Broadbandindia Magazine

With the country getting ready for number portability towards the year-end, the cellular and fixed-line telecommunication companies estimate that they may have to spend Rs 10,000 crore on upgrading technologies and making their networks ready for portability.

Number portability allows customers using mobile phones to switch from one service provider to another without having to change their numbers. For this to happen, all the telecom providers in the country need to upgrade relevant technologies. Dr J.S. Sarma, Chairman of TRAI, asked telecom players to indicate the costs with break-up of equipment and technology costs, and their estimate of transaction charges.

“We welcome the move to introduce portability and we are committed to implement it. But each telecom service provider needs to spend Rs 400-500 crore to make this happen. We expect suitable compensation for the investments we make,” Mr T. V. Ramachandran, the outgoing Director-General of COAI, said.

Cost issues

The state-owned BSNL alone pegs the expenditure at Rs 1,000 crore (for both fixed line and GSM services), while Idea tentatively put the capex estimate at Rs 350-450 crore. Reliance, Vodafone and Tata have indicated that they expected the expenditure to the tune of Rs 100 crore, Rs 350 crore and Rs 100 crore, respectively, for portability.

The TRAI consultation paper said number portability is vogue in 50 countries. Over 154 million mobile users, or13% of the users in those countries, chose to keep their number as they change the mobile operator. In India, the churn rate (people who move from one operator to another) is 40% a year.

DoT proposal

While proposing the portabil ity, the Department of Telecommunications had said the portability would initially be implemented in the metros. The country is divided into two number portability zones, each comprising 11 licensed service areas.

Representatives of some cellular service providers however, said that whether it was implemented in a few cities or some circles, the whole of the country’s network needs to be prepared for portability.

Huge threat to telcos

The introduction of MNP is presenting a huge threat for mobile operators with a study stating that as much as 18% of India’s mobile subscribers are waiting to change their operator once MNP is launched. The findings of the study contrast severely with data flaunted by India’s mobile operators , claiming that globally, only 1% of mobile consumers port their numbers, which makes the introduction of MNP a waste of money. One in four Reliance and Tata Indicom subscribers are keen to change their operator, followed by a close one in five of BSNL subscribers, says a mobile consumer study by the Nielson Company.

About 55% of respondents were satisfied with their mobile operator and 48% satisfied with the network quality. Satisfaction scores on network quality dropped for almost all operators, with Airtel, BSNL and Reliance registering the greatest drops. 46% were satisfied with network coverage area of their operator and 43% were satisfied with the price they paid for the service. High spenders, postpaid subscribers and business subscribers show a greater tendency to switch if MNP is introduced.

Prepaid, low and medium spend users are not motivated to switch. Postpaid subscribers have almost double the minutes of usage compared to pre-paid subscribers and the incidence of data usage is also higher among postpaid and high spenders. Vodafone has the highest postpaid subscriber base in India. “MNP represents a powerful opportunity for operators to drive in-bound porting of high-value subscribers provided they have a good understanding of who is more likely to switch and why,” said Shankari Panchapakesan, executive director, Telecom Practice , Nielsen Company, India. In a previous Nielsen study, network quality was a bigger driver of operator choice, driven by GSM subscribers, whereas price was the primary consideration for valueconscious CDMA subscribers.