Mobile Number Portability (MNP) – Advantages, Disadvantages and Cost

To stay ahead in the game in the world of competition, the mobile operators or service providers always promote and offer better quality of service for their customers with the hope of attracting more customers or subscribers.

What if this mobile operator is newly established and all the users have already subscribed to different operators? Here is one business case, suppose there are 10,000 users in this one area, and there are 3 mobile operators (A, B, and C) which provide the mobile phones services. Now this new company D wants to get some of the subscribers by providing much cheaper and better services than the existing 3 companies.

The Dilemma

However, customers are usually reluctant to give up their mobile number because every customer is already well familiar with their own number. To buy a new SIM card from company D won’t serve their purpose: keeping their original number.

From a practical standpoint, changing number when changing service provider is not convenient for subscribers. From a business point of view, changing your personal number would mean that you potentially lose contact with many potential connections. Say for example you get connected with someone via name card. That person will not be able to contact you anymore since he or she won’t have your latest number. As a consequence, the majority of people prefer to retain their service operators despite the lapses in the services provided, for the simple reason of keeping their current number.

Advent of MNP

Now, the picture has now changed dramatically with the introduction of mobile number portability (MNP). The history of MNP started in 1997 with Singapore being the first to implement it. With the advent of MNP, subscribers are not required to give up their mobile numbers when changing service providers. In Malaysia, MNP was announced by the Malaysian Communications and Multimedia Commission (MCMC) in 2007. Today, many countries around the world has implemented MNP. The implementation may look different in each country, but they share the same set of advantages and disadvantages. So what are the advantages and disadvantages of MNP?

Advantages of MNP

1. Benefit to the government in terms of net gain to a country’s economy. According to NERA’s final report analysis with the introduction of mobile number portability, the net present value for Hong Kong’s economy ranges between HK$769 million to over HK$1,396 million for the first 10 years from its first implementation in 1999.

2. MNP enhance fair competition among telecommunication operators and improve customer service quality. Number portability is considered to be a mechanism that will help new operators compete with the existing operators or incumbent local exchange carrier. They will have a easier time of penetrating the market, preventing monopolies of existing service providers and in turn enhances service quality.

3. Create new opportunities and improved the consumer’s experience. If the consumers are not satisfied with the operators’ services and schemes, they don’t need to give up their mobile number on changing service providers. They don’t have to inform everyone about the change in their number. There is less liability in changing services and thus free up consumers to pick the best options for themselves.

Disadvantages of MNP

1. Most mobile operators are against mobile number portability because it is hard to keep customer loyalty as they are more likely to switch to new service providers.

2. User may not know which operator belongs to the person they make a call to. Unnecessary additional charge may occur. For example in Malaysia, customers use Digi (016) to call to Digi but with MNP, the number 016 may actually belongs to Celcom.  

3. The government may not know how many customers are for which operator. It may be harder to keep track and need update from time to time.

Costs of Number Portability

As per every new system, to setup the MNP, it is not without its cost. To support number portability, the following costs (which can be considered to be the most signification) are incurred:

Initial System Setup Costs: Initial system setup includes the costs for number portability system development, network management, line testing (for fixed networks), operator services, billing information, exchanges overlay, maintenance, and support. Most studies suggest that operators should bear their own costs for initial system setup.

Customer Transfer Costs: Customer transfer costs or per-line setup costs are incurred when moving a ported number from the donor operator to the recipient operator.  The costs include closing down an old account, opening up a new account, and coordinating physical line switching (for fixed networks). For customer transfer costs, the donor operator should bear the cost for closing down an account, and the recipient operator should bear the cost for opening up a new account.

Call Routing Costs: MNP requires a number portability database (NPDB) that will store the records of the ported numbers.  Every operator will have to build a “local portability database” which will download the data from NPDB on a pre-defined interval and will be involved in call routing by doing a query to this database for routing information.

To implement MNP comes with a cost despite its great advantages. Maybe this is the reason why not all the countries have yet to implement it. Because it’s unlikely that MNP will lead to significant porting levels and only some, but no drastic improvements in overall customer service can be expected while the costs of MNP implementation are high, with significant foreign exchange outflow.

Additionally, a very high risk of intense tariff and incentive competition can affect the industry’s ability to reinvest in service improvements. To the mobile operators, the competition may become too challenging to survive and very hard to keep their customers’ loyalty. Lastly is the time consuming and complex implementation that diverts resources from other critical national projects. What do you think? Is it a good idea to have MNP?

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