Northern Exposure: Number portability to hit Canada in March

Canadian consumers soon will have the flexibility granted to American wireless customers late in 2003: the ability to take a phone number with them if they switch mobile service providers.
Canada’s wireless number portability option will go into effect March 14. Customers will be able to port numbers between wireless service providers, take a wireline number to wireless and vice versa.
The implementation is one of the fastest for intermodal number portability, according to Mark Choma, director of communications for the Canadian Wireless Telecommunications Association (the northern neighbor’s equivalent of CTIA).
As far as the potential impacts of portability on the Canadian wireless market, he said the picture is unclear.
“It’s really sort of up in the air right now in terms of what the effects will be,” Choma said. “We did have the advantage of seeing the U.S. experience, so maybe some of the areas that were of concern in the U.S., we would be able to attack those before we launch-because we do want this to be a very positive experience for consumers.”
Choma noted that there are still several concerns related to turning on wireless number portability. Because of the need for language” capabilities in both English and French, he explained, there are “some concerns with the clearinghouse that the support is there for the French characters.” He pointed out that the government had moved up the implementation deadline from September 2007 to March, and that the change in timing had essentially cut six months out of the testing process for WPN. The other outstanding issue, he said, is related to bulk porting of more than 3 million phone numbers that had been leased to other service providers and now must be transferred back to their originating carriers so that portability will work properly.
Portability will be a turning point for Canada’s wireless industry, analysts said. According to Lawrence Surtees, vice president of communications research for IDC Canada Ltd. of Toronto, the Canadian market typically follows trends seen in the United States, but with a lag of about two years. Number portability, however, has been delayed longer than other trends.
“It’s taken longer to happen, and the wireless providers here dragged their feet probably longer and much more vociferously than even the people in the States,” said Surtees. The reason, he added, is simple: much like in the U.S. market, carriers “don’t want anything that can incent churn.”
It’s unclear how extensive churn will be impacted once WPN is implemented. A 2005 study from PriceWaterhouseCoopers on WPN in Canada predicted that about 850,000 subscribers would take advantage of wireless number portability the first year. Of those, the vast majority are expected to be wireless-to-wireless ports. An estimated 85,000 participants are expected to take their wireline numbers wireless.
“The view is, there is a bit of pent-up demand” for wireless substitution, Surtees said.
In a recent IDC study of businesses, about 20 percent indicated that they were likely or very likely to change carriers; however, Surtees noted, 10 percent is a more realistic figure of those who might actually make the switch.
Canada has a wireless subscriber base of about 17.8 million people. The country has a penetration rate of about 55 percent, according to Pyramid Research analyst Krishna Kanagarayer; that figure is substantially lower than the current U.S. penetration rate of about 77 percent.
However, three year contracts are common in Canada, and the many customers also have multiple products bundled through one provider and are therefore less likely to leave.
“The bundle has been highly successful in that market, so going forward, operators will be pushing that type of option to secure the customer into long-term contracts with all major services,” Kanagarayer said. He added that while some customers may, for example, switch from a tripleplay bundle to a dual-play if they drop their home phone, they are unlikely to cut themselves entirely free from their provider.
The additional competitive pressure is likely to push carriers to do more for their customers-from perhaps introducing large, U.S.-style buckets of minutes and faster, more reliable networks with flashier services and content. Canadian carrier Telus has been distributing content from U.S. mobile virtual network operator Amp’d Mobile earlier this year.
Surtrees expects to see Canadian carriers generally become more attentive to their customers and improve their service; Kanagarayer projects that carriers might begin to offer free long-distance wireless calling by the middle of 2007 as an incentive.
“I think wireless in our country is still very much a cup half-empty, and people are continuing to flock to it and use it more,” Surtees said. “So it behooves the providers to improve their services.”