MNP: Poaching with Portability

From www.ciol.com on 26 May 2009

BANGALORE, INDIA: 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. Globally, nearly forty countries have introduced MNP till now and have different implementation models and strategies.

However, not all are convinced with MNP having any striking impact in the current business scenario. "Though MNP is a good thing for consumer, there are a number of things still unclear. For instance, does the subscriber understand number portability and know that it is available? How easy is it to port a number and how long will the process take? Who would pay for what service, quality parameters, database sharing, etc? It would take some time to understand the impact of MNP in the India market," says Vish Iyer, VP, service provider, West, Cisco India and SAARC.

Agrees Satya N Gupta, president ACTO and chief regulatory advisor, SAARC region, BT, "I would not say that MNP would create any wonders or a revolution for the Indian telecom market; however, it is a forward looking service and would put pressure on operators to improve the existing quality of services."

There is no denying that MNP is a win-win situation for a customer and would also help to increase the overall competitiveness, but is it the right time to invest in MNP? With a large proportion of the market still untapped, will major SPs promote MNP to increase reach?

In the current scenario of dwindling ARPUs, what would be the RoI for SPs like Bharti and Vodafone who might suffer the most after MNP implementation? And more importantly, with a penetration level of just 30%, that too dominated by the pre-paid segment, will MNP impact the churn significantly?

Explains Aakash Moondhra, head, telecom and retail verticals, Baring Private Equity Partners, "I don't think any operator can claim to have superiority over another. In the short term there could be an impact but in the long run it would be minimal."

"It's difficult to say if MNP would really have an impact in the Indian market. However, for subscribers it would be an opportunity which will provide an alternative," says Aviel Tenenbaum, executive VP global sales and marketing, ECI Telecom.

Till date, most operators are offering the same sort of plans and/or services. And therefore it is difficult to bet upon a single operator.

Globally, Singapore was the first country to implement MNP in 1997, followed by Hong Kong in 1999 and Australia in 2001. Off late, many countries have adopted the MNP model to prevent market doldrums and putting pressure on service providers to furnish more services at a competitive price level. However, it has not been able to produce any significant results in these markets.

While it has worked in markets like Hong Kong and Australia, it failed to bear fruit in the UK, France, Germany, Pakistan, Ireland, Malta, among others. MNP worked in Hong Kong due to the speedy porting process and the availability of already implemented solution (for fixed-line services). In Australia, the regulator effectively promoted number portability and was able to maintain the maximum porting time of just under three hours.

According to experts, MNP implementation is expected to be more productive for markets that have reached at least 50 percen cellular penetration level. The reason being that at this level, service providers can attempt to compete better due to a smaller untapped pool.And hence the attention remains centered around the already penetrated customers. India, which is still below a 35 percent penetration level, does not seem to be an ideal business case in this scenario.