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Over the weekend, TRAI, Indias telecommunications authority set the maximum fee that operators can charge for the implementation of mobile number portability. Number portability allows consumers to take their number with them when they switch operators; reducing exit barriers to change service provider. The fee has been capped at Rs. 19 (US$ 0.40); allowing the large majority of mobile customers to access this service.

Expect this to shake up the already vibrant Indian mobile market. New operators such as Tata DoCoMo had already started a price war, lowering tariffs and introducing per-second billing plans for both pre-paid and post-paid customers. With the introduction of number portability; many customers will now be more willing to change service provider to move to cheaper plans on better networks.

The biggest losers of this move will, ironically, be the state owned operators; BSNL and MTNL. The pair have together added less than 1 million subscribers in Oct-2009; which is a small portion of the 16.67 million subscribers added in the Indian wireless market in that month. In addition; both BSNL and MTNL have lost customers in mature mobile markets in the metros of Mumbai and Chennai. This comes despite the fact that the carriers currently have a de facto monopoly on the provision of 3G mobile services.

The reasons for this decline are simple; the state owned carriers are unable to compete in either branding or service quality with their private competitors. In most regions; they are also no longer the lowest cost service provider, nor the only available network in rural areas. Allowing legacy customers the easy option of switching carriers without losing their number will hasten the decline of BSNL and MTNL as major players in the Indian mobile market.