Article

Determinants of Customer Switching Paradigm

18(2) 199219
towards Mobile Number Portability 2014 IMT
SAGE Publications
Los Angeles, London,
New Delhi, Singapore,
Washington DC
DOI: 10.1177/0971890714558708
Suresh K. Chadha http://par.sagepub.com
Namita Bhandari

Abstract
Customer churn is haunting Indian mobile telecom services in a big way. Mobile number portability
has further aggravated this problem for mobile telecommunication companies, although it has rightly
empowered the subscribers of these services. Telecom sector is a very capital-intensive sector, so
a customers stay with a cellular services operator effects its earning. The efforts are being made to
predict and model the customer churn towards telecom services, so as to maximize customer lifetime
value for the company. Before making predictions of customer switching behaviour, it is imperative to
understand those variables which determine customers loyalties towards a mobile services vendor. So
this study provides an exploratory analysis of the factors which become reasons for discontinuing ser-
vices of a cellular operator. The results have identified factors like: network, tariffs, technology, adver-
tising, rewards programme and external factors which lead to switching of a mobile services operator.

Keywords
Mobile number portability, mobile telecommunication companies, switching, customer churn

Introduction
The Indian mobile telecom sector is going through its most challenging times. An industry which is credited
with endowing us with one of the most affordable telecom services in the world and thus empowering
majority of Indian population, spread across whole of economic pyramid and thus changing the way we do
our daily chores, is finding it hard to sustain growth. Recent issues of cancellation of 122 telecom licences
by Supreme Court, raising of spectrum auctioning prices, toughening of Know Your Customer (KYC)
documentation norms and introduction of mobile number portability is making a huge impact on the
environment and operational efficiencies of Indian telcos. Further policy flip-flops by legislator and Indian
income tax regulation volatility in the form of VodafoneHutch type deals are still haunting the FDI in this
sector. Moreover, if we see the future prospects, then the mobile penetration in India is 73.32 per cent as
reported by Telecom Regulatory Authority of India (TRAI) (2013), which means majority is still untapped.
Many studies have proven that to improve the growth story and to bring an inclusive growth in our country,
it is imperative to increase the mobile phone penetration. As reported by World Bank every 10 per cent

Suresh K. Chadha, Professor, University Business School, Panjab University, Chandigarh, India.
E-mail: skchadha_ubs@rediffmail.com
Namita Bhandari, Research Scholar, University Business School, Panjab University, Chandigarh, India.
E-mail: namita_bhandari1980@hotmail.com
200 Suresh K. Chadha and Namita Bhandari

addition to mobile telephony penetration leads to 0.81 per cent impetus to growth rate in terms of GDP, thus
further emphasizing the importance of the telecom sector. But this sector requires huge capital investment
and for new players to venture in the Indian telecom industry and for the existing ones to remain viable, the
return prospects should be promising. But according to one report by Cellular Operator Association of India
& PwC (2011), the Indian mobile telephony industry is ailing mainly due to following reasons:

1. Increase in number of operators and thus overcrowded market.

2. Fragmented industry structure.
3. Sharp fall in tariffs due to price wars.
4. Falling tariffs but not accompanied by increasing minutes of use.
5. Declining average revenue per unit and thus decreasing revenue.
6. Elevated operating and infrastructure expenses.

Changing Indian Mobile Growth Story

The one phenomenon which has highly effected the equation in the mobile telecom industry in India is
mobile number portability (MNP). The telecom regulator had reported a substantial increase in MNP
requests as 104.79 million customers had submitted their requests to port out of their present mobile
service operator till October 2013. This number had gone up from 102.49 million customers till the end
of September 2013 to that of 104.79 million till October 2013. Moreover, 2.30 million MNP requests had
been made in October 2013 alone (Telecom Regulatory Authority of India, 2013). And with good number
of players in the Indian telecom sector, the industry is pretty fragmented and competition is intense. If
we compare number of operators operating in the Indian cellular sector with that of world then our
industry is much more crowded.
Also the regulatory volatility in India has become a major concern for the incumbent telecom
operators, discouraging future investments by them. The new National Telecom Policy is still awaited to
bring some promising growth in the industry. The above depicted scenario in Figure 1 highlights the
need to retain the existing customer base, which has become a tough terrain especially with the
introduction of MNP in India on 20 January 2011. Moreover, the marketing literature puts emphasis on
the role of customer retention and defending the present customer base in a highly competitive business
environment (Lee , Lee & Feick, 2001). This paper attempts to identify the factors which lead to loyalty
of customer towards their cellular operator and further the main dissatisfying factors which lead to
switching to other mobile services provider.

Mobile Number Portability

MNP is the process which allows a subscriber to shift to another mobile services operator by retaining
his existing mobile phone number (Mobile Number Portability in India, n.d.). It empowers the consumers
as it allows them to easily move to any cellular operator without the hassle of getting and circulating the
new phone number and thus increases the competition level in the mobile telecom market (Durukan,
Bozac & Dogan, 2011).

Paradigm, 18, 2 (2014): 199219

 2

Iraq
Australia
New Zealand
Singapore
Belgium
Finland
France
Greece
Netherlands
Portugal
Switzerland
China
Korea
Malaysia
Philippines
Algeria
Czech
Egypt
Hungary
Morocco
Russia
Turkey
Chile
Colombia
3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

Peru
Japan
Austria
Denmark

Source: TRAI. Global Wireless Matrix 1Q11, Bank of America Merrill Lynch, April 2011.
Germany
Italy
South Africa
Spain
Sweden
Indonesia
Israel
Norway
Poland
Ukraine

Figure 1. Comparison of Number of Cellular Operators in India and Selected Other Countries, March 2011
Argentina
Mexico

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4
UK
Canada
US
Pakistan
Thailand

5 5 5 5 5
Brazil

6
Bangladesh

9
Nigeria

10
India-Average

14
India-Maximum
202 Suresh K. Chadha and Namita Bhandari

Purpose of MNP
The two main objectives of MNP are consumer welfare and ensuring healthy competition in the markets.
To correct market imperfections and to curtail market dominance abuse by few players and to make
economy more efficient, intervention of government in the form of regulations like MNP is required
(Durukan et al., 2011). Free markets also work efficiently if there are regulations to protect and empower
the consumers are present (Kotler & Armstrong, 2005).
Further as per Raghav (2009) MNP reduces barrier to switching, leading to increase in choices for
customers, which will further increase competition among players causing improve in quality of services
and reduced tariffs. Also it leads to better provisions for customer who can efficiently utilize his mobile
phone number.

MNP in India
MNP is a critical component of the switching procedure for subscribers of mobile phone services. As
expected, most of the subscribers would like to retain their earlier mobile connection number while
switching to a new cellular operator; shifting to another mobile number can be a problematic experience for
users, and can lead to major costs, especially where the concerned phone number has become an important
aspect of a consumers identity and connectivity for professional purposes (Consumer Focus, 2009). Keeping
in mind the interest of consumers, TRAI introduced the process of MNP in the Indian mobile services sector
on 20 January 2011 (initially at intra-circle level), with an aim to provide a switching procedure that is clear,
user friendly, simple and secure. Further Indian government has given a go ahead to the launch of national
MNP which is likely to start by 15 March 2015. This will further intensify the existing competition in the
telecom sector, as National MNP permits a mobile subscriber to shift to the network service of any mobile
operator anywhere in the country, while retaining his existing mobile phone number.
But this facilitator of consumer switching process (MNP) has made the retention of existing customer
base a very challenging task for cellular services providers and has ushered an era of hyper competition
in an already fragmented Indian telecom industry. In the month of December 2012 alone there were
29.35 lakh MNP requests according to telecom regulator of India, that is, TRAI. This was 47.78 per cent
more than what was reported just a month back, that is in the month of November 2012.

Literature Review
The literature review of the service industry validates the importance of retaining the existing customer
base and gaining the customer loyalty.
As established, customer switching hurts companys profitability and market share: therefore,
Keaveney (1995) tried to identify main reasons of switching by employing critical incident method on
500 service customers and came up with some 800 such critical behaviours. These behaviours were then
categorized into eight heads as: pricing, inconvenience, core service failure, service encounter failures,
response to service failures, competition, ethical problems and involuntary switching. Keaveney (1995)
developed this exploratory model as an inter-industry model as it covered customers response for some
25 services and not for any one service like telecommunication.

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Determinants of Customer Switching towards Mobile Number Portability 203

Jones and Sasser (1995) mentioned few industries which experience the problem of customer
defection at a very high rate, due to regulatory changes like: telecommunication, electrical power,
airlines, savings and loan products companies. The author highlighted certain techniques for researchers
and practitioners to detect signs of defection. These ways to listen to the customers could be: customer-
satisfaction index, feedbacks, market research and strategic activities like involving frequent and long-
term customers in the selection of the frontline staff.
The effect of customer retention is considered to be more profitable than the effect of acquiring new
customer or market share (Reichheld, 1996). Thus making a sense for focusing on customer retention
and minimizing customer switching.
The customerrelationship dynamics could be better understood with the help of studying complaint
patterns and triggers for switching the service provider. Therefore, in a study by using the critical incident
method, the attempt was made to classify the determinants of relationship dissolution with service
provider in three ways as: one which push customers to switch service provider, that is, switchers,
another which keep them loyal, that is, pullers and also a third one which after switching bring them back
to the old service provider, that is, sawyers (Roos, 1999).
To retain customers and to ensure their long loyalty, memorable and positive service experience plays
an important role which could be generated with the help of three important service elements: functional,
mechanical and human (Haeckel, Carbone & Berry, 2003; Berry, Wall & Carbone, 2006). Therefore,
factors which could trigger switching would be the deficiency in any of these elements. The change in
the service provider could be triggered by many reasons ranging from better offers from competitors to
dissatisfaction experienced by the customer (Roos & Gustafsson, 2007).
The more the competition, more are the chances that customer would compare the services with those
of the competing brands, and telecom is one industry where product differentiation being very less, poor
service experience could easily change customer loyalties. The Indian telecommunication sector is
becoming highly competitive especially after the arrival of MNP, and in this scenario it has become
crucial for telecom companies to put more stress on the customer retention strategies rather than just
focusing on strategies of customer acquisition. In such a situation of hyper competition, it has become
imperative for mobile operators to understand the reasons behind customer churn. The information about
factors which lead to customer dissatisfaction or loyalty can improve a companys bottom line by
containing churn. In the study by Rajeswari and Ravilochanan (2011), the authors considered three
major factors to study customer behaviour in the Indian mobile sector, that is, perceived product quality,
perceived service quality and perceived customer value.
In a study conducted in Cairo, Murad (2011) tried to identify direct and moderating factors which
influence a customers switching intention in banking context. Here, on the basis of the existing
literature and empirical data, the certain actions of bank like quality of service, level of commitment
and incidents of anger were taken as direct factors. Along with that there were few factors which
moderated the direct factors effect on customers switching intention like switching cost, duration of
customers relation with bank, customer participation in making decisions and how attractive the
alternates are (Murad, 2011).
Islam and Ahamed (2011) in their study measured the customers attitude in Bangladesh towards the
wireless Internet services on the basis of Fishbeins multi-attribute attitude model. The author tried to
understand what factors contribute how much to take purchase decision towards a service provider as in
Bangladesh there are six telecom service providers and how customer decides to opt for which service,
this model has measured (Islam & Ahamed, 2011).

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204 Suresh K. Chadha and Namita Bhandari

In a study conducted in Ghana to understand the antecedents of customer loyalty in telecommunication

services, the model established the relation between customer satisfaction, service quality and loyalty.
Customer loyalty has been positively impacted by the quality of service and companys image. But the
finding in the study highlighted that satisfaction is not a reason behind loyalty among customers of
Vodafone (Ghana) (Boohene & Agyapong, 2011).
Customers have developed into the most precious asset of the firm and retaining your companys
customer base calls for very specific knowledge about their behaviour for effective decision making
(Gumucio et al., 2012).
The competition in the telecommunication industry is becoming aggressive across the world, and thus
a study in Spain tried to identify the reasons which are the motivators for switching and loyalty of the
existing customers. Reason is that this industry requires huge amount of investment to improve the
technological and infrastructural aspects and thus before making any strategic move cell phone operators
need correct indicators which can lead to customer loyalty (Gumucio et al., 2012). The author in the
Spanish study laid stress on studying the determinants of both customer loyalty, such as, network quality,
service quality, behaviour of frontline and customer care staff, reasonable pricing, attractive value-added
services and many more along with the determinants of customer switching which lead to dissatisfaction
among customers. Also, he emphasized that the services marketing literature has so far emphasized more
on the area of customer loyalty than switching aspect (Gumucio et al., 2012). The author further used the
concept mapping technique to understand the reasons behind loyalty and switching.

Customer Switching
In service marketing, the role of having customers is equally important as acquiring customers
(Berry, 1980). The industry is interested in knowing that what leads to switching of customer to the
competitors services. The answer to this question is crucial as losing a customer leads to loss of future
stream of revenue. Moreover, an existing customer eventually increases his spending, which further
leads to operational efficiencies, and on the other hand acquiring a new customer needs more investment
in the form of promotional expense, etc. (Keaveney, 1995).
On average, it is estimated that annually a telecom operator looses 27 per cent of its customer base
due to churn/attrition (Wolniewicz & Dodier 2004). Hence, it becomes necessary to understand the
factors which lead to switching of a mobile services subscriber.
Considering that the cost of obtaining new customer is five times than that of retaining the existing
customer, the research works are going on to understand the predictors of customer attrition (like
demographics, usage rate, etc.) by clustering users with the help of data mining techniques (Khan,
Jamwal & Sepehri, 2010).
With the opening up of the telecommunication sector to private players, foreign investment, thus
entering of new players and innovative technologies, the telecom industry service market has become
hyper competitive. And in this highly competitive and dynamic mobile telecom industry, customer
attrition whether in the form of MNP has become a very grave problem. Many mobile services users
switch from one cellular operator to another to fetch better tariffs, plans or services or just for the sake
of getting a new carrier (e.g., to get a new cellular phone as cellular operators have tie up plans with some
mobile manufacturers) (Khan et al., 2010).

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Determinants of Customer Switching towards Mobile Number Portability 205

The choice to switch to the competitors services is liable to be effected by some motivational factors or
variables like attitude or personal opinion of the subscribers (Katono, n.d.). Attitude is the tendency of a
customers disposition for the provider of a service is positively inclined (Dimitriades, 2006). And if the
customers attitude is negative, he is less likely to stay with the incumbent service provider (Katono, n.d.).

Need of the Study

The literature has shown that the emphasis so far has been made to understand the predictors like
demographics and call patterns with the help of data mining techniques to study customer attrition (Khan
et al., 2010; Kim & Yoon, 2004). Further it has been observed that the services marketing literature has so
far emphasized more on the area of customer loyalty than switching aspect (Gumucio et al., 2012). Sothere
is still a need to understand the behavioural pattern and attitude of customer both from the perspective of
switching and that too in an emerging economy context. With this objective, this paper attempts to identify
the factors which lead to switching among cellular services users in Indian market context.

Objectives of the Study

This paper aims to get an insight into the consumer experience regarding the mobile phone services in
India. Therefore, the main objectives of this study are to identify the main factors because of which a
customer discontinues his services with a mobile service provider.

The Study
Research Design: The present study aims to find out the variables which can be used to understand the
construct of customer switching and customer loyalty towards mobile phone services. Due to lack of
clarity in how to measure customer switching and customer loyalty in the context of cellular services and
that too in Indian scenario, there is a need to conduct an exploratory level research. Hence this study is
exploratory in nature.
Data: For the study both primary and secondary data have been used. The primary data has been collected
for the study by using the convenience sampling method from areas in and around Chandigarh between
January and February 2014. The questionnaire was sent to a sample size of 150 respondents through
e-mail and in person and finally 140 filled questionnaires were received leading to a response rate of
93 per cent. But the final data used for analysis purpose is of 117 after taking out the responses having
problem regarding missing data and also dropping the outliers. Along with primary data, the existing
literature and reports of regulatory and industry bodies of Indian telecom sector (e.g., TRAI, COAI) were
also referred to.
Questionnaire Development/Item Generation: The statistical tool to be used in the present study is
exploratory factor analysis and before doing so a pool of variables or items which explain the concerned
construct is required and this initial list of items should be exhaustive (Matsunaga, 2010). The survey

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206 Suresh K. Chadha and Namita Bhandari

instrument was designed to measure the factors behind switching of mobile phone service provider along
with the questions pertaining to demographic profile of the respondents. The questionnaire was developed
after doing extensive literature review in the concerned area of study. Keeping in mind the exploratory
nature of the study, a study conducted by Gumucio, Pechuan and Marques (2012), in which the similar
constructs of loyalty and switching in mobile services context were studied, was found to be most
suitable. Our questionnaire contains 37 statements, which are used for measuring reasons for switching
on the five-point Likert scale. These statements are taken from the above referred study, carried out in
Spain, in which the author has collected 39 statements (Appendix E) as factors behind switching by
conducting a brainstorming session where the following question was asked from a group of
60respondents: What reasons provide the motivation for cell phone users to discontinue service with
their mobile operator? (Gumucio et al., 2012, p. 9). The questionnaire is presented in Appendix A.
Statistical Tool: The methodology used in the present study is factor analysis, with the aim to understand
and create a set of variables which can be used to measure the construct of both loyalty and switching in
mobile services scenario. Further factor analysis as a statistical tool will also help us to do data reduction
by bringing parsimony in number of variables which are sufficient to study the understudy constructs
and still retain the most of the required information also. To do statistical analysis, SPSS 16.0 was used.

Findings and Discussion

Profile of the Sample

Table 1 presents the demographic profile of the 117 respondents whose responses are used to derive
results for the study. The sample consists of a balanced representation of both the genders as number of
mail respondents were 61 (52 per cent) and number of female respondents were 52 (48 per cent).
Regarding age the sample was mainly representing two age groups, less than 25 years (55 per cent) and
25 to 35 years (38 per cent). Majority of the respondents were postgraduates (77 per cent) and 15 per cent
were graduates. As far as occupation is concerned the sample mainly represents salaried (48 per cent)
and people having their own business (47 per cent). Income category is also dominated by those earning
up to `20,000 and between `20,000 and 40,000. The respondents are mainly the users of mobile services
of Airtel (38 per cent), Vodafone (31 per cent), Idea (15 per cent) and remaining were subscribers of
TataDocomo, Reliance Communication, BSNL and Aircel. This fairly represents the actual market share
held by the above-mentioned telecom operators in this region of Punjab. Further, the tenure of usage of
services of a mobile services provider is also fairly represented with majority belonging to the category
of more than 5 years. Hence, respondents were having sufficient experience of the services of their
cellular operators to form an opinion.

Factor Analysis
On the basis of the responses gathered through the survey in this study factor analysis has been done to
create the dimensions which can be used to understand the constructs of customer switching and loyalty
in mobile phone services.

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Determinants of Customer Switching towards Mobile Number Portability 207

Table 1. Demographic Profile of the Respondents

ITEMS Frequency Percentage

Gender:
Male 61 52.1
Female 56 47.9
Age:
Less Than 25 Years 64 54.7
25 to 35 Years 44 37.6
35 to 45 Years 5 4.3
More Than 55 Years 4 3.4
Education Level:
High School 3 2.6
Diploma 3 2.6
Graduate 17 14.5
Post Graduate 90 76.9
Ph.D. 4 3.4
Occupation:
Salaried 56 47.9
Own Business 55 47.0
Professional 5 4.3
Housewife 1 .9
Monthly Income:
Upto `20000 62 53.0
`20001 to 40000 30 25.6
`40001 to 60000 8 6.8
`60001 to 80000 2 1.7
`80001 to 100000 5 4.3
More Than `100000 10 8.5
Cellular Operator:
Airtel 44 37.6
Aircel 4 3.4
Vodafone 36 30.8
Idea 17 14.5
BSNL 8 6.8
Reliance 2 1.7
Tata Docomo 6 5.1
Duration With Cellular Operator:
Less Than 2 Years 18 15.4
2 to 3 Years 26 22.2
3 to 4 Years 18 15.4
4 to 5 Years 15 12.8
More Than 5 Years 40 34.2
Source: Authors own.

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208 Suresh K. Chadha and Namita Bhandari

Factors Behind Discontinuing Services of a Cellular Operator

To understand this construct, first 37 statements as asked in Question 1 of the questionnaire measured on
the five-point Likert scale are factor analyzed.
Before creating the set of variables by using factor analysis, it is required to check the data adequacy
and correlation among variables in the data of our sample. The Appendix B shows the KaiserMeyer
Olkin measure of sampling adequacy (KMO) for this dataset, and the KMO value is coming out to be
0.871 for the construct of discontinuing services, which is considered excellent and hence data is
sufficient to run factor analysis (Field, 2005). In the same table, the Bartletts Test value is also coming
highly significant, this conveys that there is sufficient relation between the variables, and, therefore, it is
appropriate to do factor analysis on this dataset.
Now to see how many factors can be formed, check the total variance explained part of the output
as given in Appendix C. Table 2 shows six factors whose eigenvalues are more than one based on
Kaisers criterion to retain factors. And the cumulative variance explained by these factors is coming out
to be 66.78 per cent. This conveys that the phenomena of underlying construct of customer switching is
66.78 per cent as explained by theses six factors.
In the last step by using principal component analysis, it will be checked that which item or question
belongs to which of the extracted six factors. To check the same, the factor loading of each variable on each
factor is studied on rotated component matrix (Appendix D). Here, a variables loading is shown only
under that factor against which it is highest. Further, only those variables are retained whose loadings are
at least 0.4, because we had selected this suppression criterion while running factor analysis on SPSS.
After interpreting the rotated component matrix table, we have come up with the following factors
which contain certain variables grouped under resultant heads:

Reliability
Reliability means consistency of performance and in research it implies that the scale which is to be used
to study a construct should be able to consistently reflect it (Field, 2005). Now to establish the reliability
in factors which we have created above, the Cronbachs alpha (a) is used for each factor with its sub-
items for the construct of customer switching as follows:

Customer Switching
As explained above, to measure this construct among customers of mobile phone services users, six
factors are created. Now to find how consistently each of the factor is explained by its sub-items,
Cronbachs alpha (a) are calculated as shown in Table 3.
Table 3 shows that reliability for factors such as network and services, tariff, technology and rewards
programme is excellent as the Cronbachs alpha (a) score is 0.911, 0.861, 0.849 and 0.831, respectively
(Field, 2005). For factor advertising, the Cronbachs alpha (a) score of 0.715 indicates adequate
reliability. Even for factor external factor, reliability is adequate as a above 0.6 is considered adequate
in exploratory research works. Also as none of the items deleted is causing improvement of Cronbachs
alpha for each factor with their respective sub-items, we are retaining all the sub-items for all the factors.
Therefore, the overall reliability of the factors created and sub-items under them is very good.

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Determinants of Customer Switching towards Mobile Number Portability 209

Table 2. Factors Behind Discontinuing Services with a Cellular Operator

Factor 1: Networks & Services

Difficulties with reception of signal and network quality
Network saturation at a particular time of day
Problems with the Internet service
Disadvantages in the use of value added services
The operator does not value the customer
Deficiencies in customer care in stores and call centres
Lack of staff training in customer care in stores and call centres
The operator does not process requested post-sales transactions
Inability of operator to solve problems and complaints
Lack of politeness in call centres and stores
Factor 2: Tariffs
Higher rates than other operators
Increase in rental rates
Absence of optional plans with special rates
Being overcharged
Factor 3: Technology
Very little product and service innovation
Service uses outdated technology
Lack of information on product and service characteristics
Factor 4: Advertising
Confusing promotional campaigns
Elimination of existing programmes and/or promotional offers
Excessive advertising via SMS
Factor 5: Reward Programmes
Negative experience with rewards and promotions
Attractive promotions from competitors
Unattractive or poor quality reward programmes
Lack of innovative promotional campaigns
Factor 6: External Factors
Theft or loss of cell phone
Actions from competitors
Change of location or travel
Changes in service to a post-paid system
Source: Authors own.

Table 3. Cronbachs Alpha Results

Factors Reliability Remarks Deleted Items

Network & Services 0.911 Excellent None
Tariff 0.861 Excellent None
Technology 0.849 Excellent None
Advertising 0.751 Good None
Rewards Programme 0.831 Excellent None
External Factors 0.651 Adequate None
Source: Authors own.

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210 Suresh K. Chadha and Namita Bhandari

Discussion

Factors Behind Switching

The above findings are in tune with the existing literature also. As in a study, Keaveney (1995) has proposed
a model to understand switching behaviour of customers in service industries by using the critical incident
method and has come up with somewhat similar kind of categories and sub-categories, namely, pricing,
inconvenience, core service failure, service encounter failures, response to service failure, competition,
ethical problems and involuntary switching. Like in the present study, the first factor network and services
contributes maximum (with total variance explained approximately 18.6 per cent) as a reason for switching
the service provider, Keaveney (1995) have also come up with similar finding of core service failure as
the biggest critical incident behind the switching of service provider. Moreover, the significance of value-
added services as an important part of core services is also getting increased due to the major presence of
youth segment (Rajeswari & Ravilochanan, 2011), which is also a constituent of Factor1 of the present
study. Tariffs in our present study and Pricing in Keaveney (1995) study also have somewhat similar
sub-components like high prices or being overcharged or deceptive pricing. Also in both the studies the
category of external factors or involuntary switching are also aligning. The factor technology has
come up as a separate dimension which in earlier studies has not been considered, but is relevant in todays
time as telecom technology is evolving from 2G to 3G and further 4G. Also customer is getting more
literate about the technological aspect of telecom services and thus service providers should try to make it
their competitive edge. The increasing importance of marketing activities in services like telecom is also
getting evident from the fact that the two factors, namely, advertising and reward programme, have
also come up very distinctly with contribution in total variance explained of approximately 9 per cent and
8 per cent, respectively, behind service provider switching. This is also evident from the aggressive
advertising being done by the telecom industry, and the telecom sector being the one of the biggest spender
on advertising expense (Nielsen, 2013). In the study by Gumucio et al. (2012), the authors have used
similar pool of statements to do concept mapping, to come up with the dimensions for customer switching
construct and have grouped them under six categories as: network quality, product and service innovation,
pricing strategy, relationship with customer, loyalty benefit and customer care in Spain.

Limitations of the Study

The results of a study should always be seen in the light of its limitations. Like, in this study the sample
size is an issue, so to make the findings more generalized the sample size should have been larger. But
the KMO value of sample adequacy has found the sample size adequate to use factor analysis. Moreover,
to improve the findings, the sample should have been drawn by using probabilistic sampling technique
where as in the present study due to shortage of time convenience sampling was used.

Managerial Implications of the Study

As the Indian telecom sector is becoming hypercompetitive, so it becomes imperative to understand the
viewpoint of customers regarding what makes them quit or stick to their cellular services providers.

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Determinants of Customer Switching towards Mobile Number Portability 211

Further with the coming up of facilities like MNP, the customer is becoming more powerful and to retain
their existing customer base getting into the nuances of customers expectations regarding mobile phone
services is crucial. Moreover, customer switching is a multidimensional phenomena, that is, a customer
usually have many reasons to stay or to leave their service providers and to understand this a comprehensive
bundle of factors which include products, services, pricing and all the major determinants need to be
considered. Also to maximize the customers share of wallet towards a telecom companys other products,
that is, to cross-sell, the companies can use these factors to understand how much importance them
should be given and thus different products and selling pitches can be drafted accordingly. Attempts are
being around in the mobile telecom industry to model the churn behaviour of subscriber and improve the
predictive efficiency of such models. So to improve the predictability of such models, it is important to
identify the right variables whose relationship with customer switching and loyalty we want to establish
and this study provides a framework of such variables.

Conclusion
Indian telecom industry is facing a huge problem of customer churn, so to keep hold of this priceless asset
of telcos, the study has presented a framework of factors in the context of customer switching. With the help
of this framework the managers can understand that which factors contributes how much towards customer
loyalty or switching, by examining their real-world data. The frameworks are as follows:

Network
& Services

External Tariffs
Factors

Customer
Switching

Rewards
Technology
Programme

Advertising

Figure 2. Factors Behind Discontinuing Services

Source: Authors own.

Paradigm, 18, 2 (2014): 199219

212 Suresh K. Chadha and Namita Bhandari

Future Scope of the Study

With Indian telecom industry facing huge customer churn problem, especially in the times of MNP, the
efforts are going on to predict and model the customer churn. The study provides an exploratory
framework of factors behind customer switching which can be utilized further to make such predictions
of customers behaviour towards their mobile service providers. The contribution of each factor as an
independent factor towards customers attrition can also be regressed. Moreover, these factors provide
basis for segmenting the consumers of mobile telephony services.

Appendix

Appendix A1
Questionnaire
This survey is being undertaken as a part of a research at UBS, Panjab University.
Please answer the following questions regarding mobile phone services, keeping in mind the present scenario of
Mobile Number Portability. Mobile Number Portability means that you can change your mobile service provider
(e.g., Airtel/Vodafone/Idea, etc.) without changing your current mobile phone number.
1. How strongly do you agree or disagree with the following factors as a reason to discontinue the services of your
mobile service provider?
Indicate the extent of your agreement or disagreement with each of the following statements by putting a tick mark
under the appropriate number. The meaning of the numbers is as:

1 2 3 4 5
Strongly Disagree Moderately Disagree Neither Disagree Nor Agree Moderately Agree Strongly Agree

I would discontinue my services with my mobile service provider if there is:

No. Statements 1 2 3 4 5
1 Theft or loss of cell phone
2 Actions from competitors (e.g. better promotion, better prices)
3 Change of location or travel
4 Problems with call forwarding
5 Changes in service to a post-paid system
6 Difficulties with reception of signal and network quality
7 Restricted network coverage
8 Network saturation at a particular time of day
9 Problems with the Internet service
10 Disadvantages in the use of value added services (e.g. hello tunes, mobile games,
astrology services)

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Determinants of Customer Switching towards Mobile Number Portability 213

No. Statements 1 2 3 4 5
11 Problems with customer care and technical support
12 Higher rates than other operators
13 Increase in rental rates
14 Absence of optional plans with special rates
15 Being overcharged
16 Confusing charges for special promotions
17 Scant/very little product and service innovation
18 Service uses outdated technology
19 Lack of information on product and service characteristics
20 Confusing promotional campaigns
21 Elimination of existing programmes and/or promotional offers
22 Misleading rates
23 False advertising
24 Lack of innovative promotional campaigns
25 Unattractive or poor quality reward programmes
26 Negative experience with rewards and promotions
27 Attractive promotions from competitors
28 The operator does not value the customer
29 A customer is treated as a number, not as a person
30 The operator does not take into account how long the customer has used
the firms services
31 Deficiencies in customer care in stores and call centres
32 Lack of politeness or friendliness from staff in stores and call centres
33 Lack of staff training in customer care in stores and call centres
34 The operator does not process requested post-sales transactions
35 Delay in handling complaints
36 Inability of operator to solve problems and complaints
37 Excessive advertising via SMS

In this section, you are going to be asked about your personal details. I assure you that your answers will be kept
confidential.

1. Name of my current mobile service provider (e.g., Airtel/Idea/Vodafone, etc.):

_____________________________________________________________

2. Gender:
(a) Male (b) Female

3. Age:
(a) Less than 25 years (b) From 25 to less than 35 years (c) From 35 to less than 45 years
(d) From 45 to less than 55 years (e) 55 years and more

Paradigm, 18, 2 (2014): 199219

214 Suresh K. Chadha and Namita Bhandari

4. Educational level:
(a) High school and Less (b) Diploma (c) Graduate (d) Post Graduate (e) Ph.D.

5. Occupation:
(a) Salaried (b) Own Business (c) Professional Worker (d) Housewife

6. Duration of dealing with the present mobile service provider:

(a) Less than 2 years (b) 23 years (c) 34 years
(d) 45 years (e) 5 years or more

7. Monthly Income:
(a) Up to `20,000 (b) 20,001 to 40,000 (c) 40,001 to 60,000
(d) 60,001 to 80,000 (e) 80,001 to 100,000 (f) 100,001 and above

Name: __________________________________

Address: __________________________________

Phone/E-mail: __________________________________

Thank you very much for participating in this study.

Your time and opinions are greatly and deeply appreciated.

Appendix B

KMO and Bartletts Test

KaiserMeyerOlkin Measure of Sampling Adequacy. 0.871
Bartletts Test of Sphericity Approx. Chi-Square 1.752E3
Df 378
Sig. 0.000

Paradigm, 18, 2 (2014): 199219

Appendix C

Total Variance Explained

Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings
Component Total of Variance Cumulative % Total % of Variance Cumulative % Total % of Variance Cumulative %
1 10.879 38.855 38.855 10.879 38.855 38.855 5.222 18.652 18.652
2 2.245 8.016 46.871 2.245 8.016 46.871 3.381 12.075 30.727
3 1.792 6.401 53.273 1.792 6.401 53.273 2.824 10.086 40.813
4 1.485 5.305 58.578 1.485 5.305 58.578 2.601 9.291 50.104
5 1.197 4.273 62.851 1.197 4.273 62.851 2.464 8.799 58.903
6 1.100 3.928 66.780 1.100 3.928 66.780 2.205 7.876 66.780
7 0.943 3.368 70.147
8 0.813 2.903 73.051
9 0.762 2.723 75.774
10 0.717 2.561 78.335
11 0.667 2.382 80.717
12 0.599 2.140 82.857
13 0.525 1.874 84.731
14 0.481 1.717 86.447
15 0.476 1.702 88.149
16 0.432 1.542 89.692
17 0.397 1.419 91.111
18 0.369 1.319 92.430
19 0.347 1.238 93.668
20 0.311 1.110 94.778
21 0.268 0.956 95.734
22 0.261 0.934 96.668
23 0.222 0.792 97.460
24 0.189 0.676 98.137
25 0.162 0.580 98.717
26 0.136 0.485 99.201
27 0.117 0.419 99.621
28 0.106 0.379 100.000
Notes: Extraction Method: Principal Component Analysis.
216 Suresh K. Chadha and Namita Bhandari

Appendix D

Rotated Component Matrixa

Component
1 2 3 4 5 6
Theft or loss of cell phone 0.579
Actions from competitors 0.683
Change of location or travel 0.747
Changes in service to a post-paid 0.603
Difficulties with reception of signal and network quality 0.527
Network saturation at a particular time of day 0.640
Problems with the Internet service 0.647
Disadvantages in the use of value added services 0.526
Higher rates than another operators 0.753
Increase in rental rates 0.728
Absence of optional plans with special rates 0.700
Being overcharged 0.675
Very little product and service innovation 0.681
Service uses outdated technology 0.799
Lack of information on product and services 0.615
Confusing promotional campaigns 0.594
Elimination of existing programmes and offers 0.571
Lack of innovative promotional campaigns 0.528
Unattractive or poor quality reward programmes 0.634
Negative experience with rewards and promotions 0.524
Attractive promotions from competitors 0.618
The operator does not value the customer 0.549
Deficiencies in customer care in stores and call centres 0.686
Lack of politeness in call centres and stores 0.649
Lack of staff training in customer care stores and call centres 0.654
Does not take care of post sales requests 0.787
Inability of operator to solve problems and complaints 0.712
Excessive advertising via SMS 0.818
Notes: Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 8 iterations.

Paradigm, 18, 2 (2014): 199219

Determinants of Customer Switching towards Mobile Number Portability 217

Appendix E

Brainstorming Ideas for Reasons for Switching

1. Theft or loss of cell phone
2. Actions from competitors
3. Damage or defects of the cell phone
4. Change of location/travel
5. Problems with call forwarding
6. Changes in service to a post-paid system
7. Difficulties with reception and network quality
8. Restricted network coverage
9. Network saturation at a particular time of day
10. Problems with the Internet service
11. Disadvantages in the use of added value services
12. Problems with customer care and technical support
13. Higher rates than another operator
14. Increase in rates
15. Absence of optional plans with special rates
16. Being overcharged
17. Confusing charges for special promotions
18. Scant product and service innovation
19. Service uses outdated technology
20. Lack of information on product and service characteristics
21. Confusing promotional campaigns
22. Elimination of programmes and/or existing promotions
23. Misleading rates
24. False advertising
25. Lack of innovative promotional campaigns
26. Unattractive or poor quality reward programmes
27. Negative experience with rewards and promotions
28. Attractive promotions from competitors
29. The operator does not value the customer
30. A customer is treated as a number, not as a person
31. The operator does not take into account how long the customer has used the firms services
32. Deficiencies in customer care in stores and call centres
33. Lack of politeness or friendliness from staff in stores and call centres
34. Lack of staff training in customer care in stores and call centres
35. Difficulties in solving problems reported to the operator
36. The operator does not process requested post-sales transactions
37. Deficiencies in handling complaints
38. Inability of operator to solve problems
39. Excessive advertising via SMS

Source: Gumucio et al. (2012, p. 11).

Paradigm, 18, 2 (2014): 199219

218 Suresh K. Chadha and Namita Bhandari

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