MNP’s side effects
Cell C and joint venture partner Virgin Mobile in turn hope for a bonanza of defecting subscribers, with Cell C opting to absorb the so-called porting fee. The cellcos are required to pay an admin fee to the independently operated Number Portability Company that facilitates the porting process.
How much Cell C is saving defectors isn’t known, but those subscribers who are considering jumping ship before their contracts expire may be in for a surprise.
One exercise carried out by this writer showed that to buy out the contract (including termination and claw-back charges) on a mid-price deal (the MyCall, Weekend Everyday/CasualChat type of contracts) with a none too fancy phone that had only three months before termination was in excess of R2 000 – a cost that would probably put off most post-paid subscribers used to free phones and early upgrades.
It’s not only the cellcos that will be watching the effect of MNP closely. Least cost routing (LCR) companies route calls over the cheapest channel. For example, a call between one Vodacom subscriber and another (on-net calls) is substantially cheaper than from Vodacom to MTN.
Due to the high interconnect charges that exist in SA, LCR has grown into an industry worth as much as R5bn. The problem, says Jaco Voigt, MD of VoxTelecom (part of AltX-listed DataPro), is that in SA the industry has developed in such a way that LCR equipment (via switchboards) is installed free of charge at clients’ premises.
LCR companies then take a slice of call savings. That means to take into account MNP – where the number prefix no longer acts as an identifier – all the equipment will have to be upgraded and then frequently updated as the porting database changes.
"Many LCR operators are taking a wait-and-see approach. If general expectations of only 2% to 5% of subscribers going for MNP pan out, the LCR companies may take the hit themselves (for those calls not being routed cheaply). If it’s closer to 10%, the cost of not changing equipment may become significant," says Voigt.
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