Wireless LNP could push up churn significantly
Wireless local number portability (LNP) has the potential to drive wireless carrier churn rates up to more than 36%, according to a new survey released by In-Stat/MDR. The Federal Communications Commission has mandated wireless LNP by November 2003, which the large wireless carriers have opposed. However, the smaller, regional carriers want wireless LNP because they say it would allow them to be more competitive with the larger players. That gives wireless carriers slightly more than a year to make the necessary equipment and software upgrades to their systems. Some estimates have pegged the total investment by wireless carriers to make wireless LNP a possibility between US$900 million and US$1 billion with annual costs of US$500 million to support the new systems. In markets where wireless LNP has been introduced, churn rose between 25% and 50%. In-Stat/MDR projects that within the first full year of wireless LNP, there will be 22.2 million churning subscribers. The churn rate will drop to 30% in the following year and another 10% in the ensuing years. The survey reported that only 6% of respondents plan to churn within the next 12 months, but that another 36.6% say they might. It also noted that number portability would make them more likely to switch, with 52% indicating they would. Among those that had not switched carriers in the last 12 months, 54% would switch if they could port their current number with them.