Is the number portability policy well-designed?

DEBATE

While no one doubts customers will benefit from more choice, the question is why it has not been extended to fixed wirelines and whether it is one-sided.

T V Ramachandran
Director General,
COAI

"While GSM-mobile subscribers are free to move from one service provider to another, CDMA subscribers are like captive customers of their service providers"

The Cellular Operators Association of India (COAI) and the GSM industry fully welcome and support the initiative to introduce mobile number portability (MNP) in India. In fact, the COAI is in favour of introducing MNP in a complete and holistic manner all across the country, rather than implementing it in a fragmented manner in just the four metros. Why limit the benefits of number portability to only 3.5 per cent of the total population or just 20 per cent of the mobile subscribers staying in the four metros?

The key aim behind the introduction of MNP has always been to increase competition with a view to enable greater benefits for subscribers. In light of the same, the COAI is of the view that the full implementation of number portability can and should be done concurrently, for all service areas, and for all consumers, mobile and fixed. In fact, the need for number portability is greater in B and C telecom circles, where the choice of operators is limited.

There are already seven to eight mobile service providers in the four metros where MNP is initially proposed to be introduced. Thus, intense competition already exists in the metros. On the other hand, in B and C category circles, the number of mobile operators is less and hence, the choice for subscribers is limited. Moreover, there should be complete freedom for all subscribers "" be it fixed line, GSM-mobile or CDMA-mobile "" to opt for and benefit from number portability. Thus, this option should be given to fixed line subscribers as well.

Further, although GSM subscribers are free to move from one service provider to another, there are some barriers in the case of CDMA subscribers. India still does not have the concept of unlocked CDMA handsets. CDMA operators invariably "lock" their handsets, as a result of which CDMA subscribers are like captive subscribers of their service provider.

In fact, in response to a class action lawsuit in the US, the concerned American CDMA provider agreed to unlock all handsets so that the same can also be activated by competing CDMA providers. Therefore, in the interests of consumers in India and to ensure smooth implementation of MNP, the Department of Telecommunications and the Telecom Regulatory Authority of India should immediately decree that CDMA operators should unlock handsets. This will provide subscribers the freedom to choose between CDMA service providers, as indeed is the case with GSM service providers. Such a change should be carried out swiftly, without waiting for several months for the implementation of number portability.

GSM accounts for about 75 per cent of the total mobile subscriber additions every month. Thus, in a fiercely competitive Indian market, GSM operators enjoy high customer preference and are happy to embrace number portability. It is befitting that pure consumer choice should prevail. GSM players have welcomed and thrived upon fair competition on level-playing field terms.

Bharat B Anand
President,
Reliance Communications

"The global practice is that when subscribers get various services bundled at lower rates, as our customers do, they are locked in "" even GSM firms in India do this"

Telecom reforms, such as the introduction of carrier access code, are important steps for India to be able to provide world class services to its customers. The Department of Telecommunications needs to be complimented and we welcome its decision to introduce mobile number portability in a staggered manner in the country, with an initial launch in the metros.

Bringing mobile number portability will bring in fuller competition as operators will now have to strive harder to maintain their respective market shares and will have to focus on providing better service to their customers. Customers will, therefore, get better quality of service, better coverage, competitive tariffs as well as a slew of new offers from the telcos, among others.

The decision to implement mobile number portability in the metros where the mobile phone penetration levels are around 60 per cent is a step in the right direction since nearly 20 per cent of the country's 213 million mobile phone subscribers are to be found in the four metros. In terms of other parameters, the share of the metros is even higher. They contribute to almost 25 per cent of the industry's revenue and around 30 per cent of the industry's EBITDA (earnings before interest, tax, depreciation and amortisation). The metros also have a higher ARPU (average earnings per user) of Rs 472 per month as compared to the national average of Rs 356 per month.

Introducing mobile number portability in the metros will increase the intensity of competition and will result in a churn in high-end customers and a reduction in tariffs. International experience shows that the introduction of mobile number portability does have an adverse impact on the margins of incumbent operators. Once mobile number portability is introduced in the metros, it needs to be extended nationally within a compressed time frame so that its benefits spread to 80 per cent of the country's mobile phone subscribers who happen to live in the non-metro cities and towns.

The consumer benefit from number portability should also be extended to the fixed wireline and fixed wireless domains where the intensity of competition is lower as the incumbent service provider has a large market share. Some media reports have insinuated that there are limited advantages of mobile number portability as far as subscribers of CDMA-mobile services are concerned. This is absolutely incorrect as number portability is related to the telephone number of the customer and not with technology.

Our customers are offered phones with schemes and features like R-World to be used with our network. But the global practice is that phones which are offered with various schemes bundled in are always locked "" this is the practice followed by various GSM-mobile players in India as well, such as in the schemes that Airtel offers with LG and Hutch with Sony Ericsson. Where our customers choose to buy their phones without any services bundled, they too can choose to switch to any other CDMA operator without any problem.