Mobile number portability (MNP) is recognised by regulators as a key facilitator for competition. Research conducted by the Singapore regulator in 2005 indicated that 64% of consumers considered it critical to keep their number when switching mobile service providers and a 2005 survey in Canada found that 80% of mobile subscribers want the option to keep their number. Without MNP, consumers are forced to change their number if they change service providers – a fundamental barrier for new entrants trying to capture market share.

Since the introduction of MNP in September 2001, Australian consumers have embraced the ability to keep their mobile number when they change providers. According to the Communications Alliance – the industry group that administers MNP in Australia – since inception there have been over five million successful ports with an average of 85,000 ports per month.

Australia is seen as one of the world leaders in implementing MNP, in contrast to some markets where consumer use of MNP has been relatively modest. These models of both successful and unsuccessful implementations provide valuable lessons for countries still to introduce MNP – such as New Zealand and Canada, which will both launch MNP during 2007.

Exhibit 1: Annual volume of mobile number ports, Australia [Source: Australian Communications and Media Authority]

So, why is MNP a success in Australia? Quite simply, from the consumer’s viewpoint it is a quick, seamless, low-cost experience.

The process in Australia relies on a high level of industry co-operation and well-defined procedures, involving interfaces between the processes and systems of every mobile provider – operators and resellers. Industry performance is monitored by the regulator, the MNP Code requiring participants to complete 90% of ports within three hours and 99% within two days. The Australian regulator ACMA notes that when all systems are operating efficiently, switching a number takes only minutes. A retail dealer we contacted said the whole process usually ran like clockwork.

Exhibit 2: MNP implementation in selected countries [Sources: regulators, European Commission, Ovum, Network Strategies estimates]

Markets with low levels of porting activity have less consumer-friendly processes than those in Australia. Warning signs include:

Ineffective regulators / unco-operative service providers. Where rules are not enforced, or are too lax, service providers can delay switchover or create other consumer barriers such as high charges. In some countries, it can take up to 30 days to port a number, however three to five days is more usual. While delays certainly inconvenience the consumer, they also provide an opportunity for the original service provider to ply the consumer with inducements to remain. Without effective regulatory intervention, service providers may be reluctant to improve processes, as there is often a belief that MNP will increase customer churn. However the FCC (US regulator) noted that churn did not increase significantly with the introduction of MNP in the United States, and there was a positive impact for consumers as operators engaged in aggressive customer retention strategies, including better deals on upgrade handsets, incentives for longer contracts, better customer service and higher network spending.

High charges. It is not uncommon for the originating service provider to charge one-off administrative fees, however in some countries these are absorbed by the recipient service provider rather than passed onto the consumer. Countries in which there are no user fees include Finland, Ireland, Spain and the United Kingdom. In Germany, consumers are charged EUR24.95-30.72 (NZD41.25-50.79 based on purchasing power parity rates) – around five times higher than the AUD8.00 (NZD8.46) charged by some Australian operators. Research has found that higher porting fees leads to lower levels of MNP.

Poor consumer awareness. Lack of consumer awareness in some markets has limited the use of MNP. Market research conducted for the UK regulator in 2001 found that 3 out of 10 consumers were being told by retailers that it was not possible to keep an existing number when changing provider, despite MNP being introduced two years earlier. When the research was repeated in 2003, this proportion had fallen to 1 out of 10 consumers.

Technical issues. Singapore introduced MNP via a Call Forwarding solution in 1997, which requires two numbers (the original ported number and a second number) to support a ported customer. This method of porting has a number of shortcomings, including inefficient use of number resources, consumer confusion due to Customer Line Identification showing the second number rather than the original number, and the original numbers not being able to utilise MMS and IP-based services. The Singapore regulator found that these technical issues were discouraging customers switching providers, and directed that a new solution be implemented by Q4 2007.

Denmark appears unusual in that it has a relatively high porting rate, but lengthy time to port. The porting system does operate with few, if any, problems. However given that the maximum commitment or contract period in Denmark is only six months, and with a wide range of attractive service options readily available from competing providers, the Danish regulator suggests that consumers may feel little commitment to a particular operator and perceive MNP as an easy way of acquiring a new handset.

It has been said that MNP does not affect the underlying reasons for churn – rather it frees the dissatisfied consumer so that they may seek a better service. MNP enables consumers to reap fully the benefits of competition via increased choice and more compelling retention strategies. Service providers also benefit through increased opportunities to gain market share and to target high spend subscribers. These benefits can only happen through industry co-operation and effective control.