Mike Falconer: Carrier relations manager, Cell C

MONEYWEB, Erika van der Merwe, 14 September 2006

Why the launch of cellphone number portability has been delayed.

MONEYWEB: Well, Icasa today announced a second delay of the launch of cellphone number portability. Instead of 18 September, implementation is now set for 10th of November. Mike Falconer is carrier relations manager at Cell C. Mike, the cellphone operators had made recommendations to Icasa about ideal dates for implementation, and your proposal was the earlier of the three cellphone operators. Would it be correct to say that Cell C has the most to gain from number portability?

MIKE FALCONER: I think so. From our research it has shown that we will be a net gainer once portability is actually implemented, but really it allows us access to customers who perhaps haven’t switched before, because of the value of their numbers to them. So we do see having access to sort of early-uptake customers of cellular as well, who are potentially higher spenders as well.

MONEYWEB: Mike, why the delay?

MIKE FALCONER: The most recent delay was really just completely unforeseen. It was to do with testing. We bought a centralised solution which allows us to port numbers, and we had to test our connectivity to that system, and we had unforeseen problems, really, just with connecting to the database and sending messages to and from the database. The database works a little bit like a bank clearing house with clearing cheques, and we’ve really just had problems that were completely unforeseen by ourselves and the vendor, actually.

MONEYWEB: So is this a difficult process, technically, to ensure number portability?

MIKE FALCONER: I think so, because of the way Icasa required it to be done. So it’s a fairly quick process, which means that everything is basically machine to machine, so the processes we’ve implemented and the systems we’ve implemented are fairly complex. It has been done elsewhere around the world, but in this country we have a service provider and mobile operator model, so there are more parties connecting to this, more parties doing their own development to ensure they can interface with the solution. So it does create far more complexity – so, yes, it is fairly complex.

MONEYWEB: It’s a complex process. Who will manage it?

MIKE FALCONER: We’ve created a company called The Number Portability Company and each of the operators has an equal shareholding in that – so MTN, Vodacom and ourselves. And that will be run by a general manager who has been appointed, who will actually oversee the day-to-day management of the solution itself.

MONEYWEB: Now do you expect an impact on service offering by the cellphone operators, or even on pricing once we see number portability?

MIKE FALCONER: I think the most immediate effect will be on retention strategies of retaining customers, improving service, so you don’t sort of lose your customers initially. Perhaps over time we’ll see pricing competition, but I think initially it will really be around service, perhaps better bundling of products – you know, the traditional sort of competitive areas in the market.

MONEYWEB: How far out of line are we globally in terms of number portability?

MIKE FALCONER: When you say “out of line” do you mean the number of years or …?

MONEYWEB: Yes, that, and how many other countries are there around who have it?

MIKE FALCONER: Well, numerous. Fixed-line started way back in 1997 in Singapore, and then in 1999 there was the UK and Hong Kong, and in the sort of early 90s the EU mandated that that EU member countries actually implement number portability. So it’s been phased over the last sort of five years, with those joing the EU latest doing it now – sort of Czech Republic, Slovakia, those sorts of countries implementing in the last few years. So we’re a couple of years behind, but in Africa we’re the first. And also South America hasn’t implemented. Australia’s got it, but not New Zealand. So it just depends on the regulators in the different areas.

MONEYWEB: Mike, we heard from Arthur Goldstuck last week. His research shows that there could be limited impact in terms of switching once we see portability. Do you agree with that in terms of your own research?

MIKE FALCONER: Our research was a large sample – about 7 000. It actually showed between 3% and 5% of the total market would perhaps take up number portability, which is a fairly big number, depending on how big you see the market. So it is quite a large number. We did see the post-paid potentially more uptake than in prepaid. There’s more affinity for the number in post-paid. But yes, it is a fairly big number in actual numbers. But as a percentage it’s fairly small.

MONEYWEB: Well, thank you, Mike Falconer. Mike is carrier relations manager at Cell C. Arthur, I think perhaps you’ve tackled this issue, but just coming back to cellphone number portability – a company like MTN, this is a minor detail in their lives.

ARTHUR BUCHNER: Well, you know, I would never move from my cellphone company to another if I had to change my number. However, now it does give me the opportunity to consider what the other company has to offer. I personally think they’re much of a muchness, and the fact that I change will be as a result of how they advertise and how they brand themselves. Do they do something for society or do they not, or do they appeal to me? Is it a young cellphone company or does it appeal to the older set, rather than actual price. But it does give me the opportunity to decide that. And I think it’s going to have a major impact. I don’t think you can see 10% or 15% at least of people moving around and changing from one to the other.

MONEYWEB: Arthur, thanks for spending this hour with us in the studio.

ARTHUR BUCHNER: An absolute pleasure.

MONEYWEB: Arthur Buchner is from Nedbank Securities.

Posted in Market commentary

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