India’s mobile market is less than half of China’s. India has 200 million cellphone connections, while China has crossed 500 million. So, one out of three people in China has a cellphone compared with one out of five in India. This lesser penetration makes India the world’s fastest growing mobile market in the world. India adds more cellphones every month (six million-plus) than China (around 5.5 million) and both are racing towards a future when there are more cellphones than people, as is already happening in Europe. In fiscal 2006-07, the number of cellphones in India grew twice as fast as its population.
Despite this, India has a huge lacuna in its cellphone industry. This is the absence—an inexplicable one—of mobile number portability. The world has moved to local number portability. Why haven’t we? Take the US, Britain, Spain, Sweden, Switzerland, Italy, Finland, Ireland, Singapore, Japan, Singapore, Australia, Canada, or a dozen others. If a subscriber changes his service provider in these countries, his old number goes with him. This benefits consumers hugely. It allows them to shift to a service provider that offers them better call rates or better connectivity.
But mobile users in India cannot exercise this choice because switching to a new provider means losing a number known to everybody they know. So subscribers end up as captives —stuck with whichever service provider they start out with. The irony is that even Pakistan introduced mobile number portability last March.
So should India, immediately. It’s easy to do. The Telecom Regulatory Authority of India (Trai) should emulate the example of its peers in the West. They directed their mobile companies to provide number portability within a reasonable time frame and they were obeyed. So would Trai—it has the power and authority to enforce compliance.
If it does, Trai will fulfil its primary task—to facilitate true competition in India’s telecom industry. The competition is inhibited by the absence of mobile number portability. The absence favours incumbent mobile players who sit on and retain a large subscriber base, not necessarily because they are efficient, but because their base cannot be nibbled away by newer, more efficient rivals unless subscribers wanting to switch can retain their old number with a new service provider. The playing field isn’t level in India’s mobile sector. Contrast this with Britain where number portability is seen as so vital to true competition that the country’s telecom regulator, Office of Communications, isn’t happy that the transfer of a mobile number takes five days. So, it has directed mobile companies to shorten the porting process to two days by next March and to two hours by September 2009. The US regulator, Federal Communications Commission, has done the same. It has directed that the porting process be reduced to two hours from the two-three days it takes currently.
The absence of number portability in India is unjustifiable. India’s mobile companies give two reasons for going slow. One, they say that introducing number portability requires investments in equipment that mobile companies cannot afford. But they don’t say what the investment is, for fear of contradiction. Even if the investment is huge, it can be recovered from subscribers, just as toll roads end up financed by road users. Mobile companies in the US are recovering their investment in mobile number portability by charging subscribers a few cents to a dollar every month. The companies have been permitted by the US regulator to do so. India’s mobile companies can do the same. No business is a charity. The cost of a crucial facility for customers must come from the customers themselves.
India’s mobile companies say that investing in mobile number portability is a waste because few mobile subscribers will avail of it. Who can say? India’s mobile market is unique because of its huge size. (So is China’s, except that it has no number portability, thanks to the country’s mobile sector being a monopoly of two-state-owned companies.) Porting figures from overseas give an inkling of what could happen in India. Italy and Britain each have seen 10% mobile subscribers moving their old number to a new carrier.
The figure in Finland is 55%. Hong Kong saw 30% of subscribers porting within a year of the service being introduced. The size of similar migrations in India could be much larger because India offers mobile players huge economies of scale. We have 200 million more people than the US, Germany, France, Britain, Pakistan and Bangladesh put together, and more than 200,000 of them pick up a new cell connection every day. To woo them, mobile companies will further cut their call rates to enlarge their subscriber base. And vast swatches of subscribers could migrate to a new service provider.
Once number portability is introduced, India’s mobile sector will see huge revenue volatility. Till now, mobile companies have focused on customer acquisition. With number portability, the game will change to customer retention as companies seek to grab one another’s subscribers. Let the action begin.
(Arvind Kala is a freelance writer which, he says, is a euphemism for being unemployed. Comment at email@example.com)