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Wrong Number: Why Telecom’s Subscriber Base is Dropping

Last month, India’s GSM operators lost nine million subscribers between them, bringing the total number down to 664 million from October’s 673 million. Bharti Airtel lost 2.8 million users, Vodafone 2.4 million, Idea Cellular 1.6 million, Aircel 1.5 million, and Uninor and Videocon 0.4 million each [1].

CDMA operators such as Reliance Communications and Tata Teleservices weathered similar losses, and overall the Indian mobile market has seen some 30 million disconnections in the last four months.

With 2012 already having been an annis horibilis for Indian telecom, are matters going from bad to worse now?  Have Indians had enough of mobile and started giving up on telecommunications altogether?

Subscriber numbers are dwindling because operators are doing some much-needed cleaning up of their subscriber bases. There are two reasons why they’re doing this now.

First, the government recently introduced new norms for subscriber verification, insisting that certain fields such as ‘name’ and ‘address’ must be properly verified before anybody can be given a connection. To comply with the new standards and avoid stiff penalties, operators have been clearing their registers of connections that don’t comply.  They have been introducing new processes to comply as well, and have hired thousands of sales staff onto their books to ensure that customer verification is done by employees and not agents.

Second, operators have been cleaning up their “VLRs” to ensure that more subscribers on the network are ‘live’. Each operator has a Virtual Location Register (or VLR, given telcophiles’ knack of inventing three-letter acronyms for anything that has an on button) which is a database that provides a count of all the SIM cards being serviced on an operator’s network.

Operators around the world have policies of disconnecting those SIMs on the VLR that have no activity over a period of time (say 90 days) and therefore the numbers reported in most markets are usually an accurate representation of the “real” number of users.

But we are unique in India and here the gap between reported and live connections has only grown: Today only 77 percent of the industry’s reported 900 million+ subscribers are “live.”  Now that operators have started culling out non-compliant and dormant accounts, subscriber numbers are going down.

In essence this is a good thing, and the reported decline will have no real impact on revenue or activity since the cull is mainly of dormant or erroneous accounts, and relatively few from active subscribers.

Newspapers claiming that operators “haven’t added a single subscriber” in October are erroneous.  The industry continues to add around 6 million new subscribers every month.  Things may be bad in Indian telecom, but not that bad after all.


[1] Source: Cellular Operators’ Association of India (COAI)

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A much needed step taken by all the players. Although this should have been earlier, nevertheless its always better late than never.
Mohammad Chowdhury
Quite right Arijit, its a correction to an accumulated problem. Happy New Year!
The inactive SIM card cancellation is an important issue for the telecoms, which increases the maintenance. The multiple sim cards by a single person is one major reason for this. The question is why any customer buy too many service provider's SIM cards ? Answer is simple, no customer is happy with their service provider, temporary offers, no credible responsibility towards complaints. In near future, all the Indian service providers will shrink in the volumes of customer base, except foreign companies like voda, telenor...... If they also infused with Indian blood, then no one can change the quality of the sector, the same snail speed data services, call drops, high radiation emitting cell phone towers etc......
Mohammad Chowdhury
You're right - there's alot to be done in Indian telecoms to improve customer loyalty and satisfaction, and service quality. Maybe we'll see some of that begin to happen in 2013.. happy new year!
Hi Mohammad I actively follow your articles, blogs and TV interviews to gain insight into industry trends, direction and challenges. I would like to offer some (unsolicited) technical comments on your above blog. VLR is a technophiles 3-letter acronym for "Visitor Location Register" and each operator has as many VLRs as they do MSCs, since MSCs and VLRs are colocated (your blog suggested "Each operator has a Virtual Location Register ..."). In addition, purging the VLR after a configurable duration of subscriber inactivity is an automatic process per 3GPP standards i.e. the VLR performs "Implicit IMSI Detach" procedure after the expiry of inactivity duration timer and sends "Purge MS" message to the HLR to request permission to delete the subscriber's record in the VLR. If the HLR determines that the "Purge MS" message is originating from the same VLR where the subscriber was last registered, the HLR sets the "MS Purged" flag and permits the VLR to delete the inactive subscriber's data. With the "MS Purged " flag set, all terminating calls to the detached number are directed to an announcement such as "this number is not reachable". See snip below from standards: Mobile subscriber purging procedure A VLR may purge the subscriber data for an MS which has not established radio contact for a period determined by the network operator. Purging means to delete the subscriber data and to "freeze" the TMSI that has been allocated to the purged MS in order to avoid double TMSI allocation. The VLR shall inform the HLR of the purging. When the HLR is informed of the purging, it shall set the flag "MS purged" in the IMSI record of the MS concerned. Presence of the "MS purged" flag will cause any request for routing information for a call or short message to the MS to be treated as if the MS were not reachable How this relates to your blog is as follows - In order to cleanup inactive subscribers, operators would have to isolate and purge HLR subscriptions with the "MS Purged" flag set for the longest duration. No cleanup happens on the VLRs as the blog suggests. Purging subscriptions of inactive subscribers on HLR in turn ensures that VLRs only persist records of the active subscribers. Thank you for your informative and interesting insights in 2012. Wish you and yours a Merry XMas and Happy Holidays!
Hi Kaushal, Thank you for sharing such valuable insights. Usually we ignore such details but such information does help one to gain a better understanding of how technical processes work in telcos
Mohammad Chowdhury
Kaushal, thanks - your insight takes our understanding into further detail. Please help us demystify more issues as they come up in 2013!
 
 
Mohammad Chowdhury
Mohammad Chowdhury is PwC India's Telecom, Media and Technology Industry Leader and a member of the global executive team. He moved to India following senior roles in Vodafone, IBM and previously PwC where he started his career on the graduate scheme for economists. From London, Mohammad ran Vodafone Group strategy across emerging markets, and from Cairo served on Vodafone Egypt's executive team just before the Arab Spring. At IBM, he set up the corporation's first global telecom solution centre in Bangalore, and at PwC directed the firm's account at the World Bank in Washington, D.C., and the firm's telecoms privatisation and restructuring work in Eastern Europe, Middle East and Africa. Mohammad served as the lead adviser to telecom sector reform in countries as diverse as Saudi Arabia, Zimbabwe, Ethiopia, Slovakia and Slovenia. He is a leading commentator for the Financial Times, BBC, TV-18, NDTV and other media.

Mohammad has worked in 72 countries, lived in 7 and speaks 6 languages. He has a BA in Politics, Philosophy and Economics from Oxford University, an MPhil in Economics from Cambridge University, and executive training in strategy from Harvard Business School. He was born in London, has family origins in Bangladesh, and lives in Mumbai with his wife and five-year old son.
 
 
 
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December 26, 2012 17:37 pm by Mohammad Chowdhury
Quite right Arijit, its a correction to an accumulated problem. Happy New Year!
December 26, 2012 06:45 am by ARIJIT DUTTA
A much needed step taken by all the players. Although this should have been earlier, nevertheless its always better late than never.
December 25, 2012 17:35 pm by Mohammad Chowdhury
You're right - there's alot to be done in Indian telecoms to improve customer loyalty and satisfaction, and service quality. Maybe we'll see some of that begin to happen in 2013.. happy new year!
December 25, 2012 12:34 pm by Sridhar
The inactive SIM card cancellation is an important issue for the telecoms, which increases the maintenance. The multiple sim cards by a single person is one major reason for this. The question is why any customer buy too many service provider's SIM cards ? Answer is simple, no customer is ha...
December 24, 2012 01:26 am by Mohammad Chowdhury
Kaushal, thanks - your insight takes our understanding into further detail. Please help us demystify more issues as they come up in 2013!