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11 Dec 2006 13:46
Eric van Zyl is finally happy with the service from his cellphone provider. He was the first subscriber to switch from his old network to South Africa’s newest operator, Virgin Mobile, taking advantage of the long-awaited mobile number portability (MNP).
“All the networks promise the Earth and the Moon and Sun and all that,” he said.
“Virgin captured it very well by saying you’re held hostage.
He is an unlikely minor celebrity as a result of radical change to the nature of the cellular networks, which can no longer tie subscribers to the network that originally issued their number.
Although delayed several times, number portability went live earlier this month — with newcomer Virgin and its 50% owner Cell C expected to benefit the most as the latest entrants to the market.
Portability allows subscribers to retain their number when changing to another network, provided they meet certain conditions. For instance, subscribers who have not reached the end of their contracts are required to pay the outstanding fees, while there is a small portability fee.
But number portability appears to have been slow to take off and switching a few people has proved expensive.
Operators are reluctant to reveal the numbers, but Vodacom CEO Alan Knott-Craig said last week that because of the cost of the R300-million system, the 100 or so subscribers that the country’s largest network handled in the first three days had cost it R1-million each.
Vodacom contributed R100-million towards the porting system, whose delay prompted Virgin boss Sir Richard Branson to write an open letter to the telecoms regulator, Icasa, beseeching it to implement it.
Such portability has become the norm in mature telecoms markets, he argued, and creates greater choice and better customer service.
The great advantage of number portability is that it “gives the cellphone contract holders greater choice and options when their contracts expire”, says Arthur Goldstuck, MD of researchers World Wide Worx.
“Because people become closely associated with their phone numbers, not being able to keep the same number when moving networks was a major inhibitor of the ability to choose the service that suits people best from time to time. This gave the networks the leeway to focus less on customer service and experience than would otherwise have been required. So, in the long term, improved service should also be seen.”
Subscribers should switch if they can get a contract package that better meets their needs, or to get family members on the same network, and benefit from lower interconnect charges built into their call rates, he adds.
However, Goldstuck warns, “they won’t get cheaper rates elsewhere, so that is the worst reason”. There have been tremendous problems with porting, he adds, with one network having 300 failures on one day.
Although he estimates only 500 000 of the 28-million subscribers will take advantage of portability over the next year, most consumers were unaware of it. “But, once made aware, 27% said they would change once their contracts expired. The reality is that less than half of these 27% will change, due to both inertia and the hassle factor. As it is, they have to fill in a form and go through a process, which will instantly limit movement.”
Something to gain
Virgin Mobile, however, is clearly thrilled by the influx of subscribers.
“Relative to the size and as the new kid on the block, we are kicking arse,” said corporate affairs head Nicholas Maweni.
While it has clearly benefited, he argues that about 10-million subscribers change service providers every year — or about 833 000 a month. “On our side our business model showed we could have lived on that churn.” Added to this he says are people who didn’t “have the guts to change their numbers” taking advantage of portability.
The most likely to benefit, says Goldstuck, are contract customers on per-minute packages. “In that group, families with several contracts on different networks will benefit enormously from consolidating on one network.”
But he says, so far, “only Cell C and Virgin Mobile are offering anything different, that is the choice of better packages. MTN and Vodacom are only pushing their brands.”
Van Zyl, who lives in Pretoria and works as researcher who helps university students, says “it’s a wake up call for the networks”.
“All over the world, this was something that works great for the first year or two. Then it becomes a way of life.”
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