Driving competition in telecoms... imperatives of mobile number portability 

Ben Uzor Jr

In the last decade, the Nigerian Information Communications Technology (ICT) sector witnessed exceptional growth in terms of revenue and subscriber number. To this effect, Nigeria has emerged as the leading mobile telephony market in Africa. This growth however has been due largely to regulatory and policy reforms in the country, and the emergence of a quasi-independent regulator, which in turn ushered in an era of stability.

However, the resultant improvements in investor confidence led to a copious inflow of Foreign Direct Investment (FDI), which provided the financial lubricant required to sustain growth in mobile telephony infrastructure and services deployment in Nigeria.

In recent times, telecoms consumers have continued to complain about the poor Quality of Services (QoS) delivered by network operators. The Nigerian Communications Commission (NCC) strongly believes that when fully operational, Mobile Number Portability (MNP) will tremendously impact on the quality of services offered by service providers.

MNP is a practice in the mobile telecoms industry whereby a customer can move his number from one network operator or service provider to another. This process of transferring customer numbers between service providers is called ‘porting.’ Number Portability is not to be regarded as a subscriber service, which a subscriber can subscribe to. It is a network feature that allows the subscriber to keep a unique mobile phone number but must be agreed to among different mobile operators within the defined national or regional boundaries.

Though a recent phenomenon, MNP has recorded significant successes in Asia markets which is very similar to the Nigerian scenario. In 1997, Singapore was the first to implement the scheme, Hong Kong in 1999, and Taiwan also implemented in 2005.

But more basically, these markets at the time had already achieved 50 percent mobile penetration rate compared to Nigeria’s penetration rate of 25 percent which still offered a huge underserved market with a population under licensed territory of 140 million people and mobile phone subscription of over 40 million. Evidently, Nigeria is ready for MNP. In the last decade subsequent to the successful deregulation of the telecoms industry, subscription has grown from 400, 000 active lines in 2001 to the current 96.6 million active subscriptions.

MNP can be locality based which enables a mobile subscriber to move from one location to another without changing mobile number. This will significantly reduce CAPEX (Capital Expenditure) cost and reduce roll out time in different regions in the vast Nigerian land mass for a new operator like Etisalat.

Second type of number portability is Service Portability that enables a mobile subscriber to keep same number when changing different telecoms services and this is commonly used for mobile value added service. If a subscriber on a donor network wants to access a particular service on a receiving network, there will be no need to change number for the duration.

Lastly, the Operator Portability that enables a subscriber switch mobile operator without changing the mobile phone number is essential for fair competition among mobile operators and to help new entrants gain market share.

The scheme, according to industry watchers, represents consumer choice in Nigeria’s mobile industry and that undoubtedly promotes competition.

Competition

For Bill Best, a global expert and former chief technology officer (CTO) of the GSMA, MNP represents an opportunity for the industry to progress and develop by breaking down one of the biggest impediments to customer choice – number lock-in. “Historically, telecoms services have been provided by monopoly operators.

The customer for the first time has real options on where to go for their mobile services and competition is the driving force for better quality of service, new products, wider distribution and – crucially – more affordable price plans. Besides, economies of scale lead to lower costs for operators and customers, but more importantly, for retail device and handset prices.”

According to him, as the early markets moved towards saturation it was obvious that competition was being stifled by number lock-in. For many reasons, he continued customers did not want to change their number and this meant that they had no choice but to stick with their incumbent supplier.

This impedes market development and is the principal reason for introducing mobile number portability. Moreover, the introduction of MNP is indeed a catalyst for customers to be able to shop around and retain their mobile number even if they changed to a new service provider.

Steve Evans, CEO, Etisalat Nigeria, said in an interview that number lock-in was an immense challenge to telecoms customers’ choices which many industry experts do not really emphasise. “Once a subscriber has a number from a particular network, it is usually locked-in into that network.

This means that the subscriber is tied to the good and bad things that the service provider offers. “However, with MNP, an opportunity arises for a subscriber to switch to another network without having to buy another SIM.

With this, the customer now has real options on where to go for their mobile services and with competitive offerings from various providers, quality of service is improved, new products developed and a wider distribution and more affordable price plans are made available to subscribers.

“We have discovered that as the early mobile markets moved towards saturation, competition was being stifled by number lock-in. Customers, who do not want to change their mobile numbers, have no choice but to remain with their incumbent operator, no matter the quality of service.

This development hampers market development and is the prime reason for the introduction of mobile number portability,” he posited. Explaining the rationale behind the number portability regime, Tony Ojobo, director of public affairs, NCC in an interview, disclosed that scheme was a regulatory intervention coming from the NCC, to further deepen competition. “We needed to change the tactics.

We needed something new, and creative, we needed something tasking, which will make the operators stand on their feet and address the challenges of quality of service faced by consumers in their various networks. “The commission needed to empower the consumers while they make the choice as to what network they chose to stay on.

With the number portability, regime, if a consumer is not satisfied with the service of a particular network, he has the choice to switch to another network, without losing his number, which is his/her, identity,” he said. Ojobo further explained that the reason why some people have remained on a particular even with poor service quality was simply due to fear of losing their numbers, which has become their identity.

“There are people who have been on a particular number for ten years, so when they think about losing that particular number, and building their network of friends, business associates all over again, they simply remain with the stalling operator,” he said.

MNP service providers

In March 2012, the telecoms regulator had issued the license for number portability service. The contract for the establishment of the MNP Clearing House, which forms the pillar of the scheme, was awarded last October.

A consortium of three firms had won the bid to operate. The firms that make up the consortium are Interconnect Clearing House Nigeria (ICN) Telecordia of the USA and Saab Grintek of South Africa.

These operators, according to the telecoms regulator will make it easy for mobile network operators to comply with number portability mandates by creating a centralised system for porting all number types which would thus ensure a smooth and trouble-free process.

The commission had earlier explained that these MNP firms would have only six months to build out requisite infrastructure to implement the scheme. In addition, an extra two months, according to the commission would be given to the MNP operators to carry out testing before rolling out the scheme in the country.

Ojobo pointed out that it was expected that in the first few months after the number portability commences, the telecoms industry would witness some movement from the telecoms subscribers to other networks until there is stability in the service.

Explaining that the stake would lie in the hands of the consumer to decide which network he/she chooses to be on, Ojobo said there would be rules and guidelines, which will be laid down, to guide against the abuse and distortion of network by subscribers who might like to switch more frequently than was required.

Guidelines

Determined to meet its target of commencing MNP scheme before the end of 2012, the NCC only recently released the first draft of a document detailing the rules and regulations for running an MNP service in Nigeria. However, the commission said the release of the document was to invite comments from mobile telecoms operators and other stakeholders. The first draft of the document titled: “Nigeria Mobile Number Portability: Business Rules and Port Order,” sets out the business rules to manage the processes for porting mobile number(s) (MSISDN) between mobile service providers, NPC and subscribers, licensed by the NCC to provide mobile telecommunications service in Nigeria.

The document, however, refers only to MNP which means it does not cover Fixed Number Portability (FNP) or any other form of number or service portability. According to NCC in its introductory message, the document had been prepared without prejudice to any future requirement for number portability between fixed and/or mobile customers.

The NCC said: “In furtherance to the NCC’s objectives of protecting consumer interest through the development, monitoring and enforcement of compliance with regulations by telecoms service providers in order to ensure better quality services, fair pricing and competition, and in line with the provisions of section 128 of the Nigerian Communication Act 2003 which vests the NCC with the exclusive right to regulate numbers and number portability in Nigeria, the Commission developed a framework for number portability in Nigeria.”

The NCC stated that the approval of the need to introduce the scheme by all stakeholders had galvanized it into setting in motion machinery for developing an effective framework that will ensure its successful rollout within the purview of the established laws in the country.

“Following the approval of the MNP framework, the commission began plans to develop the regulatory, legal and technical framework for the implementation of MNP in Nigeria as well as the process of selecting a suitable vendor to run the Number Portability Clearing House in Nigeria with the publication of an Request for Quotation (RFQ) document for the provision of services with regards to the “Administration of Number Portability Clearing House in Nigeria,” the commission said.

Industry readiness

Some industry analysts strongly believe that Nigeria’s highly competitive telecoms market is not ripe for introduction of MNP given the circumstances that the industry is currently facing. According to them, there is an urgent need for all stakeholders in the industry to come together and agree on the modus operandi and terms of number portability. Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), in an interview, said: “the industry is not ripe for it.

But I would say the operators are ready for number portability but given the circumstances that the industry is facing, it is a bit doubtful if the industry as a whole is ready for number portability.

But there is a way around it and that is that all stakeholders must come together and agree on the modus and the terms of number portability.

Informed sources close to some of the networks told BusinessDay that preliminary consultations have already begun between MNP firms and top-level management of telecom firms in Nigeria on technical and commercial issues critical to the successful implementation of the scheme.

This is ahead of September date set by NCC for the commencement of the scheme in the country’s telecoms sector. Beyond that, MNP will enable Nigeria’s 96 million mobile telephone users to retain their numbers when changing from one mobile network operator to another.

However, BusinessDay also gathered that the scope of the ongoing consultations from a technical perspective revolves around how MNP firms can integrate with telecom provider’s Operations Support Systems (QSSs) and internal business processes, such as customer care, billing and order management.

“I am not aware of this. “But, it is critical that network element systems are integrated so the network can obtain the correct routing information for calls to ported numbers. “Fundamentally, operators and MNP firms will be discussing systems integration and interoperability of their systems.

And of course, there will also negotiate on interconnect charges and network handshake. “There will also be legal issues to discuss as it is critical to the success of the scheme. Discussions will also revolve around terms of billing, terms of porting, etc,” Adebayo posited. “I am not aware of this development.

But I believe telcos and MNP firms will have lengthy discussions on technical issues relating to interface of systems initially before commercial issues. “There certainly has to be an interface between telcos and MNP providers if the scheme is to be successful”, Lanre Ajayi, past president, Nigerian Internet Group, said in an interview.

Barriers

Often the biggest obstacle is the reticence and reluctance of the larger, more established operators to deploy MNP. Alluding to these operators benefiting from being the first operators in the market which has enabled them build the largest customer base, Best noted that these older and more dominant operators, though they might come out overtly to express their distaste for the scheme, see MNP as a threat to their dominance.

They believe that they can only lose customers to newer entrants and small players in the market. This, according to Best is an error of judgment because “it is the operators with the best range of products and service, the best quality of service and the best price plans that win the most customers. MNP enables the best Service Providers to win in the market place – not the biggest.”

As of December 2011, official subscriber statistics showed that MTN had 41.6 million subscriptions, while Globacom 19.8 million; Airtel had 16.1 million. Fourth GSM operator, Etisalat had crossed a critical threshold in subscription numbers with 10.7 million in the voice segment.

According to the former CTO of GSMA, the larger networks should look at MNP as an opportunity, adding that but all too often they actually act to slow down its implementation. “This requires firm and decisive action from the regulator to prevent happening.

MNP brings about the prospect of additional competition in the market place. Added competition among Service Providers does mean profit margins are likely to erode, but this will encourage them to innovate and introduce new and differentiated services.”

Dominant operators such as MTN have openly expressed their support for the scheme. “We have been preparing our business for it and believe that MNP would separate the boys from the men.

We are confident that MNP will deepen competition, it will restore the customer as king and any operator that is not giving a compelling value proposition to its subscribers in terms of pricing, quality and customer care will be punished when MNP starts”, Wale Goodluck, corporate services executive, MTN Nigeria said.

Conclusion

There is a crucial role for the government and/or telecoms regulator in every market as it relates to the introduction of MNP. Industry watchers say the time is right for MNP in Nigeria, adding that the commission needs to show leadership in devising the precise solution for the market place and setting deadlines for implementation by all mobile network operators.

Against this backdrop, the telecoms subscriber will be the chief beneficiary by having more choice available. The additional competition in the market place will stimulate service innovation, speed up the introduction of high speed data rate services, encourage telecoms operators to service their customers better and provide better quality networks.

Increased mobile penetration in turn increases national gross domestic product. Nigeria should be at the forefront of developing modern and innovative telecoms services for its consumer and business users – the implementation of MNP should be aggressively pursued. The telecoms watchdog is already making significant headway in this regard with the appointment of a Porting Administrator.

Finally, the Porting Administrator must as a matter of urgency facilitate the following: “The setting up of inter-operator implementation committees, agreement of porting business rules, technical implementation procedures, testing regime, a deadline for introduction,” Best advised.