10 %. In the case of Japan, mobile Internet

use is very popular and many subscribers of NTT DoCoMo, the largest

operator, use their phones for both calls and email. Subscribers are not able

to port their email addresses along with their mobile numbers which has

affected porting rates. Additionally, handsets are locked in by service

providers, meaning that customers wishing to change networks have to

purchase new phones. The charge for porting to a different operator is also

relatively costly, working out to approximately per port 400 rupees.

Singapore and Taiwan both had lengthy porting times of 4 to 7 days, which

led to poor porting rates and therefore the failure of MNP

While most of the literature attaches the success of MNP with high

porting/churn rate but the MNP service can still be considered a success,

even when these rates are low, if the threat of porting leads to improved

competition among operators, and hence, lower tariffs and better services.

The purpose of regulation is to facilitate a level playing field and foster

competition so that end-users are able to acquire the most optimal levels of

quality at competitive prices. As such, it could be said that if there has been

a substantial effect on tariffs and QoS post-implementation of MNP, leading

to satisfied customers it may be considered that the implementation of MNP

is successful. In any case, the argument for high porting rates being the sole


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indicator for the success of the MNP service is erroneous. Based on intuition,

even if high porting rates are achieved initially, they will slow down

eventually. Other indicators of successful MNP include a pleasant porting

experience for subscribers, simplicity and speed of porting, minimizedcustomer complaints and minimized operator porting overheads.

Preconditions for implementing MNP

Following from the previous section, it s evident that the success of MNP is

dependent on a variety of factors. Among the most important of these

preconditions is that there has to be sufficient demand from subscribers (orwhat is referred to as the minimum threshold market size), highly

competitive operators and mature telecom markets, and independent and

strong regulators who can drive the adoption of the service.

Minimum threshold market size

Customers should be willing to switch networks. If the demand for porting to

other networks (i.e. if the likely number of ports) is low, there will be no need

to introduce such a service. Not only is it costly to do so, in terms of re-

working the routing systems, managing the databases and promoting the

service to customers, but these costs will be unrecoverable if the service is

left unused, and the adoption of MNP will be an economic failure. There are

many factors which may possibly prevent users from taking advantage of

MNP services, including: a) the placement barriers put by operators to

porting numbers, such as creating artificial delays in processing requests;

b) a perceived level of distrust in the proper functioning of this service; and

c) the financial cost of switching. A casual attitude or inertia towards

switching operators by subscribers is another reason for the failure of the

MNP service in France. Subscribers are driven to make a change only if their


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operator charges excessively high call rates or are unhappy with the level of

customer service they receive. However, it is also possible for QoS-based

competition to stimulate subscribers to consider switching operators. It is

therefore important that regulators determine the minimum thresholdmarket size. According to a cost-benefit analysis of the portability process, it

is evident that there is a minimum market size below which will not provide

overall benefits; as per the analysis carried, the minimum is computed to be

approximately 10 million As such, implementing this facility in countries

with small populations and even smaller mobile markets proves to be

economically infeasible, because the costs outweigh the benefits by a

significant amount. This is clearly the case of MNP in Malta, where there has

been no impact on competition and prices even after the introduction of the

service. The island nation has a population of only about 4 million; a clear

indicator that the mobile market size and demand for porting would be too

low to be economically viable. In such countries, it makes more sense for

operators and regulators to agree to facilitate number changes when

requested by subscribers. Operators could offer to send out free SMS to all

the subscribers contacts, or maintain the old number in parallel for a given

time period.

Level of Competition

The level of competition between operators determines the post-MNP

competition and therefore success of the service. The more competition, the

lower the need for the MNP service, because operators are likely to provide

subscribers with the best tariffs and service quality possible. They are likely

to find the need to innovate and outdo their competitors in order to retain

their subscribers. However, this does not mean that MNP should not be

introduced the service reduces switching costs for those subscribers who

do want to change networks and therefore should be considered a standard

service in advanced telecom markets.


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The importance of competition is evident from the failure of Irelands MNP

implementation. The market comprised of three operators, two incumbents

and a weak and young competitor, meant that competition in the market

was lacking. As a result, subscribers saw no benefit from switching from oneoperator to another, even with the availability of the MNP service, leading to

poor porting rates.

Another consideration is how mature the mobile market is. An indication of

this would be the levels of mobile penetration; the higher the penetration

levels, the less chance for new entrants and/or competitive operators to

disrupt the existing market structure. Unless MNP is introduced in such a

market, it is unlikely that these operators will be able to survive in the longterm. In order to ensure that the market remains competitive and operators

are always under pressure to retain their customers, regulators need to push

for the MNP facility.

Regulatory control

It is imperative that the telecom regulatory agency is an independent and

powerful entity. The regulator should be able to wield significant authority

over the sector and be committed to driving the facility in order to ensure

that MNP is successful. When MNP in Finland was failing, regulators stepped

in to ensure that operators did not provide handset subsidies and long-term

contracts; they also imposed a requirement for user-friendly and free porting

of numbers between networks, in order to encourage subscribers to switch

providers. Oftel in UK and regulators in the Netherlands played a very

minimal role in the implementation phase of MNP, leading to a poorlyregulated and implemented facility. It is evident, therefore, that the

regulatory authority needs to have the necessary resources and power in

order to drive the initiative and ensure that subscribers as well as operators

are at the receiving end of a fair deal.


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In summary, regulatory bodies should ask the following set of questions

when considering the introduction of the MNP service:

How high is demand for MNP from both subscribers and operators?

How big is market size? Is it below the minimum threshold market size?

What is the level of competition?

What kind of pricing model is in place?

Will MNP spur further competition?

MNP IN INDIA

After years of debate and delay, the

Mobile Number Portability (MNP) was

launched in India in January

2011.According to the MNP Guidelines

defined by TRAI, new mobile

subscribers who have had a connection for a minimum period of three

months (or 90 days) only can port their numbers. Once a number has been

ported to a new operator, the subscriber is required to use their services for

90 days before being able to port out again. This has both merits and

demerits, because a subscriber is stuck for three months with one operator,

but also cannot arbitrarily port whenever he/she feels like it, or to avail of

short term promotional fares on different networks. The time taken for

porting has been specified as a maximum of four working days; weekends

are excluded from this timeframe. The duration for having no service

between porting from one operator to another is two hours in all.


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Why MNP in India

The introduction of MNP is expected to increase churn rates and force

service providers to stay competitive through product and service

differentiation. Prepaid churn rates are said to be between 3-4 percent per

month but the regulator is looking to increase it to about 8-10 percent, in

order to force incumbent operators to be more competitive. Although

competition is high in the Indian mobile sector, regulators feel the need for

more intense competition for the benefit of subscribers. This is supported by

the findings of a recently released market study on the potential for MNP in

India, conducted by Keynote Capitals Research (2009), which indicates that

as penetration has increased in the metropolitan areas of India, growth ofthe sector has slowed down, underscoring the importance of MNP as a driver

of competition. TRAI also hopes that it will drive prices lower, and the same

study asserts that MNP will intensify price competition within the sector.

Regulators also hope that MNP will create a more level playing field for all

existing operators. As explained by the Keynote Capitals Research study

(2009), MNP will give the five new entrants into the mobile sector and four

existing operators who have been allowed to provide services in new circles,

a chance to survive in the already competitive marketplace. Given the

anticipated growth in the mobile market to more than 860 million

subscribers, second only to China, regulators feel that the introduction of

MNP in India is imminent and deem it a suitable time to set the stage to

push subscriber numbers up.

Is the timing right for MNP in India?

Taking into considerations the predefined preconditions for MNP, it is clear

that, the Indian telecom market meet the necessary requirements to

introduce this service. For one, being one of the largest mobile markets in

the world and having a population of over 1.18 billion, the Indian


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marketplace exceeds the minimum threshold market size of 10 million by a

large margin. Even though access paths per 100 people is relatively low, with

only 40.31 having access to mobile phones in the country (TRAI, 2010), the

market is large enough to guarantee that demand for MNP can beeconomically viable. At the same time, there is still relatively intense

competition in the Indian telecom market.

On the regulatory side, TRAI, which was set up in 1997, has played a

significant role in the performance of the sector in the last decade. Although

it falls under the jurisdiction of the DoT and does not have unchecked

independence to make its own decisions in order to regulate the telecom

sector, TRAI has been key in the development of the wireless market. TheAuthority has functioned efficiently and has worked alongside the Cellular

Operators Association of India (COAI) and the Association of Unified Telecom

Service Providers of India (AUSPI) to develop the mobile sector into a

profitable one. According to IDC the survey "30 per cent of mobile

subscribers are likely to shift to an operator offering better services, if given

the option" (The Hindu, 2005). As consumer trends evolve and there is a

growing need for the regulator to protect their interests, it seems like anobvious move for TRAI to have called for the implementation of MNP. With a

growth and investment potential far exceeding most other telecom markets

in the world, the Agency has been adopting as many measures as it can to

establish its market as one that has arrived. While opponents of the service

argue that the market is still young with much potential for significant

growth in the coming years and no need for MNP at this time. They argue

that network coverage only accounts for about 40 percent in the country and

there are more pressing matters that regulators should look into.

Proponents, on the other hand, are sure that MNP will only help to develop

the market further and give subscribers the flexibility they need, even at this

adolescent stage. In response to the question posed on whether the timing is

right, TRAI and other proponents are of the view that if not now, in any case


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MNP is a facility that will have to be adopted later in a telecom market. Since

the sector is still growing, in terms of demand and supply (with the entry of

more operators in select circles), and subscriber telecom behaviour is still

evolving, it may not be a bad time to adopt it.

On the other hand, though, the question should be asked of whether TRAI is

considering location portability, along with MNP, as this is possibly more of

value to both prepaid and postpaid subscribers. With increasing rates of

migration from rural areas to the cities, it is more likely that location based

portability for example, porting from a mobile operator in Delhi to an

operator in Chennai, will be more useful to internal migrants and those

moving from rural areas to the metros. Introducing MNP alone will not besufficient to meet future mobile subscriber needs and ideas of flexibility.

In any case, as a result of the way MNP has been handled in India, there

seems to be a lot of hype and expectations from all stakeholders involved.

There uncertainty to be convinced that MNP is right for India at this time.

Potential implications

An IMRB study, entitled Switch, 11 which looked at 40,000 subscribers

with a connection of upto three months in seven cities around India, found

that 70 90 percent of all sampled subscribers are number loyal, with only 20

percent who will make a switch to a different operator when MNP is

introduced. Only 10-20 percent of all prepaid subscribers indicated that they

would be willing to port their numbers. These findings are also corroborated

by the Nielsen Mobile Consumer Insights study (2009) on the attractiveness

of MNP for postpaid and high-spending users in Indiaaccordingly, only 18

percent of the 12,500 sampled subscribers will port their numbers if the

service is in place. In many cases prepaid subscribers tend to be, non-

premium customers, furthermore, compared to postpaid subscribers,


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prepaid subscribers are less number loyal. Given that the bulk of the mobile

market is made up of prepaid subscribers, approximately 94.8 percent

(TRAI, 2010), the effects of MNP on this market may not be as high as

expected. TRAI, in fact, has been realistic enough to estimate that annualporting will be 2 percent for 5 years after launching the service .The Keynote

Capitals Research study (2009) confirms that non-metropolitan locales

comprise of subscribers with lower per capita incomes, who spend less time

and money than their metro counterparts on mobile use. In support of this,

the Switch study found that the largest percentage of switching will be in the

urban areas of Delhi and other large metros, among postpaid subscribers. It

is evident then that the effects of MNP will be felt most in the metros, where

subscribers are more dynamic and likely to switch networks in order to

acquire a variety of functions and services. Additionally, competition within

these circles is higher, as subscriber numbers are limited and operators will

try to hold on to every customer; it is expected that the introduction of MNP

will facilitate further competition. However, India already has some of the

lowest call rates in the world. Therefore the impact of MNP on price, may not

lead to as great a drop in prices as expected. The question that begs to be

asked is: how low can operators reduce prices in order to be both competitive

and profitable at the same time? With dwindling ARPUs and the recurring

high costs of maintaining the MNP facility, there is little that operators will

be able to do to compete on tariffs. Although the most likely reason for

porting in India will be to avoid network congestion, the second most likely

reason is to avail of better tariff plans. The prepaid market will not witness

as much churn as is expected. Except for those who already intended to

make a switch, there will be limited reasons for most prepaid users to do so.

Instead, operators should focus their efforts on postpaid subscribers, who

are less likely to be price sensitive but keener on better QoS and a variety of

VAS; operators will have to focus on the strength of their brands and utilize

other tactics in order to tie in these high-ARPU subscribers to their


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networks. As stated in the Switch study, the fight for customers will be

based not on tariff plans and price wars but on what a

subscription/connection with the operator will mean; there will be an

increased emphasis on quality and service. It could be argued that the size ofthe postpaid segment within which will see the most amount of churn in

India, alone, may lead to an economic success; it might even be likely that

operators can cover the costs of setting up the facility. Another implication,

as identified in the Switch study, is that there will be many subscribers,

especially high volume ones, porting from CDMA to GSM. However, in

addition to switching costs, these users will also have to invest in new

handsets that are GSM compatible. The study also warns that in any case,

any churn caused by the introduction of MNP will last for about two to six

months, after which the rate is said to dwindle down. To sum up the Nielsen

study, it is clear that the postpaid segment of subscribers will be the most

likely to make the most of the porting facility. It is clear that postpaid

subscribers and high-spenders (usually also postpaid subscribers), and

business users (almost always postpaid subscribers) will be the largest

groups that will utilize MNP.


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NEED FOR THE STUDY

MNP is the latest buzzwords in the Indian telecom industry, considering the

growth of telecom services in India, it is appropriate at this stage to discuss

the issue of mobile number portability.

It is aimed to study operator and consumer perception towards

Study of Mnp (2)

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Transcript of Study of Mnp (2)