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Is the mobile number portability idea dead on arrival? Experts differ

Saturday November 22 2014
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“Multi-Siming” — a phenomenon where a subscriber owns a Sim card from every network — makes MNP an idea dead on arrival, says an industry expert. TEA GRAPHIC | NATION MEDIA GROUP

Mobile number portability (MNP) was once supposed to be the next best thing to happen to mobile telephony in East Africa.

Launched in Kenya in April 2011, amid talk that the service heralded a new dawn, regulators and small or new operators alike would find out soon enough that they took too optimistic a view of the purported benefits of MNP.

Number portability, a service that allows telephone users to change their network without changing their number, was readily embraced by operators eager to chip at the market share of Safaricom, the market leader, and doggedly pursued by a regulator hyping the service as a means to foster greater competition.

Three years later, the regulator, Communications Authority of Kenya (CA), and Safaricom’s rivals have only met with disappointment.

Just months after the introduction of the service, one of its supposed prime beneficiaries, then Orange Telkom Kenya chief executive Mickael Ghossein, said he thought the process had failed and needed to be relaunched.

But Kenya’s failure will not stop the rest of East Africa pressing on in pursuit of MNP. Under the umbrella East African Communications Organisation, telecommunications regulators in Kenya, Rwanda, Tanzania and Uganda have agreed that number portability is the way to go.

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Although Tanzania was expected to follow Kenya in December 2011, the failure to meet “some requirements,” according to the country’s regulator, forced a deferral of the launch.

READ: EAC plan for number portability hits a snag

Meanwhile, Uganda and Rwanda have embarked on processes to establish the viability of number portability.

Uganda has began consultations with operators, and the Rwanda Utility Regulatory Authority (Rura) has commissioned a study. In theory, number portability should promote competition and spur innovation in the market, with the consumer ending up as the winner.

READ: Rura commissions study on number portability

According to iConectiv’s Harald Hauser, number portability potentially makes it easier for newer entrants to gain market share, enhancing competition among operators and creating downward pressure on prices. It should also allow consumers to make better choices while minimising the costs associated with changing a service provider or changing a phone number.

The idea of changing providers without suffering the cost of a lost identity is something iConectiv, an Ericsson-owned MNP solutions provider that has worked with the Uganda Communications Commission, advocated as a consumer right at a recent engagement that brought together the Ugandan regulator and the country’s telecom operators to discuss number portability. It is an idea that finds favour with James Wire Lunghabo, an ICT consumer rights advocate.

“It will help consumers vote with their wallets and ensure providers respond positively,” he said.

Fostering competition is one of the most popular justifications for taking the MNP route.

But will MNP have this desired effect? Maybe not, if we consider the Kenyan case, and Mr Hauser thinks certainly not.

“Number portability alone does not make markets more competitive,” he said. “If a market is not competitive to begin with, number portability will have a limited impact. Subscribers do not increase because of number portability.”

For Mr Hauser, differentiation is key. He argues that MNP is no magic solution in a market where service providers are selling the same products at the same prices. Indeed, a 2013 CA report lends credence to his argument, noting that increased price parity among operators was one of the reasons for the limited uptake of the service in Kenya.

With East Africa’s mobile markets being largely homogeneous, operator practices and usage trends in one country are likely to be mirrored across the region.

Moreover, there are even bigger challenges for the countries that are yet to implement number portability.

As an expert from Uganda market leader MTN notes, “multi-Siming” — a phenomenon where a subscriber owns a Sim card from every network — makes MNP an idea dead on arrival.

The ubiquitous and relatively affordable dual, triple, or even quad-Sim phones only serve to compound the problem. These phones go for as little as $30 a handset, while a Sim card can be purchased in most countries for as little as $0.4, making for an enticing proposition for the offer-hunting and price sensitive low-end consumer.

READ: Low mobile number portability linked to multiple SIM devices

But this should not water down the case for MNP, says Philip Warren, a consultant at InterConnect Communications, who argues that subscribers would essentially just port their “primary number.”

Poor network coverage

“Multi-Sim is a feature that’s not unique to Africa. There may be more of it in Africa, but it is a fairly common feature around the world and there are reasons for it,” Mr Warren said, citing poor network coverage and the need to assert one’s “status” among the reasons for owning more than one SIM card or handset.

“The thing about MNP and where it impacts is the primary number. What number do you give to your friends and family ‘that you can contact me on much of the time’? If you are in business, what number do you give your customers? That is the number people associate with you, and that is the number you would likely port,” Mr Warren said.

Besides multi-Siming, there is a numbers quandary around MNP. This manifests first in the cost of MNP the telecom operator and subscriber are likely to incur to provide and to use the service respectively.

Ugandan operators, for example, have expressed fears that they would be asked to bear the set-up and operational costs of the service, whose basic infrastructure requirements may include a central database and a number portability clearing house.

An industry analyst says there is “a very big hurdle” for the Uganda Communications Commission to clear before it can persuade service providers to embrace the idea.

But there are alternatives: Money could be generated through beneficiary networks paying a porting subscriber’s dues, the model used in Ghana, which is touted as one of the few MNP success stories on the continent. That model would add to the cost of doing business for the smaller and newer networks, which are the operators expected to benefit from MNP.

Kenya’s lead

The rest of East Africa could follow Kenya’s lead and require porting subscribers to pay their way. But that is not likely to end well.

In Kenya, it cost a subscriber just over $2 to port when the service was launched, which made no economic sense when measured against the immediate alternative of acquiring a new SIM card for about half that amount.

An industry watcher in Tanzania points out that many operators in East Africa already provide number mobility, where one can get the same number as that on their primary SIM with only the operator codes changing.

The other facet of the numbers quandary is in the form of the service failing to regularly attract the optimum number of porters. Mr Warren says for MNP to be viable, it would be desirable for at least 2 per cent and up to 5 per cent of the total subscriber base to port annually.

MNP in Kenya posted its best quarter to date between January and March 2012, when 6,646 subscribers ported. Since then, it has been downhill, registering as few as 217 porting subscribers in one quarter.

The regulator pointed to the long duration experienced by porting subscribers (two days), as well as associated difficulties with using their new network among the major reasons for the dwindling uptake of the service.

To meet the recommended optimum levels in Kenya, Tanzania and Uganda, at least 30,000 subscribers would need port every month, going by current market size.

Kenya has an estimated 30 million subscribers, Tanzania 28 million and Uganda 18 million. Without raising the optimum numbers of porting subscribers, MNP would not make business sense for any service provider.

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