IMEI number implant is a Rs 400 crore opportunity

That started as a security concern and a
fear of losing a huge chunk of the subscriber base, the IMEI trouble has turned
out to be a big opportunity in disguise. The ban on the use of handsets not
having proper international mobile equipment identity (IMEI) number is an
opportunity worth Rs 400 crore for every stakeholder of the telecom industry in
India, thanks to the emergence of the IMEI number implant initiatives.

The actual cost of IMEI number implant per handset is Rs 200.
There were a few reports where a subscriber was charged Rs 300-400. As per
industry estimates, around 20 mn mobile handsets, operational on various
networks, do not have proper IMEI numbers. Considering the huge number of
handsets, the market size turns out to be worth Rs 4,000 mn.

As per the government directives, handsets with false IMEI
numbers were blocked from midnight of November 30, 2009, due to security
reasons. The security agencies recommended the ban on phones not having proper
IMEI number, after it was found that terrorists were using such phones that
could not be tracked.

IMEI Number

IMEI number is a fifteen-digit unique number which enables service providers in
tracking or blocking mobile phones if lost. Operators can also track the handset
user by using GPS.

Since April 2000, IMEIs have been allocated by British
Approvals Board for Telecommunications (BABT) -acting on behalf of the GSM
Association-to legitimate GSM terminal manufacturers without the need to provide
evidence of approval. The BABT was established in 1982 by the UK government to
provide type approval services to the telecommunications terminal industry.
Since then, BABT has established itself as a notified body in Europe, and has a
number of appointments such as the IMEI allocation authority for GSM terminals
under appointment from the GSM Association.

Good for All

The larger pie of the implant money went to BABT, the provider of IMEI
number, while service providers and retailers providing implant got the least.
According to TR Dua, officiating director general, Cellular Operators
Association of India (COAI), around 1,600 centers were established in the
country to facilitate implant for the affected subscribers.

The decision helped the telecom industry to retain around 20
mn existing subscribers, which is almost equal to two month subscriber additions
by all the telecom operators in the country. Bharti Airtel and Vodafone-the two
largest GSM service providers of the country-were most affected by the ban.

Among the top three telecom companies, Reliance
Communications was the least affected as it has a larger CDMA user base. CDMA
services come with bundled handsets, having a proper IMEI number. Reliance
Communications has been offering GSM services for the last one year, and has a
smaller pie of the total subscriber base in this segment.

The preparations were on much before the end of the deadline.
Subscribers not having proper IMEI number handsets were called and offered the
implant after paying the charges.

Mobile handset retailers including Mumbai based The
MobileStore-which is now focusing more on selling high-end handsets-has also
jumped in the fray, and is offering implant services.

Arti Mehta, chief marketing officer, The MobileStore says,
"The IMEI number is used by the GSM network to identify valid devices. We have
successfully done over 30,000 IMEI implants at our 160 stores in sixty cities.
IMEI number is an important tool for handset tracking. This is a step in the
right direction to support the national security program."

However, telecom operators refrain from making any comment on
the issue, terming it as a regulatory issue. "The preparations were on for the
last four months, before the deadline. It's a good opportunity for every
affected party. All of us are benefited in one or the other way" says a senior
official of a telecom service provider.

The development had come as a boon for the small mobile
traders as the demand for low priced branded set suddenly soared in the market.
Those who had failed to get the valid code are now approaching the shops to
purchase cheap handsets of branded companies that had suddenly increased the
demand.

The Gray Side

The new and small players in the handset market were affected by the IMEI
number issue. Buyers have started asking questions before buying such handsets.
These players were seen as an extension of Chinese handsets. The existing
customers of such phones were also in panic and rushed to crosscheck the IMEI
number.

Some of the handset manufacturers issued an advisory to
reassure their customers that their handsets carry a genuine IMEI number and
they are registered member of the Indian Cellular Organization (ICA) in India
for manufacturing GSM and CDMA mobile handsets.

Kunal Ahooja, director and CEO, Spice Mobile says, "We have
been witnessing distress and panic among mobile users since the past few days,
where issues are arising with handsets of all brands, and we reassure them that
their Spice Handset carries a genuine IMEI number so they need not be worried
about it." Spice Mobile has issued an advisory to its users.

The company said that in the event or due to any technical
reasons a Spice Mobile phone gets deactivated, the same can be brought to the
Spice authorized service centers, where it will be restored immediately free of
cost.

The low-end handset market would swing in favor of the bigger
brands, until and unless the new and smaller brands distance themselves from the
Chinese handsets.

IMEI and Law

Every country has a different law when it comes to IMEI numbers.Many
countries have acknowledged the use of IMEI numbers in reducing the effect of
mobile phone theft. For example, in the UK the Mobile Telephones
(Re-programming) Act, changing the IMEI number of a phone, or possessing an
equipment that can change it, is considered an offence under some circumstances.
While in Latvia, such an action is also considered a criminal offence.

Other countries use different approaches when dealing with
phone thefts. For example, mobile operators in Singapore are not required by the
regulator to implement phone blocking or tracing systems, IMEI based or
otherwise. The regulator has expressed its doubts on the real effectiveness of
this kind of system in the context of the mobile market in Singapore. Instead,
mobile operators are encouraged to take measures such as immediate suspension of
service and the replacement of SIM cards in case of loss or theft.

"The decision was taken in the larger interest of mobile
service subscribers. As many as 20 mn people have been affected by the decision.
That is why DoT has allowed the implant of IMEI numbers," says Dua. He clarified
that besides facilitation, COAI has no role to play in the implant of IMEI
numbers.

"I have asked the department about the deadline of the
program, but they are yet to reply," adds Dua.

The directives are benefiting the existing subscribers, at
the same time it's making way for new handsets, most of them illegally imported
in the country, to get an implant in just Rs 200. The DoT directives lack
clarity on the deadline front and implant in new handsets.

Akhilesh Shukla

akhileshs@cybermedia.co.in