4 Mobile Number Portability (MNP): strategies for operators and regulators

• Inconvenience. Mobile users may decide not to port their existing number if it involves
significant inconvenience, for example filling in extra forms, waiting on the end of a
phone for long periods, or needing to contact both their old network and new network.

• Limitations in the services that can be ported. Ideally, porting should allow all of a
customer’s existing services to be ported to a new network (provided the new network
supports those services). Customers who regularly use videotelephony, for example, are
unlikely to move to a different network if this service will not function after porting.

• Problems with access to third-party services. Some third-party services, such as

ringtone and logo downloads, operate on the basis of a customer’s mobile number and
could become unreliable after porting, for example if third parties utilise inadequate
validation processes or out-of-date information.

• Lack of awareness. While mobile operators and service providers may be keen to
encourage mobile users to switch from another operator, they will also be keen to
minimise the cost of acquiring new subscribers. Therefore, operators may not be keen to
promote the fact that it is possible to retain a mobile number if MNP adds costs for them.
A customer’s current mobile operator is unlikely to promote MNP in case it encourages
churn.

Many existing MNP schemes exhibit some of these obstacles, and in most countries only a
small proportion of churning customers have chosen to port their numbers. Regulators and
operators must work hard to avoid these barriers if they are deploying MNP for the first
time, and to eliminate them if they already exist in previous implementations.

1.3 MNP is both an opportunity and a threat for mobile

operators
MNP is a crucial issue for mobile operators, because it makes it easier for customers to
churn from one network to another. For many mobile operators, revenue growth is critically
dependent on increasing the size of their customer bases. Given that mobile penetration is
reaching saturation in most developed markets, operators must attempt to retain their
existing customers while attracting customers from competitors.

MNP represents both a threat and an opportunity for mobile operators.

• MNP makes customer retention more difficult.

• MNP makes customer acquisition from competitors easier.

Furthermore, some mobile operators are concerned that, by making it easier for mobile
users to switch networks – in order to take advantage of reduced prices, for example –
MNP will increase price-based competition and therefore reduce overall ARPU.

1: MNP can have benefits for everyone © Analysys Research Limited 2006
3 Regulators must work with mobile
operators
While mobile operators have a critical role in ensuring the successful introduction of MNP,
regulators have the principal responsibility for ensuring that MNP is a success. Regulators
have a number of important decisions to make (possibly in partnership with mobile
operators).

• Defining which technical solutions should be employed (and when). There are a
number of different ways of achieving MNP, with very different cost characteristics in
terms of upfront investment and operational costs. Regulators need to consider both
voice telephony and data services.

• Defining who should manage the number porting process for a customer. This could
be either the donor network (i.e. the network that the mobile user intends to leave) or the
recipient network (i.e. the network that the mobile user intends to join).

• Specifying how the various MNP costs should be apportioned. There are significant
set-up, and ongoing, costs associated with MNP implementation, and regulators need to
ensure that the apportioning of these costs is both fair and in line with making MNP as
effective as possible.

• Deciding whether existing systems need to be upgraded to new solutions in markets

where MNP has already been deployed. As the number of ported phone numbers
increases over time, the most appropriate solution to MNP may change, requiring
regulators to revisit their original decisions.

3.1 Regulators must introduce MNP at the earliest opportunity,

with clearly defined objectives
To gain the full benefits of MNP, regulators should strive to introduce it as early as
possible, but without compromising the effectiveness and efficiency of their solution.

Clear objectives are a key prerequisite to successful MNP schemes. The primary objective
of MNP should be to remove a barrier to the free choice of a mobile network by customers.
Regulators should not overstep the mark by, for example, using MNP as a means of

© Analysys Research Limited 2006 3: Regulators must work with mobile operators
4 Mobile operators must seize the
opportunity to benefit from MNP
Mobile operators must embrace MNP as an opportunity for more open competition, by
strengthening their efforts to maximise the loyalty of existing customers and to attract
customers from their competitors. If they do this, any of the mobile operators in a market,
whether large or small, can make market share gains from MNP.

4.1 Any mobile operator can benefit from MNP

At first sight, it may appear that the most likely beneficiaries of MNP are small or new
operators, such as 3G new entrants. Churn is the only means by which these operators can
increase market share if penetration is close to saturation, so anything that increases churn
in a market is to their benefit. However, there is clear evidence that MNP can also benefit
large operators. While a big operator has more customers to lose, it may be able to use its
stronger branding and other resources to attract a greater number of customers (than a
smaller operator) from others. For example, in Spain, the two largest mobile operators
(Telefónica Móviles and Vodafone Spain) have each made net gains in customers through
MNP, as shown in Figure 4.1.

Figure 4.1: Net gain (or loss) of number porting customers by the three mobile operators in
Spain during the first five years of MNP [Source: Analysys Research, 2006]

1.00

0.50
Net gain in customers (million)

0.00

-0.50

-1.00

-1.50
Orange Telefónica Móviles Vodafone

4: Mobile operators must seize the opportunity to benefit from MNP © Analysys Research Limited 2006