Mobile Number Portability- is it the game changer?

The current market scenario in the telecom industry is bubbling with activity with new players entering an already congested market. The telecom industry is in the ‘growth’ stage of its life cycle. Thus the only objective for the companies is adding new customers and increasing its customer base. Retention of the existing customers, atleast the post-paid whose Average revenue per user (ARPU) is almost three times the ARPU of pre-paid customers, isn’t on the agenda of the telecom players. But it could soon change post the implementation of Mobilenumber portability. Some of the post-paid customers especially the corporate ones are high value customers with billing in the range of Rs. 20000-40000 per month. There is hardly any differentiation in service for the post-paid customer vis-à-vis the pre-paid ones.

Mobile number portability could alter the scenario especially for these high value customers. A churn of pre-paid customers won’t hurt the players much but post-paid customer churn would certainly hit the revenues in the immediate time past MNP implementation. These high value customers indirectly subsidise the pre-paid customers in the urban and rural areas.

India has one of the lowest tariffs and it is further going to go down with the increasing cut throat competition. The pre-paid customers do not add much value in terms of revenues although it gives the company a better reach. It is the post-paid customers who need to be taken care of. Price wars have already been started by Aircel (after 3 minutes, call STD at local rates), Tata DoCoMo with per second billing and Tata Indicom with billing based on number of calls as against the number of minutes you speak, to gain a larger share of the market. If Vodafone-Essar, Bharti Airtel and ADAG group’s flagship RCom join the price war, prices could reach unsustainable levels with a blood bath in the industry and only the big players surviving through consolidation being the only mode of survival.

MNP thus is surely going to give sleepless nights to the top management of the big players. Brand building would give way to building brand equity through better service and customer loyalty. Differentiation of services would be the order of the day in the not-so-distant future for these players. Keeping the post-paid customers happy with customised offerings would have to be the way forward. Happy customers rather than ‘just’ more customers would have to be the motto, just like in any other service industry.

As tariffs go down, pre-paid customer would find post-paid options much better which would not only increase usage for the customer but also make complete utilisation of the infrastructure for the telecom company. Only Vodafone seems to have understood the future. It is leading the pack towards changing the way people use phones. It launched with much fanfare and effectiveness its Value-added services campaign with the adorable Zoozoos. This means that they are targeting the post-paid customer who uses the VAS. This would mean more revenues. Pre-paid customers just use the caller back tune VAS. Thus Vodafone is looking at the future 5 years down the line where it wants to be ‘different’ from the ‘me-too’ players.