TRAI wants telcos to bear number portability cost- How fair is this ?

That's interesting mix of cost sharing which has been proposed.

 1. Per Port Transaction Charge- Makes sense as per my understanding. A new subscriber acquired by the recipient network will contribute revenue to the recipient network. Also, the donor network would have invested some costs to acquire the subscriber initially; so it makes sense to compensate the donor for fixed initial investment made. This serves a dual purpose- Long Term interest of operators considering current churn rates and Level Playing Field irrespective of the number of years in business (Offsetting the MNP advantage to new players to a certain extent).

2. Porting Charges- Does helps everyone, especially in a market which is so demanding. Ofcourse at a later stage, this can be another market tactic to waive this off.

 For both these charges, one important thing is that these charges cannot be kept Fixed. These charges must be differential on basis of time period a subscriber has remained with a particular operators.

For Per Port Transaction Charge, there can be 2 options:

a.) more the time period a subscriber has been with donor network- Higher the charge. Loyalty based.

b.) Less the time period a subscriber has been with donor network- Higher the charge. Initail Acquisition Cost based.

For Porting Charge, smaller the time period a subscriber is with donor network- Higher the charge.

There should be a maximum cap on sum of above 2.

The third one, Dipping charge is obviously justified with a uniform limited charges for Voice, SMS, Missed Call etc.

Cheers

I'm having a different view on this.  Once this number portability comes in place, telcos will try to retain a subscriber and avoid recurring losses which are higher than portability cost.  Additionally you may need to find out the % of subscribers migrating from telco X to Y to Z & reverse as this will always be a case with all telcos.  And hence at the end of the day its between telcos to do the  settlements which may end up paying nothing to each other.  So I do not see much burden on telcos and they definitely should bare this post settlement 'additional' cost.

Thanks

what would be a win win situation for both the operator and user.it could be simple mathematics.

if you feel the operator can bear the cost operator should,and if the client can client should,allow those who want to bear the cost to shift.(applies to both the operator as well as user).

or allow the operator to charge the cost over a period of 18 months.the operator can bear the interest burden.to acquire a client.

ideally it is the person who want pays.so to decide if th eoperator wants more clients or the user wants a new operator.

Well they should take it on thier sride, as they will in future strive to retain the customer.

What we forget here Sonal is that the telecom operators are dealing with two consumers one who is a billing consumer and the other is the prepaid consumer. The amount of charges that are dedcuted as surcharges are phenomenal. They are nearly 45% of the charge filled. Thats a huge chunk of money. Also, generally speaking with the paln that you are on in post paids, the rental charges on each of the services used is nearly 28% that of the billing amount. Thats the general findings. I guess that these guys are capable enough to take the poratbility costs on them and with an opportunity to WOW the consumers they should actually go the whole hog!

I agree with you guys but let's evaluate from telecos perspective, telecom operators are confronted with a whopping 40% annual churn rates and a good majority of those who constitute this 40% churn are low-end customers who generate low average revenues. It does not make a business case if operators must pay up to Rs 200 and bear the porting charges when cost of acquiring a new customer or selling a fresh connection is lower than this figure.

For people who wants to the kind of charges, there will be three types of charges in case of MNP. Firstly, per port transaction charge, that is the charge payable by the recipient operator (the operator, where the subscriber is willing to port his number) to the MNP service provider for processing the request. Secondly, porting charge, which is payable by the subscriber for porting his number, and thirdly, dipping charge.

Trai has asked the industry & other stakeholders to give their comments on this by August 5, 2009.
It will be interesting to see what others say about this.....

Dhananjay's and Markand's arguments are valid.

Portability can leave subsribers with the freedom to choose the operator.Service operators will be forced to offer a wide spectrum of services at competitive unit rates to retain their subscriber base and ward of subscriber churns...