As the mobile telecom market in Ghana approaches saturation, where seven out of every ten people have mobile phones, the government has signaled a shift in policy from ‘supply-side’ incentives for service providers to ‘demand-side’ measures that seek to focus on consumer interest and empowerment
Within the last 18 years, the telecommunications market has been driven by the ‘supply-side’ policy. Indeed, it has successfully provided an alternative competing communications infrastructure to the former monopoly telecommunications market. The current concentration on the ‘demand-side’ will foster competition, enhance quality of service, stimulate innovation and most importantly, put pressure on call rates to fall.
‘Mobile Number Portability,’ a feature that enables consumers and businesses to choose to retain their existing mobile phone numbers when switching providers, is one such demand-side service that has been mandated to be incorporated in standard service offerings by July 1, 2011. Such demand-side policies are expected to have a significant impact on the market and to set the stage for a more highly competitive market.
In the last couple of years, many new issues have emerged affecting the telecommunications market (including SIM registration, co-locations arrangements, freeze-on mast deployment, new spectrum for broadband deployment, the establishment of data centers, and telephone clearing houses that monitor international inbound traffic) but no single issue has generated so much public discussion as has the introduction of mobile number portability.
Mobile subscribers are vociferous in their demand for better quality of service and cheaper call rates. Some are unenthusiastic about the sector’s latest competitive market trend, citing the costly nature of the mobile number portability and the ill preparedness of the marketplace as the basis for their lack of conviction.
Hon. Haruna Iddrisu, Minister of Communications and the sponsor of the mobile number portability (MNP), has consistently argued in favor of the service as an essential part of the competitive framework. He believes that the market will become genuinely competitive only if subscribers have the right to change operators at minimum cost and minimal inconvenience. As a result, the implementation of MNP will empower consumer with the flexibility to change operators with their original number intact.
For service providers, mobile number portability threatens to increase the percentage of their customers who terminate their service and switch to another provider during a given period of time. This percentage is referred to in the industry as the customer “churn rate,” and it has a significant impact on the bottom line for providers of mobile services. Mobile number portability is therefore a contentious regulatory issue for mobile operators. It encourages churn, which mobile operators try very hard to minimize.
Regulatory policy favoring the supply side is very effective for building infrastructure, and by any reasonable measure, supply-side policies have done a wonderful job in expanding mobile infrastructure and services in urban areas—in cities, towns and villages across the country—and the new demand-side improvements will provide additional benefit to mobile customers.
Currently, the monthly churn rate of the industry is between 3 to 5 percent. It is estimated that an effective implementation of MNP in the country will increase the monthly churn rate to about between 7 to 9 percent.
As a result, the threat of mobile number portability has compelled mobile operators to upgrade their existing infrastructures, revise their tariff structures and strengthen their customer loyalty programs.
The call rate per minutes tends to neutralize as operators begin to match each other to a market-enforced uniform tariff.
For example, MTN, Vodafone and Zain have developed a single rate for both on-net and off-net calls at ten, fourteen, and eight Ghana pesewas respectively. For Vodafone subscribers, registration is necessary before they can enjoy the 8 GP per minute call rates. Since then, there have been many different types of call plans. For example, MTN has 4 different call plans.
The advent of a single rate for both on-net and off-net will help customers know the cost of their calls even if the recipient of the call has ported his or her number. For example, Zain customers would pay 8 GP even if the recipient of the call has ported his or her number from Zain to other networks. In contrast, Tigo subscribers would pay 14 GP if the recipient of the call has ported his or her number from Tigo to other networks.
Mobile number portability makes it difficult for subscribers to differentiate between on and off-net calls. This is because mobile subscribers would not be able to determine if their call terminates on on-net or off-net.
The current policy focus on the consumer empowerment through mobile number portability is a viable strategic initiative for the industry. Thus, policy makers in the telecommunications sector have correctly identified the appropriate strategy to stimulate further competition in the industry by introducing mobile number portability.