| 14th April 2004 - To the surprise of many, the first
few months of local number portability (LNP) saw little
change for wireless carriers, finds In-Stat/MDR. However,
the high-tech market research firm believes that, with
the kinks ironed out and with more cellular contracts
expiring, churn is bound to increase in both the consumer
and business environments.
Everyone expected churn rates to increase dramatically
and immediately as a result of LNP implementation. However,
this was not the case. And, while churn rates were anticipated
to increase with some carriers more than others, AT&T
Wireless was one of the biggest losers due to LNP implementation
- a somewhat unexpected event.
In the first few months after LNP was implemented,
many of the carriers had technical difficulties switching
users over to other providers and porting the numbers.
Word spread about these difficulties, which caused some
users who wanted to switch providers to wait. An additional
issue is that users must pay a cancellation fee to switch
if they have not reached the end of their contract period.
Most people are not so dissatisfied with their provider
that they want to pay this fee.With the carriers having
now, for the most part, resolved these technical problems
and more people switching carriers as their contracts
expire, churn will definitely be on the rise over the
course of the year. LNP affected consumer churn more
than business churn in the first few months of implementation
and In-Stat/MDR expects to see increased churn, particularly
in the business environment, in the next few months.
A February 2004 survey of In-Stat/MDR's wireless panel
(composed primarily of business users) found the following:
- 5% of respondents (more than 1,000 cellular phone
users) had changed their cellular service provider
since November 24th, 2003. Of those who had switched
providers, 63% kept their phone numbers when switching.
Another 7% of respondents said that they expect to
switch providers in the next three months, and at
least half of them plan to take their number with
them when they switch.
- Verizon Wireless' customers were most satisfied
with their services.
- 11% of T-Mobile's customers switched to another
provider within the first months of implementation,
compared to 8% of Cingular's customers.
- In the next three months, 14% of AT&T's customers
are thinking of switching - higher than any other
provider by a factor of two.
- The majority of respondents (end-users and decision-makers)
who are thinking about switching say the number one
action carriers can do to keep their business is to
offer better service pricing.
This Market Alert is drawn from the In-Stat/MDR report,
"Number Portability Aftermath: The First Few Months",
which reviews user awareness of Local Number Portability
(LNP); the effect of LNP implementation on churn in
the first few months by individual users and by decision-makers
at corporations (separately); users' and decision-makers'
plans to switch and keep their numbers; satisfaction
by carrier; current carriers used (by end-users and
decision-makers) and those considered being dropped;
usage of wireless phones as primary phones; interest
and plans in making wireline numbers users' wireless
numbers (by carrier) and primary phone; cellular carrier
selection criteria; and actions that carriers can take
to attempt to prevent their end-user and decision-maker
customers from switching.
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