Memorandum submitted by Hutchison 3G UK
Ltd
I understand that members of the Trade &
Industry Committee are likely to take the lead in telecommunications
issues in the forthcoming session on Ofcom's annual plan. I hope
you don't mind therefore if I take this opportunity to draw your
attention to what "3" considers to be a significant
operational issue for the regulator that is currently having a
detrimental impact on competition in the mobile market and a restriction
of choice for many millions of consumers.
As I am sure you are well aware "3"
is the most recent network operator in the UK mobile market after
bidding for and winning the 3G spectrum license reserved for a
new entrant in 2001. Our introduction into the market was designed
to bring about greater competition, and more rapid investment
in and migration to 3G technology as an enabler of mobile broadband
services. The policy of licensing a new entrant has been partially
successful, for example retail prices are on average now 12% lower
than when 3 entered the market in 2003.
Throughout this time, however, we have continued
to be very concerned with the current arrangements for the Mobile
Number Portability (MNP) process in the UK, and specifically its
negative impact on consumer choice and competition. After
considerable persuasion Ofcom are currently consulting on options
to address this issue, but the regulator's work plan is insufficiently
vigorous in this regard and could easily result in no substantial
improvement for the consumer before 2009.
The problems with the existing solution are
numerous. Currently it takes a minimum of five working days for
a customer to move—"port"—their number between
networks in the UK. The result is that the UK has one of the lowest
porting rates in the world—just 9% (see table below)—even
though it was one of the first countries to launch MNP in January
1999. In Ireland and Australia, where we also have operations,
the porting process takes just two hours. The result is that at
least twice as many customers port their numbers there as do in
the UK. The different take up of porting for "3" as
a new entrant is even starker with "3" Ireland running
at 50% compared to "3" UK's figure of 17% of total post
pay customers.
| Country | Maximum port lead time
| Port lead time achieved in practice
| % numbers ported |
| Australia | 2 days | 2 hours
| 45.3 |
| Austria | 3 working days |
2 hours | 30 |
| Denmark | 10 working days |
24 hours | 60 |
| Hong Kong | 2.5 days | 2 hours
| 40 |
| Ireland | 1 day | 20 mins
| 30 |
| Italy | 5 working days |
3.5 hours | 35 |
| UK | 2 working and 7 calendar days
| 5 days | 9
|
| |
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The UK process artificially limits consumer choice. The technology
to bring the UK into line with the rest of the world (including
countries as varied as Pakistan and Austria) is readily available,
and we believe Ofcom should be strongly urged to move as soon
as possible to current European best practice—which is a
direct routing, recipient-led, same-day porting system.
Longer porting times actively discourage network switching
and thus inhibit competition and downward price pressures. A recent
paper by Sean Lyons of the Economics Department at Trinity College,
Dublin, goes as far as correlating the empirical link between
faster portability rates and lower retail prices for consumers.
I have taken the liberty of attaching a copy of this research
for your interest.
In light of this evidence, and the fact that Ofcom on 27
March 2007 published a consultation into mobile termination rates
that implicitly acknowledges the distortions created by MNP, we
would very much like the committee to consider addressing the
following questions to Ofcom's representatives:
1. Does it consider it a fair way to deliver "public
outcomes" that UK consumers have to wait five days to port
their number between mobile networks when those in Ireland wait
only two hours?
2. If the recently announced consultation into MNP concurs
with our view that UK consumers are being unfairly treated by
being denied access to the latest (and available) porting technology—will
they act immediately rather than waiting until a proposed date
of 2009?
3. Are they aware of the Sean Lyons paper of 2006, Measuring
the Benefits of Mobile Number Portability that proves a direct
empirical relationship between reducing MNP times and an increase
in network choice and reduction in retail prices?
If you are interested in any further information on this
subject in advance of Tuesday's evidence session please do not
hesitate to contact me. If time does not permit however, I would
also be happy to meet with you at a later date, to introduce you
more thoroughly to "3" and some of the wider public
policy challenges we face.
12 April 2007
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