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Help Mobile number portability set to trigger tariff war
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Airtel and Vodafone expect the impact to be minimal BY Durba Ghosh Delhi After a four-year delay, mobile number portability (MNP), which allows mobile consumers to change their telecom service provider without changing their existing phone number, has been finally launched in the Haryana circle. It would be extended to more states next month and will be available across India by March, according to the Department of Telecommunications. Customers will have to pay just Rs. 19 to switch operators, with the understanding that they stay with the new operator for at least three months. "We are very happy to know that it is finally launched. We are MNP-ready." said Deepak Gulati, executive president, mobility, Tata Tele Services Ltd (TTSL). The company says it has been ready to launch MNP from the time it launched its CDMA and GSM (the two mobile telephony technology platforms) networks. But the moot point is whether MNP will force operators to cut prices further, crimping profit in a market where tariffs are already the lowest in the world.


Some industry executives say it would drive down call and data prices by as much as 20 percent. "We definitely expect a price war in the post-paid market," said Vsevolod Rozanov, chief executive officer of Sistema Shyam Teleservices Ltd, which provides phone services in all the 22 circles in the country. "We expect tariffs to fall by double digits in post-paid segment. We will aggressively target this segment." Sistema Shyam, which operates under the brand name MTS, and Aircel Ltd expect to grab customers from their bigger rivals, who have been struggling with congested networks. While Sistema plans to position itself on pricing and network quality, Aircel plans to attract users through stronger branding. "We have already started positioning our brand on the future of telephony. We don't think pricing can win a war. Our aim is to gain mid- and high-value users who are currently sitting with the incumbents," said Gurdeep Singh, chief operating officer, Aircel. Aditya Birla Group's Idea Cellular Ltd has already started airing the "Switch to Idea" campaign that exhorts subscribers of other networks to use their services. Other operators are expected to follow suit in the next few weeks. According to Rajat Mukarji, chief corporate affairs officer, Idea Cellular, "We have made substantial investment in the network, technology, processes, etc to allow mobile subscribers to switch networks and move to Idea."


But according to the leaders, Bharti Airtel Ltd and Vodafone Essar Ltd, portability is unlikely to shake up the industry. They expect just 5 per cent of the total subscribers to choose a different operator. Hemant Joshi, partner at consulting firm Deloitte Haskins & Sells, agreed. "A cost war is unlikely in the present scenario, since the tariffs are already low. The cost paid in capex (capital expenditure) and opex (operating expenditure) for 3G (third-generation) and broadband wireless access (BWA), and with companies concentrating on implementing 3G, operators are likely to take the customer retention route by concentrating on brand loyalty and better quality of service offerings rather than enter into another cost war," he said. So far, record subscriber additions have helped companies such as Bharti Airtel and the Indian unit of Vodafone PLC to offset the decline in revenue because of lower tariffs - service providers have been luring new users by cutting tariffs, making India the cheapest country to make a phone call. That may change as new additions slow with the rise in mobile phone penetration.


About seven out of 10 Indians now own a mobile phone, compared with less than one in 10 five years ago. The last round of price cuts was triggered by a per-second billing plan introduced by Tata DoCoMo, a joint venture of Tata Teleservices Ltd and Japan's NTT DoCoMo. Low tariffs and handset prices have helped India to add record number of users every month, surpassing China's additions. The total number of mobile phone subscribers in the country rose to 670 million at the end of August, a tenfold increase from 2005. Now, with MNP, operators such as Tata DoCoMo will target the high-spending post-paid users, who constitute 5 per cent of the total subscribers but account for as much as 20 per cent of the revenue. Only 1 percent of post-paid subscribers change their service provider compared with more than 5 percent in the pre-paid segment. With inputs from Shilpa Shree in Mumbai.

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