mobile number portability in india: evidence from an

Volume:01, Number:01, Nov-2011 : RJCBS Page 55 www.theinternationaljournal.org

MOBILE NUMBER PORTABILITY IN INDIA: EVIDENCE FROM AN

EDUCATIONAL INSTITUTE

Ashish Sharma,

Arun Kumar Agariya &

Prof. Deepali Singh

ABV-Indian Institute of Information Technology & Management,

Gwalior (M.P.),

India

ABSTRACT

The much awaited Mobile Number Portability (MNP) has been launched across the length

and breadth of India on January 20, 2011. The mobile users in the country now have the

choice to switch from one telecom operator to another, within the telecom circle, without the

change of phone number. This is set to create fierce competition in the Indian telecom

industry where the call rates were already among the lowest in the world. The research

introduces the concept of Mobile Number Portability and analyzes whether the

implementation of MNP in India brings anything for the young telecom users of India,

particularly the students. Further, it shows which telecom operator might be affected the most

in terms of percent customer attrition in the coming time and the factors that the companies

need to focus on in order to keep the existing customers.

Keywords: Mobile Number Portability, MNP, customer attrition in telecom, telecom churn


1. INTRODUCTION Mobile Number Portability (MNP), rolled-out across India on January 20, 2011 allows users

of mobile services to switch between telecom operators without having to change their phone

numbers. Porting charges are Rs. 19 or less, depending on the operator. Once application for

porting is submitted, the number gets ported to the new service provider in a few days time

with a service disruption of 2 hours at the maximum. Once ported, the number cannot be

ported again for 3 months, thus one has to stick to a service provider for a period of at least 3

months before he/she can switch to another service provider under MNP again. Mobile

Number Portability is a technology that enables mobile phone users to switch to a service

provider of choice from the one they are currently availing services of, without having to

change their phone number. For example, if a subscriber of Vodafone would like to change

his mobile service provider because of any reason, he can switch to the operator of choice,

after the payment of a nominal fee (free in some countries) and still use the same 10 digit

phone number. Number portability became popular with the advent of mobile telephones,

since in most countries different mobile operators are provided with different area codes and,

without portability, changing one's operator would require changing one's number. Some

operators, especially strong operators with large existing subscriber bases, have argued

against portability on the grounds that providing this service incurs considerable overhead,

while others argue that it prevents vendor lock-in and allows them to compete fairly on price

and service. Due to this conflict of interest, number portability is usually mandated for all

operators by telecom regulatory authorities. Mobile Number Portability has already been

implemented in over 60 countries across the globe. MNP was first implemented in Singapore

in 1997 and later in the early 2000 in most of the European countries and the USA. Pakistan

was the first South Asian country to have implemented it in the year 2007.

MNP implementation in India In India, Mobile Number Portability (MNP) had being postponed since several years.

Telecom Regulatory Authority of India (TRAI) had suggested April 2007 as the deadline to

implement MNP but it had since then been postponed several times because of one reason or

other. MNP was postponed thrice in the year 2010 and TRAI had given October 31, 2010 as

the date when it should have been implemented. It was again postponed to December 20,

2010 because of two reasons. One, the mobile operators were not ready with the

infrastructure required to implement MNP. Second, the US based Telcordia, which is one of

the two companies supposed to implement MNP in India was not given approval by Foreign

Investment Promotion Board (FIPB). Home Ministry’s main objection was that Telcordia

managed mobile number portability in Pakistan as well and it may be a security concern for

the country.

Another reason that had been delaying it was the government’s plan to introduce an

integrated numbering scheme, where landline numbers would have 10 digits by December

2011. That would allow availability of enough numbers that could be used for 30-40 years

and integrated numbering will help extending number portability to landline phones as well.

Out of 700 million phone connections in India, 670 million belong to cellular subscribers.

Finally, Mobile Number Portability was launched on Nov. 25, 2010 in Rohtak district of

Haryana for initial testing and later on rolled out pan-India on January 20, 2011. The

government has fixed the porting charges that telecom operators can charge to its customers

at maximum of Rs. 19 and the number can be ported again only after using a network

provider’s services for a minimum of 3 months.


Types of MNP on the basis of who the customer has to approach to:

1. Recipient-Led

2. Donor- Led (Only in the UK)

Methods of routing:

a) ACQ or All Call Query: This type of routing uses CDB or Central Database

maintained by third party entity and co-owned by telecom operators and is highly

efficient and scalable.

Fig. 1 (Source: Mobile Number Portability: Riding the wave (Krishnan and Sanyal,

2011)

b) Indirect Routing: This type of routing is used in the UK. It is highly inefficient as

even after porting the calls are routed by the Donor Network and if the Donor

Operator goes down or out of business, the users who ported out of that network may

not get incoming calls to their number.

Switching cost incurred by users before MNP implementation:

1. Cost was incurred by user to buy SIM of other operator in order to make the switch.

2. Expenditure in informing the new number to all personal and business contacts.

3. Business users may have to make new sign boards, get new business cards printed,

and update their websites with new contact information.

4. Changing the service provider could lead change of phone number resulting in losing

business opportunities because of missed calls from the prospective clients who are

unaware of the changed number.

Switching cost incurred by users after implementation of MNP in India:

1. Porting charges (Rs. 19 or less)

2. Mobile number porting may take a few hours to a few days, resulting in mobile

services being unavailable for that duration.

3. Mobile operators may impose service contracts and users may have to pay hefty

penalty for breaking the service contract.

Costs that service providers had to incur to implement MNP in India:

1. Network infrastructure cost.

2. Central database maintenance cost. (ongoing expense)

MNP in other countries:

Over 60 countries across the globe have already implemented MNP. MNP was first

implemented in Singapore in 1997 followed by Hong Kong in 1999 and Australia in 2001.

The global experience of MNP has been mixed with countries like South Korea, Hong Kong

and Australia experiencing higher attrition rates while in other markets like UK, France,

Japan, Taiwan and Singapore MNP did not result in significant increase in customer

attrition (Gaurav Dixit, 2010) The impact of MNP depends on a number of factors, such as

the time and ease of completion of the porting process, porting charges, penetration

levels, pre paid and post paid subscriber mix and the marketing initiatives undertaken

by the service providers. An example of the failure of MNP due to the cumbersome porting


process can be derived from Pakistan where MNP was launched in March 2007 but

experienced less than 1% portability due to poor customer service and time consuming

process of porting. The quicker and more seamless the porting process is, the higher is the

likelihood of churn, however if the porting process is cumbersome subscribers may not want

to opt for it. One of the reasons for the success of MNP in countries like Australia is that the

entire porting process there is completed within 3 hours.

Fig. 2 (Source: Electronic Communications Committee, 2005, Report 31, Implementation of

Mobile Number Portability in CEPT countries; regulators in individual countries.

Service Provider wise market share in India as on 30-09-2010

Fig. 3 (Source: TRAI, December 1, 2010)

Telephone subscribers and tele-density in India Fig. 4 (Source: TRAI, The Indian Telecom Services Performance Indicators April - June

2010, October 5, 2010)

Table 1: Rate of growth of telecom operators

Volume:01, Number:01, Nov-2011 : RJCBS 9 www.theinternationaljournal.org

(Source: TRAI, The Indian Telecom Services Performance Indicators April - June 2010,

October 5, 2010)

LITERATURE REVIEW:

This section briefs about the work that has been done by various authors on Mobile Number

Portability and gives insight about the same.

Table 2: List of studies related to MNP

S.

No.

Paper Title Author/Year Key Learning’s

1. Implementation of

Mobile Number

Portability in CEPT

countries

Electronic

Communications

Committee

(ECC report

updated October

2005, original:

March 2003)

- Awareness of the predominant

approaches to MNP implementation

and to compare alternative

approaches.

2. Mobile Number

Portability

Ewan

Sutherland

(2006)

- Churn is good to an extent.

- How MNP benefits business

customers

3. Fostering competition in

Thailand’s

telecommunications

sector

Patrick Xavier

(2008)

- Importance of MNP in development

of effective competition in telecom.

4. Mobile Number

Portability

Stefan Buehler,

Justus Haucap

(July, 2004)

- For success of MNP, termination

charges have to be regulated.

- The set-up costs for MNP must not

be so high that they exceed the

various consumer benefits.

5. Mobile Number Banerjee - Reliance, Tata, and BSNL

Volume:01, Number:01, Nov-2011 : RJCBS 0 www.theinternationaljournal.org

Portability More

Attractive To India's

Postpaid Users and High

Spenders: Nielsen Study

(2009) subscribers more likely to switch.

6. Measuring the effects of

mobile number

portability on service

prices

Lyons

(2009)

- Prices fell in countries with a five-

day or better MNP delivery standard

after a lag of roughly one year.

- No significant effect of MNP was

found on average prices for countries

that applied a less stringent target for

maximum porting time.

- MNP has not been a success in

Singapore because the penetration was

less when it was implemented. Also,

the system adopted in Singapore in

1997 permitted operators to levy

monthly charges on users, but from

August 2003 onwards only a one-time

administrative fee was allowed.

7. Mobile Number

Portability in South Asia

Tahani Iqbal

(2009)

- Existing market structures in South

Asia may not be as suited to MNP

because of the large number of

prepaid or low-end users. Their phone

use patterns and requirements are

rather distinctive, compared to high-

end postpaid subscribers, commonly

found in the developed western

markets.

- The importance of MNP may be

declining, due to falling of switching

costs. Number changes are getting

easier and the use of email and other

technologies makes it easier for

subscribers to notify their networks

about their new numbers. In the case

of business, many use word processor

templates for their invoices and

letterheads, which can be edited

within seconds, in case of a change in

phone numbers. Additionally, the cost

of having multiple SIMs, and running

parallel accounts, is so cheap that

subscribers will not miss MNP

facility.


8. MNP Effect: Not enough

of a game changer!

Adesh Doifode

(8th

December,

2010)

Indian Telecom market comprises of ~

more than 91% prepaid subscribers

and already this segment is having

annual churn rate from 50‐70%.

Hence, there will not be any big move

in this segment. Though, the postpaid

segment which is ~9% or less of total

subscriber base in India and

contributes about 20% of overall

subscriber’s revenue would be

expected to have higher churning rate

as compared to present rate of 12-

24%.

9. Price Competition with

Reduced Consumer

Switching Costs: The

Case of "Wireless

Number

Portability'' in the

Cellular Phone Industry

Mengze Shi,

Jeongwen

Chiang, Byong-

Duk Rhee.

(2006)

- In Hong Kong, most networks

decreased their prices significantly

around the time of MNP

implementation.

- Orange, the largest network, steadily

gained market share following the

implementation of WNP. So, it is not

necessary that big players lose

because of MNP.

10. Switching costs and

consumer behaviour:

implications for

telecommunications

regulation

Patrick Xavier

and Dimitri

Ypsilanti (April

2008)

- Lengthy and cumbersome switching

procedures can make it inconvenient

for consumers to switch and can

outweigh any potential benefits.

- Early exit charges, imposed by an

existing provider, can reduce the

benefits of switching.

- Technical incompatibility of

equipment can make it uneconomical

for consumers to switch (for example,

if they cannot use a blocked mobile

phone with their new provider)

- Long-term deals can lock consumers

into lengthy relationships with their

providers (as may occur with mobile

telephony and Internet contracts) and

increase the risk of them being

overcharged.

11. Switching cost and

customer loyalty in the

mobile phone market:

The Nigerian Experience

Joseph Omotayo

Oyeniyi,

Joachim Abolaji

Abiodun (2009)

- Switching barriers affect

significantly the level of customer

retention, and also affect the

relationship between customer

satisfaction and customer retention.

It does seem that switching costs

could be used to predict consumer’s

behavior in the mobile

telecommunication sector. Customer


satisfaction has positive effects on the

customer retention.

12. Mobile Number

Portability

Rohan

Samarajiva

(2010)

- Multiple SIM ownership among

those at Pakistan’s Bottom of Pyramid

(BPO) increased from 13% to 23%

from 2006 to 2008, countries we

studied) from 2006 to 2008, despite

MNP being introduced.

-BOP users placed great weight on

affinity- group calling plans (“friends

& family”)

- They were very comfortable with

changing SIMs to take advantage of

coverage and price SIMs to take

advantage of coverage and price

differentials

- They were unlikely to use MNP

- Also the normal rationales re

business cards, letterhead, etc. do not

apply

13. Customer Complaints

and Switching Behavior -

A study of relationship

dynamics in a

telecommunication

company

Bo Edvardsson,

Inger Roos

- There are 3 types of switching –

Situation triggered, influence

triggered, reaction triggered.


Table 3: Citation of variables that affect customer attrition in telecom


3. RESEARCH METHODOLOGY

This section discusses the research methodology that has been used in the research.

Objective

The objective of the research is:

1. To know the customer profile, like their current telecom operator, type of connection

and their overall experience with their current telecom service provider.

2. To know whether change of number is a significant issue for the students.

3. To converge to broad areas that the telecom operators should work on to keep their

current customers with them.

Data to be collected

Quantitative

1. Profile of the respondents

2. Current telecom operator

3. Type of connection

4. Whether change of number is a significant issue to the respondents

5. How many respondents have already made switch under MNP or planning to switch.

Qualitative

1. Overall experience with current telecom operator.

2. Giving rating to the variables affecting customer attrition that would come up from the

literature.

Likert scale of 5 point rating has been chosen. Sample size would depend on the

number of variables, and is expected to be more than 5 times of the variables. Data will

be collected from the students of different batches of IIITM through an online

questionnaire, and if need be, physical forms on paper. Sampling type would be

convenient.

Analysis of quantitative data

Quantitative data thus collected can be analyzed by representing in the form of bar

graphs and pie charts.

Analysis of the qualitative data

Factor analysis will be performed on the qualitative data using SPSS to figure out the

major areas that the telecom companies should focus on to tame customer attrition.

Variables identified through brainstorming: Few more variables were added to the list

through brainstorming among the students and peer in the institute. These variables are:

- Unlimited calling plan not available

- Unavailability of suitable calling plans

- Recharge vouchers not available

- Service activation/deactivation on its own

- Long hold at IVR(Interactive Voice Response)

- Full talk time plans not offered


Developing the questionnaire

Questionnaire has been developed keeping in mind the data to be collected, quantitative as

well as quantitative. 5 point Likert scale has been selected for rating the factors for customer

switch from Highly Unlikely to Highly Likely.

Analysis of data collected through questionnaire

Quantitative data thus collected through the questionnaire (Q1-Q16) will be represented in

the form of bar graphs and pie charts and analyzed.

Factor analysis was performed on the qualitative data collected through the questionnaire in

Q17. (See Annexure for questionnaire)

4. RESULTS AND DISCUSSION

This section discusses the results of the analysis of the quantitative as well as qualitative data.

Total Number of respondents: 131

Profile of respondents:

1. Gender:

2. Batch:

3. Current telecom operator:

Male 92%

Female 8%

Male

Female

IPG 1st year 18%

IPG 2nd year 11%

IPG 3rd year 17%

IPG 4th year 3%

IPG 5th year 2%

MBA 1st year 8%

MBA 2nd year 22%

M.Tech 1st year

11%

M.Tech 2nd year 8%

PhD 0%

IPG 1st year

IPG 2nd year

IPG 3rd year

IPG 4th year

IPG 5th year

MBA 1st year

MBA 2nd year

M.Tech 1st year

M.Tech 2nd year


4. Postpaid or prepaid:

5. How has your overall experience been with your current telecom operator?

6. Do you think change of number is a significant issue for you, if change of number can

get you a better service?

7. Do you plan to switch to some other telecom service provider or have already

switched it under Mobile Number Portability (changing the operator without change of

phone number)?

Airtel 25%

Vodafone 5%

Tata Docomo 12%

Idea Cellular 16%

BSNL 13% Videocon

0%

Reliance GSM 24%

Reliance CDMA

2%

Tata Indicom

1%

Virgin Mobile GSM 0%

Virgin Mobile CDMA

2%

Aircel 0%

Other 0% Airtel

Vodafone

Tata Docomo

Idea Cellular

BSNL

Videocon

Reliance GSM

Reliance CDMA

Pre-paid 98%

Post-paid 2%

Pre-paid

Post-paid

Very Bad 2%

Bad 14%

Neutral 23%

Good 47%

Very Good 14%

Very Bad

Bad

Neutral

Good

Very Good

No 62%

Yes 38%

No

Yes


8. Percentage of subscribers who know there is a better operator available and would

definitely switch.

Reliability

Scale: ALL VARIABLES

Table 4: Case Processing Summary

N %

Cases Valid 131 100.0

Excludeda 0 .0

Total 131 100.0

a. Listwise deletion based on all

variables in the procedure.

Table 5: Reliability Statistics

Cronbach's Alpha N of Items

.924 25

Table 6: KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling

Adequacy. .838

Bartlett's Test of

Sphericity

Approx. Chi-Square 2.059E3

Df 300

Sig. .000

43%

14%

22%

21% No, I am happy with my mobile operator, so won't switch

No, I will not switch. I am not happy with my operator but I know that others are equally bad

0 10 20 30 40

Series1


Table 7: Total variance explained


Table 8: Rotated Component Matrixa

Component

1 2 3 4 5 6

Network coverage .762

Call drops .880

Voice not clear .861

Network busy .660

High local call rates .626

High STD call rates .736

Costly national roaming .812

Costly international roaming

Unavailability of suitable calling plans .701

High SMS charges .814

Unavailability of appropriate SMS plans .715

Bad internet .802

Costly internet .804

Content not good .620

Influence by family and friends .705

Recharge vouchers not available .605

Impolite customer support rep. .840

Bad complaint addressal .822

Incorrect balance deduction/billing .702

Service/tariff not as promised .530

High international call rates .553

Unlimited calling plan not available .625

Service activation/deactivation on its own .626

Long hold at IVR .655

Full talk time plans not offered

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 7 iterations.


Table 9: Derived factors that the telecom companies should focus on

Variables with loading value of more

than 0.5 in Rotated Component Matrix

Derived factors that the

companies should focus on

Factor 1 High local call rates

Pricing

High STD call rates

Costly national roaming

Unavailability of suitable calling plans

High SMS charges

Unavailability of appropriate SMS plans

Factor 2 Recharge vouchers not available

Customer service

Impolite customer support representatives

Bad complaint addressal

Unlimited calling plans not available

Long hold times at the IVR

Factor 3 Network coverage

Network Call drops

Voice not clear

Network busy

Factor 4 Bad internet

Internet and multimedia Costly internet

Content not good

High international calling rates

Factor 5 Incorrect balance deduction/billing

Transparency and reliability Service not as promised

Service activation/deactivation on its own

Factor 6 Influence by family and friends Brand building

5. CONCLUSION AND FUTURE WORK

Summary and discussion of results:

The findings suggest that Mobile Number Portability (MNP) may not be a really be a huge

success in India, even though a large investment has been made in making MNP possible.

Some of the key findings have been given below:

1. Change of number does not significantly affect a vast percentage (62%) of students.

The result would probably hold true for people at the bottom of the pyramid as well

and they make up a considerable percentage of people using cellular phones in India

now. So, the cost involved in setting up the infrastructure for rolling out MNP

(including ongoing costs of managing databases) may not have favorable result when

cost-benefit analysis is done. The cost could rather have been passed on to the

customers, which are most sensitive to pricing, as shown by the results, where it is the

most significant factor in keeping customer attrition rate low.

2. Almost 50% of the students of IIITM are using the telecom services of either Airtel or

Reliance GSM with other operators having a considerably low share vis a vis these

two. And, Airtel users are also most likely to switch to another operator, as shown by

results. So, Airtel needs to understand the problems of its customers and address the

issues so that it can enjoy the market leader position for the coming time as well.


3. Almost all (98%) students are using pre-paid connections and close to half the

respondents have a good overall experience with their current telecom operators.

4. Another finding suggests that 43% of the students would not switch in the near future

as they are happy with their current service provider. 14% of those surveyed are

unhappy with their current telecom service provider and they know others are equally

bad. Almost one-fifth of respondents say they know there is a better service provider

available in the market and may switch soon. Almost the same percent of respondents

say they would wait and watch.

Six major areas that the telecom companies should focus on, in order of importance:

1. Pricing: Pricing is the most important factor in the minds of young telecom users of

India and the companies need to keep this in mind while making the product mix.

Pricing includes call rates, SMS charges and also the national roaming as the youth of

today are more mobile than ever.

2. Customer service: Telecom service providers should improve their customer support

and make the recharge vouchers available at wider number of locations.

3. Network: It has been widely believed that the network of the telecom service provider

is the most important of all the factors, however it is not so, with it being at third spot

with respect to attrition. Network includes call drop rate, QoS (Quality of Service),

availability of network signal at different places.

4. Internet and multimedia: Internet and multimedia content is the fourth most important

factor that results in attrition of young telecom users.

5. Transparency and truthfulness: Customers are also likely to switch if the billing is

not done correctly done or the balance deduction is not as expected. So, the telecom

providers need to have efficient systems in place that do not bill customer excessively

or activate/deactivate service on its own.

6. Brand building: Family and peer pressure is another reason that results in customer

switching from one telecom operator to another. Companies should focus on the brand

building exercises in order to retain the existing customers.


Framework for customer retention in telecom:

Future scope of work:

1. Cost benefit analysis can be done, if the total cost involved in MNP rollout is known.

2. Multi-SIM phones which have made a big entry in the developing markets like India

may be taken into consideration while working on customer switching behavior in

telecom.

Customer retention

Pricing

Customer

Service

Network

Transparency

and

truthfulness

Internet and

multimedia

Brand

building


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***

mobile number portability in india: evidence from an

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