On Mobile Number Portability (MNP)

Update: Some recent news stories (dont have links) have confirmed that most companies are making $100M investments on MNP, including Mobilink, for an October launch. The news, well converts the analysis on this post to known fact.

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Mobile Number Portability is the art of switching your cellphone service to another operator, all the while keeping your existing cellphone number. This has recently caught a lot of marketing and grapevine attention in Pakistan.I have seen a lot of people venting at the government or incumbent operators for ‘not EVEN being able to introduce MNP in Pak’. The context is usually such that it’s almost as if MNP will solve all of the worlds problems, world hunger and geo-political unrest included. I have never really understood unsubstantiated venting, so I thought I would point this out to all of these people venting about on forums.

Bloomberg recently reported (31 july around 6am) about another little country whose telecom environment doesn’t have MNP. More after the link.

It’s a little country called Japan — you know, the place where Video-calls and Mobile-TV is now an old fad that has passed its time; where we have HSDPA/HSUPA neworks (i.e. 2Mbs+ data speed while riding bullet trains); where operators enjoy some of the highest ARPUs in the world ; where proprietary cellphone data application formats like I-Mode still hold significant global market share of web content ; and (unrelated) where people are busy buying personal humanoid robots to act as tour guides and PR reps for their companies.

According to Bloomberg, Japan is expected to roll-out MNP in November of this year, and operators such as NTT DoCoMo have concerns about losing customers to others such as Softbank. Pakistan is expected to implement it by October. [Based on a TV interview]

It is easy to blame the govt or incumbents for ‘not caring about consumer interests’ or for ‘being so inefficient that they can’t even get MNP started’. But you’d have to understand that MNP is an exhaustive solution with — in my opinion –low marginal benefit. Let’s look at it just to an introductory extent.

MNP requires significant commitments from all operators, and requires modifications to their networks, mainly switches. The latter alone is enough to send shivers through operators (one word: billing), but I can also see why — based on an operators’ 2-yr business strategy — operators may choose to not support MNP until they feel that it will be right for them.

MNP also requires a trusted independent third-party to host and manage the national number database which all the operators use. This has legal deliberations attached with it — think about it : If your network was supposed to guarantee 99.9999% availability and an end-to-end latency of < 250ms to your customers, would you feel comfortable having a third-party’s systems and databases be the performance bottleneck for your network? Your customer will only blame you for any poor latency.

There’s another important ramification of the above : who will pay for maintaining the independent data center? The model that works is where the maintainer is a private entity (with monopoly status) that can charge the operators for access to the data center at a pre-fixed markup. Even more importantly, each operator will need a direct point-to-point connection to the data center. Considering that *all* of the operator’s call signaling will first be routed to the database, and then onwards, an operator would need significant bandwidth on the connection. At the end, the customer is the poor chap that pays for this markup and extra bandwidth in the form of an increase in call charges. It’s great that you need MNP — but would you still need it if call charges go back up to Rs.7/min? (well ok it probably won’t go that high…)

But despite that I think there’s one ramification that’s even more important to consider : MNP throws out most of your conventional wisdom in designing marketing promotions. Consider this — how will you be able to offer a promotion saying ‘Only Rs.1/min for on-network calls!’ when your customers will have no way of distinguishing b/w on and off network calls. As a consumer, I can’t decide for sure whether or not I should call this person with a 0300-52.. number, because I dont know if that’s actually a Warid customer in Karachi. I suspect that, considering a lot of mobile consumers do think thrice before spending precious credit on calls, that ARPUs from calls may infact go down initially until new promotional strategies are born.

All of that said, I think our operators do have enough experience and insight that they will shine through these problems, especially after consumers get used to the idea that the prefix doesn’t determine charges. In fact if any of the experts read this, please point out the general best strategies and tips to handle this for our other readers.

I was merely pointing out that I dont understand the consumer pressure and hype that has come from the MNP concept. First (as I’ve just introduced) it’s possible that your call charges could increase post-MNP. Secondly, even without MNP, any entreprenuer could have jumped on the opportunity in the market. The customer need was “I can’t switch operators because my clients know my number”.

There could have been a value-added-service which lets you set cross-operator call forwarding (much like USPS when you move). How much premium would you be willing to pay for not bothering your clients with your new number?

Or, in its simplest form, we could have just had a VAS where, when you call the person an automatic recording says ‘this persons number has changed to… ‘ How much premium would you pay to be able to setup that recording when you switch?

I also had a few cents worth of thoughts for operators, but I will reserve it interest of space, and go into conslusions :

1- I think it should be seen as a strength of the private sector of Pakistan if a company such as a telco chooses that it is not in its best business interests to support a certain initiative. This is their right as citizens creating value for the economy, and I would only be happy to encourage that as long as the checks-and-balances stop such people from fraud and price-gauging. Rather than asking the government to intervene and explicitly enforce initiatives (even when the companies haven’t really done anything), I would support a more liberal small government where the regulators only exist to punish companies that break the competitive balance *after* such a company has clearly done wrong. In case of MNP I dont think any crime has been committed with the hesitation to adopt MNP, as there are enough things other operators can do to try and steal market share from incumbents, such as investing in better infrastructures and better applications on the network.

2- In this flattened world we are more than just consumers. So if you see a hole in a dam with water leaking out, be the hero, and build a plug that fits the hole. You’d even be able to sell the plug to the dam.