South African operators should brace themselves for an increase in customer churn and the possibility of a price war when mobile number portability (MNP) becomes a reality.
That is the word from Gopal Govinder, management consultant at Ericsson SA. He says that cellular operators should start positioning themselves for MNP by aligning it with their service offerings in such a way that it makes a positive difference for their subscribers.
?MNP is all about increasing subscriber choice and maximizing competition. The introduction of MNP in many other mature cellular markets has increased churn rates since it gives consumers the ability to change service providers without changing their cell phone numbers,? says Govinder.
The threat for African operators is that regulators may use this as a tool to force tariffs down in a low income-earning continent, and to create opportunities to license more operators.
"SA will probably be the first market and the benchmark for MNP on the African continent. We may see a marketing frenzy take place in SA as operators seek to outmaneuver each other with cheaper and more innovative packages, forcing tariffs down," adds Govinder.
Many subscribers in countries where handset subsidies are prevalent are likely to form part of a "grab and go" trend, joining one operator for a new, trendy phone, and then migrating to another that offers the best pricing, or most attractive services.
In Africa, however, voice remains the killer application and only two things matter to the average consumer -- lowest tariffs and trendiest handset.
While handset grab and go may take off among contract subscribers in SA, most subscribers in Africa are on prepaid packages, and will follow the operators with the cheapest tariffs.
According to Govinder, MNP strategies based on defensive or negative tactics are likely to fail. Instead, operators should simply regard MNP as a new addition to their service portfolios.
Subscribers usually churn if they are unhappy with an operator"s customer care, service portfolio or unattractive tariff rates.
For that reason, building a strong brand and forging close relationships with existing customers are the fundamentals in overcoming churn.
?Ericsson"s best practices and international experience with MNP suggest that operators undertake a stringent network optimization exercise and develop an updated marketing plan with emphasis on customer retention and value-added services for the enterprise and mature segments,? says Govinder.
He adds: "Operators will need to assess their strategy as their markets start to saturate, and the importance of customer retention increases. To overcome market demands and the impact it will have on the service layer, operators are advised to look deep into traffic and revenue growth."
?The key to MNP is to align it as a service for advanced subscribers and business users and to augment the specific GSM/GPRS traffic with, and in some markets, aggressively encourage fixed-mobile substitution,? Govinder concludes.