Customer Loyalty program for telecom service providers

LinkedIn discussion on the topic of Customer Loyalty programmes by Telecom Service Providers (TSPs).
Increased competition and introduction of number portability will make it imperative for mobile service providers to introduce good customer loyalty programs.
http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&gid=23013&discussionID=434160&commentID=550356&trk=discq_mor&goback=%2Esrp_1_1226460130686_in%2Eanh_23013#commentID_550356

Hi Ritu

I think Telecom Service Providers (TSPs) need to take a leaf out of your books (Credit Cards) on the Customer Loyalty Programmes.

However a few stumbling blocks to be kept in mind (these act as restriants currently):
1. Number Portability and Churn are devils that may and probably will ruin the ROI sheets of a lot of these TSPs.
2. Opening up of the licences can see a lot of investment in India by other TSPs (e.g. Etilasat, Telenor)
3. Hence the market will see further fragmentation
4. Given this, there is a reluctance from operators in investing in higher quantums in 2009
5. While operators reduce the capital expenditures by sharing infrastructure, uncertain economic conditions cast a doubt on returns over existing infrastructures.
6. 80% revenues of the TSPs comes from less than 20% of consumers in very small pockets. (Metros and major 10 towns)
7. Hence there is excess demand in cities and rural networks have huge white spaces.
8. Spectrum Limitations by the government donot allow operators to value sell higher services to the premium customers (the 80% revenue ones)
9. Higher Spectrum (3G) has very high entry cost which presently doesnot guarantee a break even in a medium term horizon.
10. Then there are other disruptive technologies such as VoIP which loom as a threat in the horizon.
11. The internal competition threatens to commoditize the voice and sms based revenues and most operators will need to value sell to maintain profitability.
12. However most operators are holding up their investments presently in face of toughening market and general conditions.

In all, the only gainer is the exchequer who holds the spectrum, the new technology licences and service taxes. The markets will gain in competition and users will benefit out of that but most of this will be discount deals or customer loyalty programme led. There wont be any major value lifting propositions.

Bottomline for you: While TSPs will take Credit Card Route to retain consumers, that wont really guarantee innovations and newer technology and services to consumers. Do let me know if i confused you with the discourse. Thanks Regards Manas