Study of impact of MNP on mobile telecom operator

Abstract

During the last one decade with the opening up of the Indian Telecom Sector under liberal National Telecom Policy of 1994 and 1999, the Indian Telecom Industry had been under the growth of 20-22% and attracted lot of FDI in this sector. With this growth in the Indian Telecom sector the Latest Telecom Technology was made available for Indians which has been almost at par with prevailing Telecom Technology of the most developed countries but due to the multiple operator scenario the pricing of the new services in wire line and wireless had been very competitive whereby every telecom operator are having tough time in churning the profit from their operation. Now apart from the on-going intense price war among the telecom operator, the Telecom Regulatory Body-TRAI asked the Department of Telecom(DoT) to implement the Mobile Number Portability(MNP) way back in April 2007 but due to the procedural delay from the Telecom Operators the MNP was finally implemented in Haryana Telecom Circle on 25th Nov 2010 and on all-India basis from 20th Jan 2011.The basic goal of the MNP regime was to enable the mobile customer to decide their choice of the operator without having any fear to lose their mobile number identity. It is believed that with the implementation of MNP, subscribers would get a wider choice and would be able to switch between service providers easily. This shall compel the service providers to offer competitive pricing plans as well as offer higher service quality to attract new customer and retain old subscribers. The direct fallout of implementation of MNP would be an increase in customer churn. Change in mobile number has been a major deterrent in switching service operators in the past, especially for high usage customers. However, with the implementation of MNP, customers would be able to easily switch from one service provider to another without changing their mobile number. Moreover , the low porting charges (maximum of Rs. 19 per porting to be paid by the subscriber) and low porting time (7 days for all circles except Jammu and Kashmir, Assam and North East where the maximum time period for completing the porting process would be 15 days) to drive the adoption of MNP in India. Increase in the churn is expected to increase the customer acquisition and retention costs of operators, which coupled with competitive tariff plans and falling average revenue per user (ARPUs) is expected to result in a decline in the operating margins of the telecom operators especially in the short term. Under such a scenario, telecom operators with stronger financial profile would be better placed to cope with the increasing competitive intensity. As all telecom operators in the market quickly react to match competitor pricing, tariff may not be a differentiating factor in the choice of operator. Hence, the quality of service and customer experience will play an important role in a customer s choice for an operator rather than pricing. It is expected that customer retention, especially in the high paying post-paid segment, would become the focus area for operators, as these contribute significantly to revenues, even if they form a small portion of an operators overall subscriber base. Operators would have to increasingly focus on offering differentiated services and improving quality of service (in terms of better customer care and improved network and coverage) in order to attract and retain customers. Offering differentiated services like third generation (3G) services would also be important for retention of high usage high ARPU customers. The implementation of MNP would be beneficial for mobile subscribers, as it would provide them with a wider choice (in terms of pricing plans, services, etc.), flexibility to change service operators without losing their mobile number and most likely an improvement in the quality of services offered by operators. However, for mobile service operators, the churn that invariably follows MNP implementation represents both a threat and an opportunity. Post the implementation of MNP, some operators are likely to witness the erosion of their customer base and consequently a decline in profitability, however, for some other operators, MNP can provide an attractive opportunity to gain market share and target high ARPU customers. Thus, MNP would result in higher competitive intensity that would be reflected in an increase in churn, pressure on ARPUs and margins in the short term and telecom operators would have to increase their focus on improving service quality and offering differentiated services in order to attract and retain subscribers in the long term. It is felt that the operators with superior quality of service would be the clear winners, while those with less than satisfactory service quality would stand to lose the maximum by way of subscriber churn and this study is a little step to explore this reasoning under MNP era. In this study the effort is made to understand the relationship of the various factor with the switching intention under which the customer makes a MNP port out request from their existing operator to another. The primary data had been collected through the questionnaire administered on the 200 MNP customer who made the Port-Out Request but did not left their current TSP and also response from the 210 MNP Customer was collected who leave their current TSP through the MNP Port-Out request. The response of the MNP Port Out and MNP Not Port Out customers were captured for the different constructs - Service Quality(SQ), Perceived Price(PP),Switching Cost(SC), Customer Lock-in(CL), Customer Satisfaction (CS),Switching Barrier(SB) and Switching Intention(SI) on the 7 point Likert scale. The data collection was done telephonically as the customer was remotely located in the different SSA (Secondary Switching Area) of the BSNL Haryana Telecom Circle. The second part involved was the collection of secondary data having different variables from the MNP Data Centre of BSNL Northern Zone for the numbers of customer under the MNP port Out and MNP Not Port Out category. The data was collected during the period from Aug 2011 to Dec 2011 for all the 9 SSAs of Haryana Telecom Circle. Then the data of the billing usage with four variables for these customers was collected from the Northern Billing Centre Chandigarh. After cleaning the data the prediction accuracy of MNP Port-Out/MNP Not Port Out customer was estimated through the different modelling technique like Logistic Regression, Classification Tree Method and Artificial Neural Network. The third part was the analysis of the personal exit interview taken for the customers who made the request for the port out and the reasons for the port out was broadly classified into the four categories .It was found that the service quality is the main reason behind the MNP Port Out which also supports the findings of the two output of above studies. On comparison of the results from the three part of study it is established that the main reason for the port-out under the MNP regime by the customer had been the service quality and if the Operators are able to have excellent Service Quality then the customer may not go for the port-out as the pricing and other parameter are almost the same across all the operator. Last not the least, the explored relationship among variables provides the useful insights to policy maker and regulators for evaluating the performance of service provider and the Cellular Industry under MNP regime. This relationship shall also be useful for the Telecom Service Provider for quantifying the customer switching intention level at various region and also shall help in knowing the reasons for Customer Switching Behaviour which in turn shall help them in retaining their customer base. After going by the findings of the analysis of the study it is found that the service quality is the main factor which is influencing the MNP customer to port out and the another most important reason is the customer care therefore in order to have the minimum churning of the customer under the MNP, the each Telecom Service Provider(TSP) has to make an all-out effort to maintain the Top Quality of the Service of the Network and also the Best Customer care . Those operators who are able to meet to these parameters are able to retain their customers and are also able to acquire more customer from the other TSP which are having inferior service quality and poor customer care.