The telecom industry has spawned some of the last decade’s favourite ad campaigns, built and on occasion, rebuilt brands from scratch. It has consistently innovated on price and geographic spread and now earns gross revenue of over Rs39,000 crore a year, according to Telecom Regulatory Authority of India (Trai) estimates. But the end of the year brings with it one of the sector’s biggest challenges yet —the launch of mobile number portability.

In spite of many countries having preceded India, the impact that portability is likely to have on this market is anyone’s guess.

Graphics: Ahmed Raza Khan / Mint

On the other hand, in Brazil, a prepaid dominated market such as India, portability caused an incremental churn of just 1-1.5% marketeers and analysts are betting more heavily on the latter outcome given that India is already a volatile market with annual churn of 40%.

According to Daniel Yu, Asia-Pacific analyst for Pyramid Research, “Mobile number portability will definitely increase overall churn, but not significantly. Operators will focus on the post-paid subscribers rather than prepaid market segment." Shankari Panchapakesan, executive director, telecom practice, The Nielsen Company, adds: “We expect number portability at a national level will pretty much be a blip. The high spend segment is far more prone. And new entrants will be able to see a big impact if they leverage this platform right."

As many as four mobile-phone firms are expected to launch operations in India, not counting recent entrants such as Tata Docomo. While the likes of Bharti Airtel Ltd, Vodafone Essar Ltd and Reliance Communications Ltd have spent the better part of this decade building large customer bases, the newer brands are preparing to woo at least some of these away.

What’s encouraging them is a spate of recent surveys which indicate that the lucrative post-paid category is likely to see the highest levels of churn. Market researcher IMRB’s Switch study pegs the figure at 50%, while Nielsen’s Mobile Consumer Insights indicates that the churn is likely to be strongest in the high spending subset.

In spite of accounting for a meagre 10% of the market, the post-paid segment has an average revenue per user, or Arpu, that’s thrice as much as prepaid, bolstered no doubt by big spenders with corporate accounts.

Abdul Khan, head-GSM marketing Tata Teleservices Ltd, says: “A lot of legacy post-paid users in the business segment have to make do with a network which may not be as good as it was when they started. They would probably be the people who would look for an opportunity to move out."

The switching is likely to be further incentivized by the fact that mobile phone companies have thus far not really made customer retention or loyalty a priority.

With a few rare exceptions, both brand communication and the services on offer have been undifferentiated.

“Operators are taking the high value consumer for granted," says marketing consultant Pranesh Misra, chairman and managing director of Brandscapes Worldwide. “Sometimes they have corporate arrangements and, therefore, get consumers trapped in. You may spend Rs20,000 a month or Rs40,000 a month as a highvalue customer, but they don’t really recognize you. They throw all kinds of SMS messages at you, and when you call for help, you go through an interactive voice response like any ordinary Rs200 a month consumer. That’s where companies have to wake up and see how they can differentiate."

Marketing spending is expected to rise post-portability, as incumbents scramble to fence their subscribers in, and new players announce competitive rates and less cluttered networks. But this time around, the communication will no longer be built on a one-size-fits-all, acquisition- driven approach. It will be targeted sharply on the high-end segment of post-paid consumers.

Perhaps belatedly, customer retention and loyalty programmes will become far more critical. Pradeep Shrivastava, chief marketing officer, Idea Cellular Ltd, says: “Perhaps it is high time operators had a greater focus on customer service. Now your existing subscribers have a choice to move on the same number. The focus is going to be more in terms of ensuring you have fewer and fewer dissatisfied customers. It’s not so much about publicizing who you are; it’s delivering who you are which is going to be critical."

In a post-portability world, lovable dogs, precocious children and anthemic jingles are likely to lose out to cold hard facts on better networks, a differentiated offering and higher levels of customer service.

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