Cellular Customer Churns Due to Mobile Number Portability: Causes and the Strategies to Deal with it (An Empirical Study)

Cellular Customer Churns Due to Mobile Number Portability: Causes and the Strategies to Deal with it (An Empirical Study)

S. Sreeejesh (ICFAI Business School - Hyderabad, ICFAI Foundation for Higher Education University, Hyderabad, India)
DOI: 10.4018/jitn.2013010104
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Abstract

Retaining existing customer has been considered to be one of the most critical challenges for telecommunication service providers than for attracting new ones. In telecommunication, the service offered is different from that of a general commodity sale as in the former case the service is considered to be a continuous process, wherein the service provider can offer the differentiated services throughout the customer’s tenure. This differentiation in service offered creates a demarcation from the competitors and hence establishes competitive advantage for that service provider for attracting new customers and retaining the existing ones, which ultimately determines the profitability. In this paper, the author captures this differentiation factor by investigating customer switching behavior under Mobile Number Portability (MNP) in Indian telecommunication market. It is shown that only limited attention has been paid to the customer churn under MNP and none of the existing studies incorporated psychological constructs as the determinants of customer churn. In this context, the study used discriminant analysis to understand the factors that best discriminate between switchers and non-switchers and predict (develop a churn prediction model) the customer churn behavior through incorporating psychological constructs. The findings indicate that service quality, customer satisfaction, attachment, commitment and switching costs are the major factors differentiating the switching and non-switching decisions. Service quality of the service provider found to be as the differentiating factor in churning decision. The results of the study have implications for both academicians and relationship mangers; they are using psychological constructs to predict customer switching behavior.
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The Indian Mobile Telecommunications Service Market

In India the number of mobile phone subscribers has increased from 846.32 Million at the end of March 2011 to 861.48 Million to April 2011. The industry registered a growth rate of 1.79 percent during March-April 2011 alone. The detailed information about telecom subscription is shown in the Table 1.

Table 1.
Telecom subscription information as on April 2011
ParticularsWirelessWirelineTotal
Wireless +Wireline
Total Net Addition826.9334.55861.48
Total Net Addition15.34-0.1815.17
% of Monthly Growth1.89%-0.51%1.79%
Urban Subscribers547.4225.94573.36
Urban Subscribers Net Addition9.38-0.099.28
% of Monthly Growth1.74%-0.36%1.65%
Rural Subscribers279.518.61288.12
Rural Subscribers Net Addition5.97-0.085.88
% of Monthly Growth2.18%-0.94%2.09%
Teledensity69.192.8972.08
Urban Teledensity152.417.22159.63
Rural Teledensity33.441.0334.47
Share of Urban Subscriber66.20%75.08%66.56%
Share of Rural Subscriber33.80%24.92%33.44%

Source: Telecom Regulatory Authority of India

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