Mobile number portability: Success or failure? 

With mobile number portability planned for this year, the big question is how much impact it will have on the operators.

Charles F. Moreira

Mobile number portability is scheduled to be introduced here by the middle of the year. There will be greater freedom of choice for mobile users as they will be able to switch to their operator of choice, while retaining their number. In theory this should introduce greater competition between operators and hopefully bring down call charges and force operators to provide better service overall but will that be so in practice?

Under the present system, switching between telcos means getting a new mobile number.  It’s natural for users to be reluctant to switch since it will involve informing contacts of the new number, and in the case of businessmen, printing new business cards and company letterheads.Mobile number portability (MNP) was conceived to address this issue. In essence, it allows for a user to take along their number when they switch users. Such facilities were first introduced in Singapore in 1997, in Hong Kong, the Netherlands and the United Kingdom in 1999, followed by 21 countries like Australia the United States, South Korea and Taiwan. Brazil, India and South Africa are among countries planning MNP implementation.

Porting one’s mobile number became an absolute user right in the European Union under Article 30 of the Universal Service Directive of 2002. At that time, mobile penetration was reaching saturation and it helped reduced barriers for new 3G operators to attract customers, according to Neil Gough, director of international relations with the Vodaphone Group.

A public inquiry paper on MNP was issued by the Malaysian Communications and Multimedia Commission (MCMC) on 1 September, 2004 to obtain public and industry feedback and comments on MNP. Implementation was supposed to have begun in 2006, though it now looks more like the middle of this year.

Last year, this publication said that the number of subscribers switching operators or what is known technically as the “churn rate” soared in Hong Kong following the introduction of MNP. Five million subscribers switched operators within three years, in a territory with a population of seven million.

Vodaphone’s Gough pointed out that the experience of MNP in Australia, Germany, Hong Kong, Ireland, the Netherlands and the United Kingdom was increased competition, while in Ireland it resulted in more customers for its third operator and a 3G operator.
He also said that small new operators were most strongly in favour of MNP, which could suggest operators like DiGi and the new 3G operators, Time dotCom and MiTV stand to benefit from MNP when it’s implemented.

The biggest beneficiaries of MNP would be users with a large number of contacts and small businesses. The effect on other groups was unclear and that there was no evidence of “serial churners” or people who keep on changing their operator for the sake of changing.
However Gough said that over the longer term he expected to see a shift to preferred networks.

For example, 7.8 million subscribers in the United States ported their numbers in the first 12 months after MNP was introduced, with most moving to Verizon, the largest operator and T-Mobile, one of the smallest among operators and placed fourth in market share.

An April 2003 statement by Wind Telecomunicazioni in Italy said that MNP had not fully taken off in Italy due to long, drawn out procedures, with transfer times established by current operator’s agreement being over 15 days, which is way in excess of other European countries, despite the regulator’s explicit intention to reduce that to five days.

On the other hand, transfer times are within 48 hours in Hong Kong, where 60% of subscribers have change operator, leading to 60% average price reduction since MNP was introduced.
According to the Hong Kong Office of the Telecommunications Authority, the monthly success rate in terms of the number of successful portings over the number of applications varied between 91% and 97% from March, 1999 to November 2006.

According to a 2003 paper by the European Conference of Postal and Telecommunications Administrations, the most common reason why an operator can refuse a porting request to another operator is that the subscriber hasn’t completed the term of his contract. Others include debts owed, the handset is SIM-locked (which does not apply here), the handset is stolen, national defense and technical issues.

Well, all that happened some years ago, one wonders how successful MNP would be in the longer term, after all those who had been wanted to change operators have done so.A recent report by strategy and consulting firm Analysys (http://research.analysys.com/store) in Cambridge, UK found MNP did not do well in many markets.While MNP has been in place for several years in many countries and despite the high level of churn in the mobile industry, there are few examples where over 10% of mobile numbers were ported. Barriers to porting numbers include high porting charges, long delays before porting is implemented, limitations to data services after number porting, and many users being unaware of the porting option.
“One of the biggest barriers to MNP is that customers do not realise it is available,” said Alastair Brydon who co-authored the report. “Even with the best technical solutions and processes in place, if regulators and operators do not publicise it then it will fail.”

“Contrary to popular belief, MNP does not necessarily increase long-term churn or cause price competition, though it can be a major benefit to mobile operators if implemented well and some have achieved significant market share growth by embracing it,” he added.

An issues resulting from number porting is that callers don’t know what network the person they’re calling is on, since numbers beginning with 012, 013, 016, 017 or 019 will no longer be tied to a particular network. Callers won’t be sure whether they will pay intra-network or inter-network call charges.

However, in practice, making domestic inter-network calls doesn’t seem to be much of an issue in Malaysia, since people quite happily call or SMS friends, relations and business associates on any network without hesitation.

Either way, we’ll know the answer soon whether our MNP implementation will follow the example of the Italian or Hong Kong experience.