As debate continues around the implications and advantages of number portability, little has been mentioned about the potential impact of number portability on organisations that are currently reaping the benefits of least cost routing. Jacques Du Toit, Director at Orion Telecom, says that with number portability set to launch in July, clients will have to ask their service providers a few very important questions to ensure they continue to receive the savings they have been promised.
Number portability allows cellphone subscribers to switch network operators while keeping their original numbers. From a retail perspective, there has been much speculation about the impact of number portability on an operator`s ability to retain its customers. In the business world, however, the more pressing question is how will number portability affect companies that have implemented least cost routing (LCR)? Number portability has the potential to have a hugely negative effect on unprepared LCR solution providers, who may pass this on to their clients.
LCR systems intelligently analyse differences in the tariffs of the various telephony carriers including Telkom, Vodacom, MTN and Cell C. They take advantage of tariff differences to place any telephone call on the carrier network that provides the lowest cost, taking into account such factors as time of day, call origination and call destination. Around 60% of businesses in South Africa have implemented LCR from a variety of service providers.
Internationally, it has been estimated that customer churn due to number portability is set at about 5%. We do not yet know what that figure will be in South Africa, but let`s say that 20% of subscribers decide to port to an alternative network. This effectively means that 20% of least cost routing charges will go through the roof.
Here`s why. A PABX examines an outgoing call, determines which network the call is intended for, redirects it to the relevant router; the number is then dialled and sent via the lowest cost carrier. The cost of that call is R1,28, whereas an off net call would be charged at R2,02, or at R1,65 by Telkom. Off net calls would therefore incur an increase of over 50% in call costs because the calls have been routed incorrectly - 22% more than if the client had just stuck with Telkom.
The fact is that it is up to clients to determine with their LCR service providers how number portability will affect their savings agreements. Here are four questions to ask:
* Does your service provider have a plan in place to deal with the implementation of number portability?
Your service provider must have a strategy in place to deal with number portability and the effects it can have on their LCR systems. Find out what it is and how it affects your organisation.
* Does your service provider guarantee rates?
Your service provider should be offering you a managed solution that is customised for each type of client. They must be able to guarantee a rate and deliver it.
* Who absorbs the cost for an off net call?
The cost of a call that is routed incorrectly should be absorbed by the service provider. That means the risk associated with the cost of the call going from R1,28 to a potential R2,02 remains with the service provider and not the client. That is, after all, why the client contracts with the service provider in the first place.
* Who absorbs the costs associated with hardware?
Any costs associated with new LCR equipment, number portability hardware, programming of your PABX and integration of the solutions should be the responsibility of the service provider who is providing a managed solution for the client.
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