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Mobile Number Portability: A Telecom Revolution

Arun Singh  |  New Delhi 

After years of debate and delay, the Mobile Number Portability (MNP) was launched in India in January 2011. It allows the user to retain the existing number while giving him an option to change the subscriber. Singapore was pioneer in introducing MNP in 1997; thereafter the service was introduced in different countries like Hong Kong, Australia, Europe, Japan, New Zealand and UK. Number portability is of three types; operator, location and service portability. However, most of the countries have adopted the operator portability due to its ability to promote fair competition amongst the operators. 

India is the fastest growing mobile market in the world. With the rapidly expanding mobile subscriber base, network and quality of service (QoS) of the operators became the basis for selection of operator and thereby accentuated the implementation of MNP. Many of the operators didn’t provide the level of service or the call plans that the subscribers were looking for. For most subscribers the idea of changing mobile number was a dreadful thought. Due to the numerous personal and professional contacts that our number is circulated in and the hassles associated with conveying the change in number to these contacts was the biggest barrier to change the operator over the years. However, with MNP in place, this scenario is rapidly changing. According to TRAI, around 17.11 lakh subscribers have submitted their requests to different operators for porting their mobile number till February 5, 2011 since the time the number portability was first launched in India. 

Number portability is a pre-requisite to support fair competition in a telecommunications market. The service has immense benefits that can usher in a new revolution in the telecom market with consumers being the biggest beneficiary. The subscribers, who have ported in their numbers in India so far, cited the poor network/coverage and tariff issues as primary reasons for porting the mobile numbers. Thus, the introduction of MNP will compel the operators to improve the QoS to the subscribers, offer attractive promotional packs, improve network coverage and introduce value added services to retain customers. 

Going ahead, the introduction of MNP is expected to eat away at profit margins and increase competition on one hand. And on other, it will provide the operators with an opportunity to increase subscribers and gain market share. Moreover, for new operators, MNP can be a golden opportunity to lure away dissatisfied consumers from established players thus gaining a foothold in the Indian telecom market. In summary, with the introduction of MNP, quality of services will be the key to growth going forward. 

Impact on Service Providers 

The launch of MNP in India is expected to have an impact on operator’s margins as they will try to retain the subscribers by offering competitive tariffs and improving QoS. The Indian telecom players already grappled with falling Average Revenue Per User (ARPUs) and offering competitive tariffs to match the competition will further put pressure on their margins. Moreover, now with MNP in place the QoS will be a major differentiator which will attract subscribers. In such a scenario, operators will now have to seriously think about their service offerings and make substantial investments to improve QoS which will put pressure on margins for a short term period. In summary, MNP will increase the churn rate that will lead to greater customer acquisition and retention costs and also put pressures on an operator’s margin. 

Another trend that is expected is that there would be a lot of traction on the corporate connections. On an individual subscriber level, India already experiences a high churn rate as around 96% of subscribers are in the pre-paid category that keep changing operators depending on the tariff structures. However, the corporate segment is a top end of the overall pricing range with a heavy usage of voice and data services and contributes substantially to the ARPU. Competitors are expected to target this segment with lucrative plans and thus incentivise bulk of corporate subscribers both under individual plans as well as corporate plans to shift. This will further impact the service provider’s margins. 

Way Forward 

It is assumed that the high number of subscriber base leads to higher probability for adopting MNP. The total telephone subscriber base reached 787.28 million in Dec-2010 of which mobile subscribers were around 93% (729.57 million). The growing number of subscribers is the biggest driver for MNP in India. Further, several new operators are entering the market coinciding with the launch of MNP which will drive the demand for MNP and achieve high porting rate. 

Though MNP is at a nascent stage in India, it is expected to impact the Indian telecom industry in a major way. Globally, MNP has been a catalyst in improving the service quality of the operators. In India too, it is expected to improve the operator service quality apart from intensifying the competition and giving customers a wider choice. 

Dr. Arun Singh, Senior Economist, Dun & Bradstreet India

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First Published: Mon, March 07 2011. 17:37 IST