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WLNP Threatens to Significantly Impact Wireless Churn Rates
Posted: 28-Aug-2002 [Source: In-Stat/MDR press release]

[New report from In-Stat/MDR says Wireless Local Number Portability (WLNP) has been resulting in 25-50% wireless subscriber churn rates first year, with expected churn rates of 30% the following year, and 10% in subsequent years.]

Scottsdale, Ariz. -- Much to the chagrin of wireless carriers, Wireless Local Number Portability (WLNP), the ability to change mobile carriers and keep one's mobile phone number, threatens to drive churn rates higher. In-Stat/MDR estimates that one-third of US wireless subscribers will churn, or decide to switch from one carrier to another, in 2002. The Federal Communications Commission (FCC) has stated that wireless carriers must implement WLNP in November, 2003, giving carriers little more than a year to make the necessary network and OSS upgrades that will allow for number portability. As number portability has driven churn rates as much as 25 to 50% higher where it has been introduced in other markets overseas, the high-tech market research firm estimates that it will have a significant effect on churn in the US, resulting in an additional 22.2 million churning subscribers in its first full year after introduction. That churn rate will drop to 30% in the following year, as the initial flurry of number portability driven churn declines, and in further years will decline by 10% annually.

The impetus for WLNP, according to regulators, consumer advocates, and the occasional carrier, is that it will promote competition and give customers greater choice and freedom to choose the wireless telephone service they want. According to its detractors, primarily wireless carriers, WLNP will be a burdensome and expensive drain on their resources, which will siphon money away from capital investments that would have greater benefit for all wireless users. These capital investments include network buildout and upgrades that will fill in gaps in coverage and deliver advanced services that consumers say they want. Carriers also argue that the US wireless market is already highly competitive and that no substantial barriers exist that prevent customers from choosing the wireless service that best serves their needs.

In-Stat/MDR has also found that:

The US wireless industry will spend between $900 million and $1 billion to roll out wireless number portability across their networks, and annual costs to wireless carriers to support it will approach $500 million, on an ongoing basis.

In a recent survey of 1,050 mobile business subscribers, only 6% of respondents said they were likely to churn in the coming 12 months, however a significantly higher number (36.6%) said they might, and only 51% said they had no plans to do so.

A clear majority of survey respondents said that number portability would make them more likely to switch (52%). Significantly, among those who said they had not churned in the last 12 months, the likelihood that they would churn if they could port their mobile number was higher (54%) than among those that had churned in the last 12 months (43%).

The report, WLNP: Understanding Number Portability & Its Impact on Wireless Churn (#IN020258WP), contains In-Stat/MDR's analysis of the US Wireless Market and the potential impact that Wireless Local Number Portability will have on US carriers and on churn. Data from this report was drawn from primary interviews with national and regional US wireless carriers, the FCC, the Australian Communications Authority, and WLNP systems vendors.

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