In the early 1970s when my father got married, among the pieces of advice he received from his uncle, he recalls one the most: "Young man, now that you are married, have you booked a phone for yourself?" My father answered in the negative as he had heard that getting a phone connection meant a long 10-year wait.
This week when Haryana Chief Minister Bhupinder Singh Hooda and the Communications Minister Kapil Sibal launched mobile number portability (MNP) at Rohtak, a small town neighbouring India's capital, it signaled a sea change brought about by the mobile revolution. The telecom industry watchdog, Telecom Regulatory Authority of India (TRAI), has been pushing the telecom operators, including the government-run firms, to focus on quality of service (QoS).
MNP, that allows subscribers to retain their mobile number even after changing service providers, will undoubtedly improve the QoS. In just 16 years, after mobile phone services were launched in India, the growth of new mobile connections has been setting a new record every month.
India has become the fastest growing mobile industry with around 15 million new connections every month. Nationally, every other Indian has a mobile connection. The metro mobile tele-density is four times higher than the rural mobile tele-density. The intense competition for new customers has led to a price war resulting in a phone call costing less than a paisa per second. More aggressive players like Tata DoCoMo, who initially drew blood by offering one paisa per second local calls, extended this tariff for a few STD and ISD calls.
Customers, initially elated with declining tariff plans, did not realize that the pressure for margins would lead to difficulties like poor voice quality, frequent call drops or no-signal zones even in the densely populated metros. The sudden spurt in the number of mobile subscribers — from 76 million in December 2005 to over 670 million today — too accentuated issues like poor customer care and inappropriate tariff plans. To be fair to the operators, the race for new additions led to lower margins.
In order to shore up their bottom lines in a scarce spectrum environment, customer service levels and the overall customer experience dropped. For the service providers to improve QoS there is an urgent need to grow the current less-than-$4 a month average revenue per user (ARPU) by offering a bouquet of value-added services. The current ARPU levels threaten the long-term survival of most new entrants, especially as they look to the hinterland for growth.
Service providers have had to make substantial investment in network, technology, processes to allow mobile subscribers to switch network. In fact, Idea Cellular has taken the lead in spreading awareness about MNP through a television campaign. The advantage of MNP will be the flexibility to retain the mobile number and an improved QoS.
The biggest churn is expected to come from the 'high ARPU paying post-paid customers' accounting for about 5 percent of the total mobile users. Current industry estimates suggest that between 5 and 8 percent of the post paid customers may switch to another service provider. According to IT intelligence firm, IDC India, two of every five mobile handsets sold in the country were multi SIM handsets, indicating that a significant number of Indian users are familiar with issues of quality of more than one service provider.
The service providers suffer the wrath of customers as a result of customer service issues — deactivation of imported phone without IMEI numbers and disconnection due to incomplete verification. These irate customers may look at alternate service providers using MNP.
Meanwhile, the planned launch of 3G services by several mobile service providers and the subsequent increase in spectrum will enable service providers to offer better voice quality, lower dropped calls and improved network coverage. It will serve as a bonanza for mobile users, especially those who subscribe to 3G.
For the first time, the Indian smart phones and data cards users will be able to enjoy a superior user experience and record better download speeds. While MNP assures customers the freedom to choose service providers, an improvement in the QoS alone will help the mobile customers stay loyal to their service provider.
If customer acquisition was the only goal for service providers until recently, MNP will surely drive them to look at the QoS seriously. And the mobile users can talk easy!