The Malaysian mobile sector is certainly the place to watch over the next few months with the much anticipated mobile number portability (MNP) trials scheduled for in Q4 and Q1 2008 and the upcoming commercial launches of the two new 3G players, MiTV and TimeDotCom.
MNP is a widely-accepted regulatory tool used to promote healthy competition and enhance customer choice in the mobile market.It effectively eliminates customer "stickiness" resulting from attachment to a mobile number or perceived premium attached to a prefix, as may be the case in Malaysia.
Malaysia's late adoption of MNP - Singapore started in 1997, Hong Kong in 1999 and Australia in 2001 - in Ovum's view could be an advantage. MNP is usually best introduced at a stage when the market has entered a mature phase, because at that point a further boost in competitiveness may be desirable.
MNP acts as an incentive for the rejuvenation of competition. The Malaysian mobile sector, with a 76% penetration rate and 20.6 million subscribers in Q1, can be characterised as maturing. The three existing mobile operators are on fairly equal footing with none having a significant competitive advantage over the others in terms of market share, coverage, quality of service or price.
MNP is to be introduced in Malaysia about six months after the scheduled commercial launch of the new 3G operators, and with the right marketing strategies targeting the various customer segments, MNP can be a powerful tool for these operators to gain a foothold in the market.
In Singapore the introduction of MNP occurred at a time when the third mobile operator, StarHub, was licensed, and enabled that operator potential access to SingTel and M1 customers.
Call for loyalty
So what can users expect with MNP‾
In the lead up to MNP we expect mobile operators to intensify their marketing campaigns to try to keep their customers loyal.
This will continue post-implementation. Users can expect to be spoilt with innovative new loyalty programs, including bundling of standard services with free value-added and other services.
Other subscriber lock-in strategies could include attractive on-net tariff structures that encourage groups of users (usually friends and family) to stay with the same operator or the creation of "community-based" services such as blogs, instant messaging, chatrooms and multi-user gaming that are only available to users on the same network.
O2's retention strategy it introduced in 2005 in the UK was seen as a big success, with churn dropping 12% for post-paid subs and 21% for prepaid subs in 2005.
Early that year O2 launched a major advertising campaign, delivering the message "the longer you stay with O2, the better it gets." This strategy helped increase consumer awareness of the benefits of staying with O2. As part of this retention strategy, O2 offered handset subsidies, specific promotions, competitions and discounted packages to encourage customers to commit to new or longer contracts.
If well-executed, MNP should take competition in the Malaysian mobile sector to a new level. The success of MNP is typically gauged by the longer-term rate of porting - there is usually a sudden surge just after MNP is launched, but porting should trend toward a normalized level after a few months. A higher rate of porting is usually taken to indicate greater success of MNP.
However, the regulator and industry commentators will need to be careful when interpreting a lower than expected rate of porting, if indeed that is the result. MNP could release competitive countervailing activities, resulting in a net rate of porting lower than that forecasted.
This is still a good outcome for users so long as it is competition that is driving the low rate and not other factors such inefficiency in the porting process or high porting costs. The threat of porting could well be as important and effective as actual porting - that in itself should be taken as an achievement.
Elaine Chow is a consultant for Ovum and is based in Melbourne