Mobile number portability is about to roll out across the country starting from January 20, 2011, and has been in operation in Haryana since November 25, 2010. Reports coming in now from Haryana suggest that the big networks, like airtel and Vodafone are the biggest gainers from the churn, but that the overall impact has not been very high.
In Haryana, which has a population of over 21 million, according to the 2001 census, the subscriber base had reached 14.93 million in May 2010. The number has likely gone up even further by now, but this represents a change of only 0.5 per cent of the total subscribers. Even among post-paid users (the only group affected), this figure is only around 10 per cent, well within the expected figures.
In a recent report by ICRA (formerly Investment Information and Credit Rating Agency of India), the new mobile number portability is going to directly increase competition between the service providers, and in the short term at least, lead to declining profits because of higher acquisition and retention costs for the operators.
One of the fallouts of the new scheme will also be in improved quality of service and a focus on VAS. According to ICRA, with tariffs in India already the lowest in the world, there is limited scope to compete on the pricing front.
Moreover, as all players in the market quickly react to match competitor pricing, tariffs will not be a differentiating factor in the long term. Hence, the quality of service and customer experience will play an important role in a customer’s choice for an operator rather than pricing.
According to the study, 80,000 numbers were ported, and the biggest gainer has been Vodafone, but more details are not available at this point.
From January 20, 2011, the service will be rolled out across the nation and will be at the minimal price of Rs 19, with the whole process taking less than a week. Considering how convenient the system has been made for users, it can be expected that large numbers of people will quickly give it a try. What is going to be important over the long run though will be the retention of the new customers.
Considering though that the mobile number portability can only affect the post-paid segment, which according to ratings agency Fitch Ratings makes up only 5 per cent of the total mobile user base in India, the overall long term impact of MNP is likely to be low, even though it could well become a point in marketing as time goes by.