Mobile Number Portability in India and its

effects on Telecom brands
India is set to become the world’s largest mobile youth market passing China in 2011 with 281
million activations.  By 2012 mobile owning youth in India will outnumber the entire population
of the United States.

Up until this year, mobile operators in India have enjoyed very minimal external threats, but in
just a few months Mobile Number Portability (MNP) will be introduced into the market. MNP
enables mobile subscribers to change their service providers or their location without having to
change their existing phone numbers. If the subscribers are not satisfied with the services of their
service provider, they can change their service provider while retaining the existing phone
number. This infuses competition among service providers and forces them to improve their
service standards to check subscriber churn.

MNP presents a number of new challenges and opportunities for marketers and brand managers
to maintain and garner greater share of the youth market. One of the biggest challenges for the
them will be to retain the existing customers. According to research from The Nielsen Company,
close to one in five (18%) of Indian mobile customers said that they would change their operator
if they have the ability to retain their number.  For some mobile services, this news might cause
some concern: a quarter of customers of Reliance and Tata Indicom said that they would be keen
to change if MNP becomes reality, while 19 percent of BSNL subscribers would do the
same.. The Telecom Regulatory Authority of India (TRAI) itself has estimated the porting rate to
be at 10% in the first 15 months and 7%, 6% and 5% for the successive three years.

Nielsen Survey

So what does this mean for the Telecom marketers in India? Until now, marketers

adjusted their pricing strategies to cut out the competition. However, in the wake of MNP,
pricing won’t be the deciding factor. Currently, there are brands who provide 1 paise a second
plan, that’s barely a quarter of a cent. Secondly, Mobile companies will be forced to look at
technology to retain a greater share of the market. However, the reality in India is that not many
people have woken up to the smart phones consumption yet. So that will be another challenge.

I won’t be surprised if brands start following the UK model of phone contract systems, wherein a
consumer is tied to a service provider for a certain period of time which reduces the risk of
consumers switching between various brands. With the intensely competitive mobile phone
market, service providers will have to constantly come up with more exciting offers and greater
value-added features.

Social media will play a key role in helping marketers and brand managers to retain a greater
share of youth market. Needless to say, brands who adapt this new promotion strategy will have
a clear competitive edge. There is a greater need to provide a package to the consumers whereby
they could form a network of friends and families and enjoy free SMS, free internet access and
the lowest call rates within their network of people.

What do you think the challenges will be? Can you think of how Telecom brands in India can
over come the challenges of MNP?

Mobile Number Portability – An opportunity in disguise for operators

“MNP” (mobile number portability), is finally here in India. Now customers can switch to new
network at the cost of just Rs. 19, without changing their number. While it is good news for

customers, it rings an alarm tone for mobile operators.

Several Consumer insight studies indicate that the churn rate of subscribers will increase
significantly, with post-paid and business subscribers showing a greater affinity to take
advantage of MNP. High-end users make up 5 per cent of the total subscriber base, but generate
around 20 per cent of revenue. These segments are most likely to switch network, if offered
better services without having to change their number.

Some experts point out that MNP would especially hit CDMA service providers owing to the
difference in handset prices. For instance, let us take an example of a CDMA subscriber who is
thinking of buying a new handset with better features. If he is opting for a CDMA handset it
might cost him around Rs. 3000 or Rs. 4000 on an average, where as a GSM handset in the same
category will cost him only around Rs. 2000 on an average, the difference being anywhere
between Rs. 1000 and Rs. 1500. Considering that his average monthly bill is Rs. 80, the
difference in the price of the handsets can cover his mobile bills for the next 10 to 15 months.
MNP would be an incentive for such migrations from CDMA to GSM.

MNP is likely to hit all operators in one way or the other. It is also a “wake up” call for mobile
operators to shift their strategy from price war to “customer experience.” There will be added
pressure on the Top-line and the Bottom-line of the operator’s revenue, which are already
shrinking due to intense competition in the market and increased marketing cost.

How well the operators take advantage of MNP would depend on how soon they upgrade to
customer centric marketing. There is a huge pressure on operators to become creative marketers
and focus on retention, customer loyalty and demonstrable value. Adoption of more aggressive
customer loyalty programs by the operators will be the key to revenue enhancement and
retention.

The success of customer acquisition and retention strategies will hinge on an operator’s ability to
offer differentiated services and to understand and act upon customer demographics, lifestyle
factors, and purchase preferences — factors that potentially drive customers to change or retain
their existing operator.

One of the main problems faced by operators today is the ‘disconnect’ between marketers and
customers. The traditional marketing mix like print ads, bill boards, and television commercials
may not work for the successful marketing of new products and services. In the operators’ world,
a concept called mass no longer exists; each subscriber has strong and unique preferences.
Successful marketing is all about understanding and responding to unique customer needs in
real-time.
An operator’s success depends on the extent to which their marketers can reach out to customers
in a personalized manner, with products and services that may be most relevant to them. This is
possible only by understanding and acting upon act upon customer demographics, lifestyle
factors, and purchase preferences — factors that potentially drive customers to change or retain
their existing operator.

It is in this context the mobile marketing and advertising will become significant. Mobile, being
the only direct and real-time marketing channel, will evolve as a holy grail for operators’
success.

Though operators realize the opportunity today, the mobile marketing chain is currently
underexploited. The marketing teams within an operator’s organization often have no access to
real-time customer information. Lack of appropriate technology and tools often force marketers
to depend on intermediaries to execute campaigns and to forgo the ability to receive and respond
to subscriber reactions in real-time. This results in under-utilization of the channel, and devalues
its potential and provides poor results.

The immediacy and intimacy of mobile channel also call for operators to be highly sensitized to
their responsibilities. A wrong message at a wrong time will not only estrange customers, but
will also damage both their own reputation and that of the brand. Unsolicited marketing from
irrelevant sources and lack of control over frequency of messages can easily turn off their
customers and stimulate churn.

With a right mobile marketing strategy and technology, operators can convert MNP from threat
to opportunity.