State of Telecom Industry in Pakistan

A good write-up from PTA on mobile number migration work, currently in progress. See my previous posts here and here.

Pakistan follows International Telecommunication Union (ITU) -T standards E.164 for geographical national numbering plan that includes local loop & cellular mobile operators. The cellular mobile numbers are identified by means of 4-digit separate access code which is known as NDC (National Destination code) i.e. 03xx (x=0-9). The first 50 codes are reserved for Cellular mobile operators. Each access code has the capacity to accommodate 8-million subscribers excluding level “0” & “1”. This means that subscriber number consist of 11-digits i.e. NDC & 7-digit number starting from 2 to 9. In Pakistan cellular mobile numbering plan is based on geographical boundaries that limit the utilization to 50-60% of the numbering space available against each NDC. In this scenario, each cellular mobile operator requires multiple NDCs to accommodate their growing subscribers.

To provide more numbering space, a public consultation process for 7 to 8 mobile number migration was started in 2007. The consultation paper was circulated to all stakeholders and it was decided that the current mobile numbering plan i.e. 0300-xxxxxxx will be changed into new mobile numbering plan i.e. 030-0xxxxxxx. The mobile number migration is planned to alter minimum changes in the existing mobile subscriber numbers, as there is shift of 1-digit from mobile NDC code to the subscriber number. Except CMPAK [031], Instaphone [036], & SCOM [035] the numbering plan of remaining cellular mobile operators will remain the same from subscriber point of view. The dialing format of Mobilink, Ufone, Telenor, & Warid will remain the same but the changes are implemented in core network. This will increase the current numbering capacity by 10 times which is enough for next two decades in Pakistan.

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With the monthly additions average around 2.5 million subscribers, 2007 has been a phenomenal year for the mobile market growth in Pakistan.  Here’s a look at the numbers (from PTA site) for the first 8 Months Of 2007. A quick analysis of this data reveals few trends about market leadership.

Mobilink gained the most subscribers (5.45 million)  in this period. Its market share has been decreasing gradually but that’s expected with the increase in competition and teledensity.

Telenor was the fastest growing company, 45% of their current subscribers (5.35 million) were gained this year. No doubt that Telenor has emerged as a strong contender. It took a small lead over Warid in March and has been able to maintain it.

The rate of growth for Ufone has been impressive as well. It gained 5.32 million of  the approx 20 million new subscribers in first 8 months of this year in Pakistan. Paktel has been barely able to reverse the negative trend of subscriber losses.

Here’s the month-to-month change analysis.

Some of the reasons for Mobilink’s continued success include useful services such as Jazz Advance and smart marketing moves which has reinforced its brand. Mobile number portability - for one reason or another - did not do much to impact its subscriber count.

Mobile Number Portability service was introduced in Pakistan in March 2007. MNP facilitates the customers to switch to any service, package or operator while without changing their existing mobile number, thus providing customers with freedom of choice. MNP was part of the regulatory mandate under which mobile companies were awarded licences to operate. The MNP implementation was a large and costly undertaking.

However, according to Pakistan Mobile Number Portability Database Company Limited (PMD), so far approximately 20,000 subscribers out of 58 million have availed the facility. According to industry experts, “The incidence of switching from one cellular company to another in Pakistan has been much lower than the world average of 3 percent”.

The Unique Selling Proposition of MNP aims at increasing buyer’s bargaining power, which is viewed as a potential threat by service providers. The threat of buyer’s bargaining power is already high in Pakistan’s Telecom Market characterized by stiff competition. MNP does provide some justification from customer services and regulatory perspectives and due to this, operators will have to struggle further to minimize service switching and to retain the customers.

From service provider’s perspective MNP poses a potential threat of LOSS, especially for new entrants who are already struggling with market penetration, regulatory issues and inadequate infrastructure platform available in Pakistan.

However, very slow acceptance of MNP is providing much time to the service providers to craft their business development strategies accordingly. One of the reasons for the slow acceptance for MNP is lack of awareness. PTA so far has not been much effective to actively promote the service and it is not wise to expect the service providers to do so as “BRAND” and then the bottom line of business which is “Revenue” matters most for the market players. However, all the operators have allocated space for information regarding MNP on their websites. Further, the process to avail this service is also not very simple. From customer to recipient operator to donor operator to verification and then till activation of MNP is much time consuming. The switching cost is also there. Companies are charging Rs50 to Rs200 for MNP activation. In comparison to this it is far easier to purchase a new connection with free minutes, SMS etc in no time and informing all contacts about the new number through SMS.

From service perspective, customers have complained about the inability to receive incoming calls. Customers have also reported that PTCL callers have faced difficulty calling to their mobile numbers. The process can be slow and discouraging. In some cases it even took a month to get the MNP service activated.

PTA may have checked off another task on their “To Do” list but MNP in Pakistan cannot be described as a success so far. Only market forces will decide the long term prospects for Mobile Number Portability.

Added Oct 4, 2007: Mobile number portability: The Case For and against - LIRNEAsia

Now that MNP is available in Pakistan and all the companies are trying to win customers from their competitors, lets review the implementation of this $80 Million effort in bit more detail. For an overall summary of MNP please see my post at Pakistaniat. 

How MNP was Implemented in Pakistan

Number portability implementation in general requires the ability to deploy number portability successfully, with minimal service disruption to existing customers in a timely fashion, thus complying with regulations. Number portability readiness planning is an important early phase activity to achieve flow-through of processes, transition to a centralized solution, implement standard interfaces to reduce costs, maintain minimal service disruption to customers, and incur minimum costs during ramp-up and service launch.

In Pakistan, an independent body - Pakistan MNP Database (PMD) - was setup by Pakistan Telecommunications Authority (PTA), with the specific purpose of managing the implementation of MNP. The PMD is set to have a 14 member dedicated staff, with the entire project costing Rs. 4-5 billion (US$66 million – US$82 million) with US$10 million –US$12 million contribution from each mobile operator, reports ITP.

PMD is utilising Telcordia’s Number Portability Clearinghouse solution as its centralised repository for number porting. The solution automates ordering, provisioning, notification and administration and allows service providers to rely on the same set of rules for handling port requests, so number exchanges can occur quickly and accurately.

According to Telcordia website:

Telcordia Number Portability Managed Services is a turnkey solution comprising Telcordia Number Portability Clearinghouse application software, integrated with an in-country data center, help desk facilities, and staff to implement and operate numbering-specific services among operators who choose to outsource the implementation, deployment, and operation of services and focus on core competencies. The Number Portability Clearinghouse managed service facilitates centralized, automated ordering, provisioning, notification, and administration for porting numbers between operators. The Number Portability Clearinghouse software supports both fixed and mobile Number Portability.

Mobile Number Portability (MNP) has finally started in Pakistan during this week of March 2007. For background and history see my earlier posts on this topic.  Now the interesting battle to win and retain customers has started. In part 1 of the guide I’ll review how service providers and PTA have played their role in educating consumers and helping them through the transition. First a basic review of the process of MNP. After that a review of how service providers have conveyed MNP information on their web sites.

 1. Perform some basic checks for your number - such as: proof of ownership, no conflict due to existing agreement, number has been in service for at least 60 days etc.
2. Fill out a form and present it to the provider to which you wish to port.
3. Pay the porting fee (upto a few hundred rupees)
4. A Number Portability Request (NPR) is launched by your new provider (called Recipient Network) and you are given a SIM and a tentative time (at least 4 days - but could be up to 21 days) to when you can start to use new mobile provider network on this SIM.

I was hoping that PTA will provide a clear link to MNP guide on the MNP section of their web site but as of this writing I have not seen that (see my comments below for updates and see the PTA subscriber MNP Guideline). I am sure that very soon their will be some info posted there. But PTA really needs usability experts to imporve their site … despite all their hard work on getting MNP rolled out they did not update their site on time. In general it is not easy to get useful information from PTA site - see the cellular tariffs page for instance.

Mobilink provides a page on its site to help consumers move to its service!  As they put it: It is now very easy to become a part of Pakistan’s favourite cellular family. It is indeed ironic because as many readers of this blog have been quick to point, Mobilink stands to lose the most with MNP.

On Ufone’s site I was unable to find ANY information about MNP. What? I leave the comments to the readers.

Telenor presented a very well written guide and also provided a list of frequently asked questions (FAQ). Telenor has set the bar in terms of quality of information, clean design and a fast web site. Good job Telenor!

Warid’s site has also decent MNP FAQs, under customer service menu.  They could have made it more prominent. Overall Warid’s site has plenty of room for improvement.

This is the start of a new chapter in Pakistan’s telecommunication industry. I bet the call centers of mobile companies and the advertising agencies will be kept very busy in the next few weeks if not months. It will be interesting to see the competitive dynamics and the change in attention to customer service. I hope it will be worth all the investment.

Pakistan Telecommunication Authority (PTA) has asked different institutions to remove mobile phone jammers by January 30. Previously issued licences for the jamming devices have been cancelled. Reason? The cellular companies contended that jammers were hampering the quality of service. As mobile portability comes near, mobile companies are forced to think about customer sastisfaction but they have started with pointing blame to external factors! Read full PTA directive here and business recorder coverage of this here.

What are mobile phone jammers?

There are times and places when and where a phone ring is not desirable: Cinemas, places of worship , exam venues, libraries etc. A cell phone jammer is an instrument used to prevent cellular phones from receiving and transmitting the mobile signals to a base station. By broadcasting on the same frequency as a mobile network they block signals, leaving phone users with a “no signal” message. Effectiveness of a jammer ranges from a few meters to  kilometres. A portable mobile phone jammer is shown on the left, courtsey of BBC.

PTA has directed all the institutions to off load all the mobile jammers as the deployment of such equipment is causing interference and blockage to the service in vast areas even outside the authorised premises. The policy also suggested a separate process to be adopted, in which an inter-ministerial committee will decide on future authorisations in the context of national security.

In US and UK jammers are illegal. France allowed jammers to be used in movie theaters and performance venues. In India Government and school use jammers.

Silent Communications is a company which caters to this problem. As reported here, Silent Communication estimates that “lost calls” are worth $20 billion per year worldwide, and that use of their product will drive up operator ARPU significantly.

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This is a snapshot of mobile industry’s growth in Pakistan in year 2006. By many measures 2006 was an amazing year for Pakistan’s mobile companies. The total subscribers reached 48.2 million, translating to mobile density of 31%. Two new companies - Warid and Telenor - entered the mobile marketplace and the increased competition from them spurred growth in Pakistan’s mobile sector. Ufone and Mobilink announced major network investment plans. Marketing campaigns were at the centre of Pakistan’s mobile growth. And most recently the uncertainty about future of Paktel ended with China Mobile buying it.

Government regulators at PTA must be pleasantly surprised by all this growth in 2006 but they have a lot more to take care of in 2007. One important upcoming change is the much anticipated, but delayed, mobile number portability implementation.

Here are the numbers and market share at the end of 2006 (source: PTA web site)

Mobilink leads with over 22 million customers but its market share has declined to 46%. Ufone is next with over 10 million customers. Warid has over 7.6 million and Telenor about 6.6 million. Paktel has 1.3 million customers and Instaphone has only 0.25 million customers.

According to some analysts Pakistan is likely join the small group of countries with over 100 million mobile subscribers during the second half of 2008, and that by the end of 2010, there could be over 120 million cellular customers in Pakistan. Lets hope that this growth does not come at the cost of quality or service.

For more about the mobile companies in Pakistan see my earlier post here.

As we wait for Pakistan to implement mobile number portability, let us take a look at the status of another recent MNP implementation - in Japan. As expected there were issues after MNP - but the nature of the issues is interesting and has relevance to Pakistan as well. The main issues were not technical or process related - they were related to the intense competition and deceptive advertisement and marketing. The Japanese Fair Trade Commission had to step in and threaten the operators to fix their advertisements.  

Here’s a writeup of the issue as reported by the Japanese paper Daily Yomiuri.

The turmoil was triggered by the introduction in late October of the mobile number portability (MNP) system, in which a cell phone user can switch a service provider without changing the cell phone number.

Taking advantage of the introduction of the MNP system as an opportunity to boost its share in the cell phone market, SoftBank went on the offensive. The advertisements it ran during this sales campaign became the issue. SoftBank Mobile widely advertised that it would offer free calls and free e-mail in its cell phone service. But in fact, a number of conditions had to be met to receive such benefits. SoftBank Mobile’s advertisements failed to cite these conditions clearly.

But if the company continues to offer the discount deal after Jan. 15, that means the company deceived people who subscribed to it before that day. In that case, the FTC said it would issue a warning or take other measures against SoftBank Mobile. The commission also pointed out problems with advertisements by KDDI and the two companies.

The FTC said the language in the advertisements was inappropriate because it misled consumers into believing they could immediately receive a 50 percent discount in the basic subscription fee for some plans, or carry over without limit unused portions of a free call deal to the following month.  

The editorial notes that the Fair Trade Commission on Tuesday issued a warning to Softbank Mobile, saying the cellphone provider ran misleading ads in possible violation of the new law against unjustifiable premiums and misleading representations. The antitrust watchdog also issued cautions to Japanese operators NTT DoCoMo, KDDI and PHS operator Willcom.

This is my second post on Mobile Number Portability (MNP) in Pakistan. After the first post on portability a number of readers asked about the status of MNP in Pakistan. According to recent news  MNP is likely to be implemented in the first quarter of 2007.

MNP is the ability of end users to change service providers, without changing their mobile numbers. MNP is considered a major achievement for any mobile market and it is anticipated to shake things up in the already heated mobile market. Research from Japan and India indicates that about 30% of subscribers would switch providers if they could keep their numbers. MNP poses many technical and administrative challenges for the operators but provides a competitive landscape for consumers and operators. Usually MNP increases the potential of churn (loss of customers) thereby forcing service operators to work hard to retain their customers. MNP helps the best company to win.

Here’s a timeline of how MNP evolved in Pakistan. Source: PTA website.

2004: Cellular Telecom policy requires MNP implementation by Jan 2006.

January 2005: PTA asks for Request for Proposals on Mobile Number Portability

May 2005: All the six cellular mobile operators agree to form a Supervisory Board to implement Mobile Number Portability with the help of Pakistan Telecommunication Authority (PTA). Initial expenses on the implementation of MNP to be shared by the operators. Tore Johnsen, President of Telenor Pakistan is elected as Chairman of Supervisory Board to implement MNP.

June 2005: The Mobile Number Portability Regulations are placed for the information of all concerned and comments are requested from all stakeholders including general public

July 2006: Chairman PTA announces that MNP will be implemented in October 2006

Sep 2006: PTA sets first Quarter 2007 as the new target for MNP implementation 

March 2007: Latest date announced for MNP launch!

On December 12 The News reported that all the six operators - Mobilink, Ufone, Warid, Telenor, Paktel and Instaphone - have reaffirmed their commitment to meet the deadline of January to implement the MNP after five-time extension offered by the authorities concerned. The article mentions that ”MNP requires more than $500 million investment, which is contributed by the operators at the ratio of their subscribers base share”.

If you are interested in the details of how MNP works PTA has published a good paper here. The supervisory board owns the whole process and is responsible for numbering aspects, routing using centralized databases and for making sure that the portability is completely transparent (no dialing changes) to the end users. The press articles mention a “Pakistan Mobile Number Portability Database (Guaranteed) Company Limited” which appears to be the organization responsible for portability system.

If history is any guide, there will be issues when MNP is introduced.  The administrative processes for handling portability requests can be complex and hard to track at times. I hope that the companies provide an easy-to-understand guide for their consumer to get through the portability process. I’m sure most consumers will ignore these teething pains for the larger reward of retaining their phone number and for getting quality service!

Added on Feb 27 2007:  As reported in DAWN, March 23 is the next target date for MNP launch.

Number portability allows consumers to switch phone providers and still keep their phone number. It started with local number portability and even that took a long time in many developed countries and it was not a very smooth experience for the consumers as they tried to switch companies.

Mobile number portability (MNP) is the big thing now which is changing 
the nature of the competition for mobile industry.

In U.S. only a couple of years ago the mobile phone companies started providing portability of mobile numbers. It takes significant resources to set up the rules and systems to take care of local or mobile number portability. Usually the regulatory agencies mandate number portability by a certain date and the phone companies try to extend these dates. Till now Japan did not have MNP. But this week mobile phone carries in Japan are engaging in fierce competition to take advanatage of the start of the mobile number portability.

Below is an interesting survey result from ACNielsen.
It shows that price is the main factor for switching service.

Pakistan is also about to experience MNP. PTA has been studying MNP and supposedly has asked the providers to provide MNP by 2007. There is a study / paper on PTA website which gives details of their program. The interesting thing about Pakistan is that the area codes of the mobile phones are separate by the provider i.e. 0321 is Warid, 0300 is Mobilink. But how will it work after MNP?

The mobile companies have formed a MNP Consortium which will work through the details of MNP under PTA guidance. For sure MNP will change the market share. Recently Pakistan passed the 40 Million subsriber line. The growth may continue but mobile service providers will have to work hard to retain their customers!