bsnl-mnp-costs

The journey to mobile number portability in India has hit its first major hurdle. Established players have demanded a “porting charge” be set up so they can recover their expenses in upgrading their networks to enable mobile number portability. BSNL estimates that the costs for the system upgrade to its network would amount to an initial expenditure of Rs. 1,065 cores in addition to an annual operational expenditure of about Rs 184.75 crores for the purpose of MNP service. Click on the chart on the right for detailed costs. MTNL also wants fixed line operators to get compensated for upgradation of its fixed line network.

Interestingly, BSNL views (pdfMNP as elitist and says that it is meant to enable a few customers who want to save the cost of informing friends, business partners about a change of number, and save on costs of updating company web pages, brochures and business cards. BSNL has questioned the Government’s plan of giving the two MNP operators exclusivity for five years, and the TRAI for not sharing detailed cost sheet of MNP service providers. BSNL also suggests that the dipping cost will make calls more expensive – maybe even by Rs. 0.10 – and is anti-consumer. It suggests that only those who opt for MNP must pay.

Pricing: Porting, Dipping

The porting charge is one of the three that are being instituted:

  • Per Port Transaction charge – A processing charge paid by recipient operator (the operator to which the subscriber shifts her loyalty) to Mobile Number Portability Service Provider
  • Porting charge – charge payable by the subscriber for porting his number to the recipient operator. Brazil, which has a high prepaid ratio like India has a porting rate of 6% in the first 9 months of the MNP implementation. RCOM suggests that a successful case of Hong Kong needs to be looked at, where there’s a porting charge of just HK$ 1.29 (around Rs. 8) being levied. RCOM recommends a porting charge of Rs. 20
  • Dipping charge – charge paid by the service provider who uses the query response system of the MNP service provider for obtaining location routing number (LRN) for correct routing of the called number. According to the Association of Unified Telecom Service Providers of India (AUSPI), the key drivers for dipping are total number of calls, missed calls and SMS. They want an upper limit for the dipping charge to be specified, to avoid unjustified charges being levied by MNP operators who have a monopoly for five years in their zone. RCOM recommends a dipping charge of Rs. 0.01-0.015, which AUSPI recommends Rs. 0.02.

Time Taken

RCOM has provided details of time taken for number portability, and suggests that the number of ports (subscribers who switch) is inversely proportional to the time taken, and wants the initial porting rate to be high. This might help grow its GSM business.

porting-time

Who Pays?

The question consumers need to ask themselves is, ‘How much would you pay for retaining your mobile number when you switch operators?’ While TRAI expected it to not be more than Rs. 200, some operators have estimated it can be as low as Rs. 20. The price can be expected to be revised every year as more users opt for portability.

The porting charge will not be distributed amongst all subscribers – only for those opting for a change in operator. These, according to BSNL are, “big entrepreneurs, professionals, businessmen”.  According to TRAI, the annual rate of porting has been assumed as constant at 2% for a period of 5 years – this would mean only 2% of the subscriber base of 427.28 million (as of June 09) will avail of MNP. In Loop’s estimate, even if one third of the current churn avail of porting, this would be 10% instead of 2%.

ET has roughly calculated that around 8 million users (taking 2% as the userbase) seeking the service would have to shell around Rs. 6000. It is not clear if this is a one time fee that will allow the users to switch between networks whenever they want. If such a high fee is demanded, mobile number portability might not see a large scale adoption, as RCOM said in its comment.

New Telcos Vs Old

The going has been mostly smooth so far – the telecom regulator ruled that MNP be offered so subscribers have more flexibility in switching between networks and retaining their mobile identity. While new telcos are betting on mobile number portability to draw new subscribers, established players such as Airtel are worried about the ‘abnormal’ churn it would result in. Loop Mobile notes that, “At present (annual) churn rate of subscribers in India is about 35-40%.” Larger operators have reported a lower rate of churn, but undoubtedly, this can be expected to spiral with MNP.

One interesting aside from new telcos is their query about why a dissatisfied subscriber seeking to switch to another operator would want to shell out a porting charge to the donor operator. Established operators such as Airtel and Idea Cellular believes the porting charge should be shared amongst the three players – MNP provider and two operators involved. But Etisalat, which holds 45% stake in Swan Telecom, a new telco, said this would be akin to making a child transferring from a “deficient” school to a better one, pay the deficient school for leaving. This will serve as a deterrent to porting. However, established operator Idea Cellular wants the Donor Operator to get a piece of the pie, as does MTNL. MTNL suggests that mobile numbers are a precious resource, and the number gets blocked for the donor operator, and transfers to another. Airtel also wants the TRAI also take into account the investment that existing operators will have to make to enable MNP. Unitech Wireless, run by Telenor, is also of the view that it would not be customer friendly and that the number of port-ins and port-outs would balance each other soon.

Airtel has given details of the work involved for each operator, and rightly acknowledges that incumbent operators are most likely to be donors, as compared to new telcos.

Quality Of Mobile Networks

Billing issues are one of the main reasons why mobile users switch networks (read TRAI’s quality of service report on Himachal Pradesh mobile users) Asking them to pay to leave would rub salt in their wounds.

TRAI has directed cellular operators to submit monthly and quarterly reports on quality of service to determine if they comply to benchmarks such as billing, customer care and time taken to fulfill requests of disconnections. (PDF of the directive issued on August 10 is here.) According to a March report, Reliance, Idea and Vodafone had most congestion in their points-of-interconnection in their networks and circles most affected by congestion were Bihar, Andhra Pradesh and Kolkata. (via TelecomIndia)

Comments From Stakeholders