Mobile Number Porting
How are you planning to spend the 4p Ofcom saves you next year?
Since 2005, mobile penetration has exceeded 100%. For almost five years, we’ve boasted more mobiles than people in the UK.
Customer acquisition is expensive – even when a market is not completely saturated. With virtually no access to brand new customers but some very juicy carrots in the form of existing mobile users (long contracts, recurring revenues, highly lucrative network minutes, exorbitant roaming tariffs, freedom from regulation to extort more than £1,000 per Mb for SMS traffic, etc, etc), the battle for mobile “switchers” has become intense.
Turn on the TV and you’ll see advertisements aimed squarely at affluent teens (those scarce new customers). Open a magazine for ads targeting switchers. And whilst I’m on the subject, why are mobile ads so homogeneous? I mean you can tell instantly it’s a mobile ad. But you’d be hard pushed to say which operator. Maybe the networks are all using the same creative agency. (Tesco’s September 2009 TV campaign is so refreshing and illustrates exactly what I mean.) The whole thing reminds me of 1980s fashion retail. In those days, you had to step back on to the high street and check the name above the shop window before you wrote your cheque. Merchandise was identical because the stores belonged to exactly the same chain.
Not so in the UK mobile industry. No monopolies here. It seems that Ofcom believes the lack of Significant Market Power (SMP) is a good indication of a well functioning mobile market. Five companies battling it out for a handful of new customers, desperate to entice us with the latest handsets boasting cameras, MP3 players, unlimited access to rich content through innovative applications… It should be a pretty favourable environment for UK citizen consumers. So why doesn’t it feel that way?
It’s true that the Mobile Network Operators (MNOs) are fighting tooth and nail over us. And once on board they’ll do everything possible to retain us. Need proof? Phone your network and ask for a PAC code (it’s a technique employed by many looking to upgrade to the latest handset).
If you do decide to move, it’s no walk in the park. The donor network will try its darndest to make things as difficult as possible for you and the recipient network. Coincidentally, as I’m writing this post, my first “pop-under HTML ad” in a few weeks has appeared. It’s one for Hutchison 3G, offering:
“…free Skype calls forever, unlimited texts, unlimited on-net calls, unlimited emails and internet, a Sony Ericsson C903 with integrated Facebook and a 5 megapixel camera.”
That’s got to be worth a click. You never know, I might even switch myself. But hang on. What about my three hundred contacts? How am I going to let them all know my new number? It’d be much easier if I just keep the one I have.
Switching would be a picnic for the networks if we we’d only let go of the telephone number to which we’ve become so attached. Porting numbers is a challenge. Its a process devised by the same irritation committee responsible for broadband switching, changing electricity supplier or (heaven forbid) moving to a new bank. I mean, what could possibly go wrong?
A perfect opportunity for our caped-crusader? Generate some happy column inches and save everybody a lot of pain. You’d guess, but Ofcom could have made several omelettes from the egg scraped off its face last time it attempted to improve mobile porting. Amongst other things, the regulator was criticised for an unrealistic implementation schedule, inadequate consultation and a lack of technical rigour. Unsurprisingly, the regulator was swiftly out-manouvered by Vodafone.
As I write this, we’re four weeks away from the closing date on two important consultations. I sense history repeating itself:
Part of Ofcom’s Executive Summary (p3, Routing calls to ported telephone numbers) states:
1.7 We are considering the current arrangements for routing calls to ported numbers afresh following Vodafone’s successful appeal against our decision in November 2007, which required that operators route calls directly to the network serving the subscriber (that is, to the network to which the number has been ported – termed ‘direct routing’).
1.8 We consider that direct routing of mobile-to-mobile calls is likely to serve subscribers’ interests by improving efficiency and ultimately reducing prices through saving costs that would otherwise be incurred by the mobile industry. We are not making any proposals at this time about the routing of calls to ported numbers from or to fixed networks. Our assessment suggests that the costs of making such changes involving the fixed networks are likely to outweigh the benefits.
1.9 The inefficiency caused by onward routing costs around £14m per year now and could rise to around £19m per year by 2021 of mobile-to-mobile calls is likely to serve subscribers’ interests by improving efficiency and ultimately reducing prices through saving costs that would otherwise be incurred by the mobile industry. We are not making any proposals at this time about the routing of calls to ported numbers from or to fixed networks. Our assessment suggests that the costs of making such changes involving the fixed networks are likely to outweigh the benefits. We estimate the benefits of a move to direct routing for mobile-to-mobile calls to ported numbers (only) at £26m.
Ofcom has its heart set upon a porting process which takes as little as two hours. I simply don’t get it. Like everybody else, I want the process to be trouble free, but that doesn’t mean it has to be instantaneous. We’re not talking about removal of service whilst the port is underway. So if I can still make and receive calls, in fact use my phone just as I always do, surely I can wait a day or two for the new handset I’ve been craving? If I’m porting because of poor network coverage, a bad customer service experience or because I’ll receive better value for money on a different network, 48 hours is no biggie.
Ofcom’s original two hour porting model should have been in place this month. But Vodafone was successful in its Competition Appeals Tribunal (CAT) – stopping the regulator in its tracks last year. Ofcom’s “failure to carry out its consultation transparently and effectively” was the regulator’s undoing (hmm, sounds familiar – 07 personal numbers, 0870 NTS services…). Vodafone argued that Ofcom had not provided a proper technical specification. Ofcom’s research had established that the cost of speeding up number porting would be around £5m. Vodafone insisted that the cost would be in excess of £180m.
With Vodafone’s appeal upheld by the CAT, Ofcom headed back to Southwark Bridge, tail between its legs. Fast forward twelve months and it looks like the regulator may not have sharpened its pencils.
Look again at point 1.9 above, particularly the last line:
We estimate the benefits of a move to direct routing for mobile-to-mobile calls to ported numbers (only) at £26m.
These efficiency benefits are at the centre of Ofcom’s consultation. And so they should be. After all, £26m is a lot of money, isn’t it?
Based on the first paragraph of this article let’s assume there are around 65 million connected mobile phones in the UK. The £26m quoted above represents an efficiency saving over ten years – £2.6m per year. Let’s also assume that the mobile operators pass all of Ofcom’s estimated efficiency benefits to their customers [scoff].
Hold your breath now. If my calculations are correct, the saving per year, per mobile phone is [drumroll] four pence. There’s a figure which is sure to impress the CAT at the next appeal. 4p.
[Oh heck! I've just used my mobile to dial an 0800 freephone number and blown my 4p (and the rest). But that's a different post, for another day.]
September 25th, 2009 at 10:23 am
Great post Kieron!!
September 26th, 2009 at 12:40 am
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