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Call Center/Command


Number portability

Number portability

After a three-year delay and numerous court battles to stop it, wireless number portability is set to become a reality on Nov. 24. For those mobile operators
  • Written by Urgent Communications Administrator
  • 1st November 2003

After a three-year delay and numerous court battles to stop it, wireless number portability is set to become a reality on Nov. 24.

For those mobile operators who struggle to implement WNP, the consequences could be devastating. New research indicates more customers than previously thought know WNP is coming, and many threaten to take advantage of this ability to take their phone numbers with them to another operator.

Most carriers and industry analysts have estimated all along that at least 20 percent of wireless subscribers are aware of the WNP mandate, but a new comprehensive study from The Management Network Group (TMNG) indicates that figure is twice as much.

In reality, 42 percent of wireless subscribers know of the mandate. This means carriers should be ready to handle at least 30 million number porting requests during the next 12 months, said Lisa Donnan, principal of TMNG.

“One of the last sources of stickiness has been eliminated,” said Donnan during a joint conference call with Bear Stearns. “Our research has confirmed there is pent-up churn.”

In an industry already plagued by churn-averaging around 2.5 percent each quarter for the majority of operators-an additional 18 million now threaten to switch because of WNP, while 12 million who had planned to change providers anyway will now have an incentive to do so since they can take their numbers with them. TMNG has estimated that each carrier should be able to handle between 800,000 and 2.3 million porting requests per month through May 2004 when WNP is available nationwide. Operators are only required to provide WNP in the top 100 markets by Nov. 24.

“The operating challenges are significant, and can have for those who do not execute flawlessly, some very interesting impacts,” said Rich Nespola, chairman and CEO of TMNG. “Mainly there will be erosion of margins.”

Other research is just as jolting for the wireless industry. A recent study from Intelliseek says more than 40 percent of wireless consumers are ready to switch carriers following the WNP deadline. The Yankee Group estimates that between 10 million and 12 million additional customers will change carriers in the first year following the introduction of WNP. Seven to 9 million will probably churn in the first four months after the WNP mandate.

The current depressed state of wireless stocks is attributed to WNP, said Timothy O'Neil, president and founder of The Eon Group, a Wall Street research firm. While the NASDAQ was up 10 percent during the last three months, AT&T Wireless stock fell 2 percent, Sprint PCS remained flat while Nextel Communications performed on par with NASDAQ, he said.

“WNP has caused a lot of uncertainty,” said O'Neil.

Poor third-quarter metrics from the nation's largest carriers prior to the WNP mandate has added to the concern. AT&T Wireless and Sprint PCS saw a decrease in subscriber additions and a spike in churn for the third quarter. Operating expenses are rising as carriers implement customer retention and customer service initiatives in anticipation of WNP.

Few carriers are offering detailed information about their levels of WNP readiness only saying that their back-office systems are in place and testing has commenced. All are quickly hashing out service level agreements to make sure the porting process is smooth. Yet, the Yankee Group believes carriers have not conducted any significant “stress” testing of their back office systems.

Still, most wireless executives and analysts are predicting teething problems, especially with the Federal Communications Commission's requirement that carriers port numbers between each other within 2.5 hours.

In addition, no firm rules have been established to regulate the portability between wireless and wireline operators. Verizon Wireless and Verizon Communications have signed the industry's only wireline-to-wireless SLA.

“All carriers understand that this thing is coming. They are doing everything in their power to get ready,” Tim Donahue, Nextel's president and chief executive officer, said during the company's third-quarter conference call. “Initially, we'll see some bumps in the road. We'll get over that.”

Michael Keith, president of mobility operations at AT&T Wireless, echoed the same sentiment during his company's third-quarter conference call: “There will be low digits of success rates. It's going to be a rough road during the first 60 days of this.”

“WNP looks like a simplistic process when likened to wireline portability,” said TMNG's Nespola. “Unfortunately, the operating infrastructure of wireless is far different than that of the established ILEC. This adds a whole new dynamic, including different network architectures and a lack of understanding of the public.”

Number porting problems will result in customer frustration, which will impact cash flow, CPGA, operational costs and the costs associated with the loss of a new subscriber, said TMNG.

“WNP introduction is probably the least cross-carrier tested mass-market launch the United States has ever seen,” wrote The Yankee Group analysts in a recent research note.

Ken Hyers, wireless analyst with In-Stat/MDR, predicts “total chaos” the days after Nov. 24 as sales channels become choked with customers inquiring about and demanding WNP during the busy holiday season.

At press time, one Denver-based third-party retailer had yet to be educated by carriers about how to port numbers.

“The capabilities and behavior of these third-party employees will reflect on the carrier,” The Yankee Group analysts insisted. “A significant portion of gross additions come through non-carrier affiliated channels that do not have to follow the same training regime the carriers are providing to their sales representatives.”

One tool carriers are likely to use to ward off porting is aggressive marketing and pricing plans that require customers to sign two-year contracts, analysts say.

T-Mobile has sparked the marketing war by launching an extended “free weekend” minute offering rate plan that extends unlimited weekend calling to include Friday.

Consumer demand drives portability

  • More than 70 percent of all wireless respondents stated that keeping their wireless telephone number was very or somewhat important to them.
  • 29 percent of the total wireless customer base indicated that they would change wireless provider solely based on being able to take their wireless phone number with them. This represents 44.5 million customers.
  • 27 percent of wireless customers stated that they would leave their current provider as soon as they received a better offer if they could take their phone number with them.

Source: TMNG survey

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