India is set to become the world’s largest mobile youth market passing China in 2011 with 281 million activations.  By 2012 mobile owning youth in India will outnumber the entire population of the United States.

Up until this year, mobile operators in India have enjoyed very minimal external threats, but in just a few months Mobile Number Portability (MNP) will be introduced into the market. MNP enables mobile subscribers to change their service providers or their location without having to change their existing phone numbers. If the subscribers are not satisfied with the services of their service provider, they can change their service provider while retaining the existing phone number. This infuses competition among service providers and forces them to improve their service standards to check subscriber churn.

MNP presents a number of new challenges and opportunities for marketers and brand managers to maintain and garner greater share of the youth market. One of the biggest challenges for the them will be to retain the existing customers. According to research from The Nielsen Company, close to one in five (18%) of Indian mobile customers said that they would change their operator if they have the ability to retain their number.  For some mobile services, this news might cause some concern: a quarter of customers of Reliance and Tata Indicom said that they would be keen to change if MNP becomes reality, while 19 percent of BSNL subscribers would do the same.. The Telecom Regulatory Authority of India (TRAI) itself has estimated the porting rate to be at 10% in the first 15 months and 7%, 6% and 5% for the successive three years.

Nielsen Survey

So what does this mean for the Telecom marketers in India? Until now, marketers adjusted their pricing strategies to cut out the competition. However, in the wake of MNP, pricing won’t be the deciding factor. Currently, there are brands who provide 1 paise a second plan, that’s barely a quarter of a cent. Secondly, Mobile companies will be forced to look at technology to retain a greater share of the market. However, the reality in India is that not many people have woken up to the smart phones consumption yet. So that will be another challenge.

I won’t be surprised if brands start following the UK model of phone contract systems, wherein a consumer is tied to a service provider for a certain period of time which reduces the risk of consumers switching between various brands. With the intensely competitive mobile phone market, service providers will have to constantly come up with more exciting offers and greater value-added features.

Social media will play a key role in helping marketers and brand managers to retain a greater share of youth market. Needless to say, brands who adapt this new promotion strategy will have a clear competitive edge. There is a greater need to provide a package to the consumers whereby they could form a network of friends and families and enjoy free SMS, free internet access and the lowest call rates within their network of people.

What do you think the challenges will be? Can you think of how Telecom brands in India can over come the challenges of MNP?