News, views and commentary from the telecoms sector across emerging markets and developing countries worldwide

Friday, 29 May 2009

Where will MNP go live in 2009? How should MNOs respond?

With Mobile Number Portability now about to hit the Indian market, the country's technology media are following the debate about how much impact this is likely to have.

Jatinder Singh, writing for Voice & Data magazine, notes that MNP has been a long time coming:

"After years of discussions and apprehensions by major telecom operators, MNP or mobile number portability, is finally going to make inroads into the Indian telecom market. [The] TRAI has approved the pan-India implementation of MNP, and [the] DoT has framed the timeline of its implementation; it is expected to hit the market by year-end."

Singh notes that MNP will be phased in piecemeal, region by region, starting with Delhi, Mumbai, Kolkatta and Chennai, with nearly 18% of the total cellular subscriber base given the option to change service providers while retaining their current mobile numbers. Singh also expresses the opinion that MNP may force operators to improve quality of service in order to avoid losing customers to rival MNOs.

So, how seriously are India's operators taking MNP in terms of threats and opportunities it might create? A range of views are reported in Jatinder Singh's article:

Kuldeep Goyal, Chairman and MD of BSNL, which currently occupies 4th place in terms of mobile market share with 11.95% of subs according to WCIS, seems upbeat about MNP, saying "It would certainly offer opportunities in the Indian telecom market. We are positive with our market share and would be eyeing more customers once things are in place."

From market-leading Bharti Airtel, Dr Jai Menon (Director, Customer Service and IT) notes that MNP has had varying levels of impact in markets worldwide.
"We are ready and believe that it allows more and more customers to come to our network and enjoy the services," says Dr Menon. Also speaking for Bharti Airtel, Deputy CEO Sanjay Kapoor told the Business Standard earlier this month, that MNP "is more relevant in countries where you have long-term contracts", going on to explain that because "India is a prepaid market... number portability won’t be a game-changing opportunity for anybody." For Kapoor, the vast, price-sensitive prepaid segment is already so inclined to regular churn with "the exit and entry cost on prepaid connections... so low", that he does not believe MNP "really adds to value."

It is, perhaps, tempting to assume that a newer market entrant would be welcoming MNP much more enthusiastically, mindful of an improved opportunity to grab customers from established rivals.

Raymond Yu of telecoms think tank Ovum, writing earlier this month, however, contends that all MNOs are vulnerable to MNP-driven churn. He cites the cases of Greece and
Lithuania, where the largest operators actually managed to increase their market shares immediately following the introduction of MNP. Yu also recalls the case of Hong Kong, where although all MNOs experience a large number of ports, "this is not unique to the customers of the market leaders."

In India, considerations of this kind may account for the apparently quite muted repsonse of new kid on the block Sistema Shyam Teleservices. The Voice & Data article quotes Vseovolod Rozanov, the company's CEO, as saying "it is more of an opportunity than a threat. However, looking at the experiences of global markets, the influence on change in the market share is not very dramatic." This is not to suggest, however, that Rozanov is completely disinterested in MNP. In a recent Economic Times article he is quoted as saying "
number portability will... drive growth for us." The Sistema-backed operation, which has now harmonised its brand with that of the giant Russian cellco which is part of the same group, has, according to WCIS, yet to break the 1% mark in terms of market share.

The Bharti Airtel CEO's comments about market conditions in India somewhat diminishing the relevance of MNP are echoed, to a degree, by remarks made by the head of the telecoms regulatory agency in Uganda. In this case, however, market size rather than the behaviour of prepaid users is being put forward as the argument against imminent deployment of MNP.

A recent Cellular News story quotes
Patrick Masambu, Executive Director of the Uganda Communications Commission, as saying that "at this stage, number portability is not something we see as a remedy in this market." Mr Masambu feels that the Ugandan market needs to grow further before the costs could be justified. He added, however though that once the country has passed the 10 million subscriber mark, then MNP could be viable. I find it a little curious that Mr Masambu chooses 10 million subs as the trigger for more actively considering MNP. If you read his comments without knowing the size of the Ugandan mobile market, you might imagine that the country has rather fewer than the 10 million subscriptions. According to WCIS, however, the country had 9.95 subs as of March this year. Hmmm...

In neighbouring Kenya, the deployment of MNP may also be some way off, if a recent article from the country's Standard newspaper is to be believed. The Standard's Robert Ndingwa notes that the Communications Commission of Kenya (CCK) has just three months to go before its September 2009 deadline to implement its version of number portability but states that the regulator is yet make a decision on whether to licence local number portability operators, "leaving consumers at the mercy of dominant mobile service providers." Ndingwa alleges that the CCK "prefers, instead, to hide behind its so-called principle of technology neutrality in the new market structure it introduced."

With some operators and regulators apparently lukewarm about the need for and effects of MNP, it might be worth asking whether views of this kind might mask a degree of fear about number portability. If so, Ovum's Raymond Yu dvises operators in particular not to be too worried, suggesting that each MNO must decide whether to view MNP as a threat or an opportunity and then devise an effective strategy in response.

Yu argues that "essentially, there are two ways to react to the introduction of MNP: either promote it or keep it under covers." In most cases, challenging operators would take the aggressive stance, says Yu, "whereas dominant operators are initially more reluctant to push MNP."

Yu notes that popular strategies for promoting MNP include making it a normal part of the sales process and using marketing to increase consumer awareness and perception of the facility to retain their numbers when switching providers. Strategies to defend against MNP include, according to Yu, simply not advertising it, implementing strong win-back strategies in line with porting requests and employing stronger loyalty and retention initiatives.

Let's see which of these options are chosen by MNOs in India - and in Uganda and Kenya, should MNP become a reality any time soon. According to Raymond Yu, other markets to watch for MNP deployments this year include Ecudaor, the Dominican Republic, Peru and Thailand.


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