Wireless number portability - musical chairs with a twist, says Analysys

WASHINGTON D.C., November 21, 2003 - The impending introduction of number
portability will increase churn as consumers seek to take their business,
along with their phone numbers, in search of a better deal. However, the
result will not be as uniformly gloomy as many in the industry have
predicted, according to Analysys, the global advisers on telecoms, IT and
media (www.analysys.com).

"Many commentators seem to view the resulting churn as a zero sum game -
consumers will switch between operators in equal numbers and all operators
will be worse off as a result of subsidizing these switches," said Michael
Kende, principal consultant based in Analysys' Washington D.C. office. "The
reality could be more like a game of musical chairs with a twist - all
subscribers will be able to get up and switch operators, but when they sit
down again, some of the operators' chairs may be empty."

According to Kende there is already significant churn in the industry, as
consumers switch operators in search of better service and/or prices.
However, the valuable customers who spend the most are the least likely to
switch operators for the simple reason that they cannot afford to change
their phone numbers.

"These are likely to be customers who use their phones for business, and the
cost of switching phone numbers, along with the risk of missing important
calls, makes switching operators a last resort for many such customers,"
added Kende. "Number portability will remove the constraints from these
customers, and well-placed operators will benefit by attracting these
customers and thereby increase their average revenue per user."

Analysys believes that number portability will also allow operators to sell
new services to customers, in particular mobile data services, which are at
an early stage of adoption. Users must have handsets that can access these
services, and today the cheapest way to get such a handset is to switch
operators to take advantage of the handset subsidy offered to new
subscribers. However, for many who might be willing to try these new
services if the price is right, the cost of switching phone number outweighs
the saving realized in acquiring the new handset. Again, this could all
change under number portability.

"Operators with the most compelling offerings, in terms of prices and mobile
data services, will have a great opportunity with the onset of number
portability to not only expand the size of their customer base, by luring
customers from other operators, but also to increase the revenue that they
receive from their customers, by attracting the most valuable ones," added
Kende. "These operators must also protect their flanks by introducing
loyalty schemes - similar to a frequent flier programs - that allow them to
identify and reward their most valuable customers and ensure that new
customers do not continue the game of musical chairs."

An extended thought piece on the issue of number portability can be accessed
at:
http://www.analysys.com/Articles/StandardArticle.asp?iLeftarticle=1432&iRigh
tArticle=

Analysys works at the forefront of the communications revolution, delivering
advice and insight to clients in the public and private sectors. Analysys
staff (130 worldwide) provide strategy and systems consultancy and
information services to the companies that are creating the networked
economy, and regulatory and policy advice to governments on all six
continents.

Media contacts:

Michael Kende
Analysys - Washington DC
Tel: +1 202 349 1111
Email: michael.kende@analysys.com

Louise Nunn
Analysys
Tel: +44 1223 460600
E-mail: louise.nunn@analysys.com