Number Portability Implementation in India

[Arun 795]

Number portability: A distant dream

Times News Network, January 24, 2007 12:35:28 AM

On December 4, 2006, the department of telecommunications (DoT) rejected the recommendations of the Telecom Regulatory Authority of India (Trai) on mobile number portability (MNP) citing regulatory and technical feasibility issues in its implementation.

Earlier, on July 22, 2005, Trai had shaken the telecom market by announcing the deadline for implementation of number portability (NP) in India as April 1, 2007. Since then, various stakeholders have debated the issues related to NP, which is recognised as the last barrier to perfect competition in the telecom market. According to DoT such a change should not be mandated by the licensor (DoT) or regulator (Trai): it should arise out of the commercial judgement of operators.

NP is a feature of telecommunication which allows the users to retain their telephone numbers while switching between service providers, geographic locations or service types. Lack of this service deters the customers from switching over to an alternate service provider as the benefits thus derived do not compensate for the costs incurred in adopting the new number.

For business customers, the number becomes an identity and hence the switching costs are higher. NP is inevitable in any mature telecom market as it is expected to increase competitiveness of market compelling all the players to enhance their network quality and customer service.

Trai should be complimented for its efforts to make the market more competitive and for some of its recommendations. For example, coming up with a maximum time limit for processing a porting request would force players like BSNL, having waiting lists for mobile connections, to enhance their capabilities to serve customer demands to avoid paying fines. Trai suggested using metros and ‘A’ circles with the maximum number of business subscribers and higher churn rates as testing grounds for NP.

The private players in these circles, however, opposed the move estimating the impact of NP on the already competitive market to be minuscule. This move could divert their attention towards these high-revenue circles and in the process lead to the neglect of rural teledensity improvement initiatives. But, for the sake of better coordination through a phased out launch and availability of better and technologically superior infrastructure, Trai couldn’t have come up with a better first move.

The operators blamed Trai for being partial to the fixed line operators as it recommended introducing MNP before fixed line number portability (FNP), while FNP has always come before MNP in most of the countries. Trai had mentioned that wireline telephony market in India is near stagnant and the major chunk of the growth in subscriber base is coming from wireless telephony. Considering the unattractiveness of the fixed line market to the private players and complexities in FNP implementation, Trai thought it best to start with MNP to address the need of the hour.

However, there are certain issues with MNP that Trai failed to notice. For example, it had invited the paradox of tariff transparency by opening up the discussion on allowing deregulation of termination charges (Consultation Papers: ‘Admissibility of Revenue Share Between Visiting Network and Terminating Network for Roaming Calls’ and ‘Differential Tariffs for On-network Calls’).

Successful implementation of NP, requires strict regulation of termination charges lest the operators start manipulating them to force the customers to adopt their networks. The customers cannot identify the terminating network and hence cannot make out the tariff structure applicable for a call made to a ported number. Since the ‘calling party pays’ principle is applicable, it would make sense for operators to increase their termination charges for calls from fixed line to force consumers to switch to mobile phones. This is just one of the many sources of unhealthy competition that may arise out of the asymmetry of information.

The speed of clearing a porting request is an important success-factor for MNP. Donor operator (network from which a subscriber is porting out) has an incentive to delay the porting process, as a longer porting process implies higher number of calls lost for the subscriber and thus dissuade porting out customers.

In a market where all players are nearly equal in terms of performance, market share and facing similar rate of churn, the operators can collude and deliberately delay the porting process to discourage customers from porting. In less competitive markets, several legal disputes are expected to arise among operators and between operators and subscribers.

Trai’s solution of entrusting the responsibility of initiating the porting request with the recipient network and setting up of a centralised clearing house for any disputes might prove inadequate given the history of long and fiercely fought legal battles in interconnection and spectrum issues. Authentication of users during porting, necessary for security reasons, is another source of delay in the porting process.

While the donor networks would try to delay authentication even for genuine customers, unhealthy competition may abet them in tipping-off the recipient network about fraud in case of fraudulent customers. It has been observed in other countries with NP that lenient authentication and denial rules increase chances of success of NP, but security reasons create a paradox for the regulator.

Implementation of MNP without service portability between GSM and CDMA technologies means locking the subscribers to a particular technology and making the differential switching cost among GSM-CDMA and GSM-GSM or CDMA-CDMA much higher than before MNP, because of the cost of a new handset. This defeats the purpose of NP as it segregates the subscriber base into two distinct divisions with huge switching cost between them. Dual-band handsets which can work on both technologies can reduce this discrepancy. But it is difficult to ensure immediate availability of such handsets and so MNP would be successful only much later than expected.

Considering the serious issues involved in the implementation of MNP, DoT’s decision to stall MNP implementation, albeit for a possibly different set of reasons, may be termed appropriate. In response, Trai should investigate further into these issues before making any further recommendations on number portability, and even evaluate whether MNP is really required to boost competition in a highly competitive market with one of the lowest average revenue per user in the world.

(The authors are students at IIM Ahmedabad. The study was completed under the guidance of Prof Rakesh Basant.)

[HetalDP 947]

1. Fixed line MNP : Number Portability in Fixed line will not be usefull, as 95 Percentage of BSNL Fixed Line Coverage is not Covered by any Fixed line Operator Till Now.
   
2. Conversion Cost : of CDMA to GSM and Vice Versa are not that Costly as it seems Unlike USA We have better Second Hand Market so we can sell the Handset of Old Technology and Buy another Second Handset of New Technology. The Churning ration of Handset is 1 to 1.5 Years for Major Customer so Customer can have Pair the New Buying with MNP.
   
3. Completion is only for New Customer : Operators is claiming there is Fierce Competition among the Operator. This Seems true only in case of Acquition Phase But What about the Services Phase. I had seen More and more scheme Come only for New Entrant or New Customer like Free Incoming for some Month or Year, Free Bundled Handsets, Free Talk time worth Rs. XXX and so on. Has you seen any Old Customer Getting Better Benefit on the Ground that he is a Old and Loyal Customer to the Network and for Person Complete 2 or 3 Years should get some Exclusive Plans.
   
4. Differential Coverage : Operators Claims that all Operator have same plan and same Services. Than What about the Coverage If a Person is Shifted to Some Location where He can not get Coverage or Service of his own Network than why He should not be allowed to move his number to any Other Operator whose service is better in new area.
   
5. Inter Network Congestion.: If a person have Phone of One Operator and his Team mate or Family member or Spouse is in Other Network Calling in Peaks time takes too much time as there is heavy load in Link between these two Operator. Customer can Group in cloud of one Network Operator to have Better Services.
   
6. CUG Facility - There are not CUG Facility in Inter Network or (Off Network system), MNP can have make this Possible so Groups Person can enable CUG between the Group by using the Facility of MNP.
   
7. Non Partner Roaming : Most CDMA Network provided Non Partner Network Roaming so in Home network i got the best Coverage but in Visiting network I have one network on my services. So if I visit some Remote Village Chances of Having same network is very less. This Type of Customer can use MNP to switch to any other Network who can provide Multi Partner Roaming Access.
   
8. Cheaper Roaming : Also CDMA Provider and BSNL have Cheapest Network for Roaming Network now and State Owned BSNL is much Better. But There might be condition that a person had taken a Mobile Connection in 2000 when only one or two operator were there. Now he fill that Another Operator have better Coverage in Expected area. MNP is only way for such cases.
   
9. NP Conversion Cost : Dissatisfied Customer of Existing Network never see for cost of conversion and at all all Cost of Conversion will be borned by the Customer only then Why the Operator can claim that this will increasing running Cost.
   
10. What about of Gold / Choice Number : Operator are Taking Charges to Provided Choice Number, Silver, Gold and Platinum Number. If Customer pays for the Number Customer must have some more right to that number. Customer should have better control on this.
    
11. Changing Criteria / Plan of Customer Network is ever Improving thing. So when Customer choose an Network the Condition and reason to choose that network might be Different. But the Same Plan, Services, same Charges or Call and Roaming might not be available to same customer in same Network. Customer should then have some more Option to use MNP type of tools.
    
12. Issue of Churning : So many Operators are talking that this will increase the Churning of users and already they are facing heavy churning. But the Operator who are Facing heavy Churning might be solved as Existing Customer can use MNP he will not close old number and use the New Number. The Whole Scenario will be much more Simple.
    
13. Issue of Malpractice. There are some view that stats that MNP will create mis Practice between the Customer. So Operator will announce Extreme Plans for New Comer from Other Network. TRAI can not the Issue and there can be order that Permit New Operator to give only Plan which is available to their Own Customer from Last 3 Months, and There must not be Free call, Free Package or Goodies, No Commission to any agent or Marketing person for any Customer who used MNP. Which will Drastically reduce this type of Mal Practices which might happen in Future.
    

Edited January 25, 2007 by hpnasik