Research Notes

Number portability is a huge success – Discount mobile service providers are great with numbers and figures

New customers can pick a new mobile number or they can bring along their old phone number – and thousands of customers are choosing the latter.
Figures do not lie – in under two years the providers of discount mobile telephony in Denmark have attracted so many customers that discount mobile telephony has now become a very serious threat for the large traditional mobile telephony operators that primarily base their business on monthly mobile subscriptions.

That discount mobile telephony has become such a huge success is very much due to that customers are not billed a monthly invoice and on top of that the prices for a “voice” minute and SMS message are much lower than the tariffs the traditional mobile providers have offered so far with a subscription based package. In return for this very cheap mobile telephony, the customer has to service himself by both registering and topping-up his account online.

And the Danish customers have been registering by the thousands with the discount providers. It is very interesting to see that the customers these new discount providers are getting are both customers churning from one of the established operators, but also very much first time customers getting their first mobile phone ever. So now the established mobile operators are loosing market shares, not just because their customers are switching to discount providers, but also because many new first-time mobile customers prefer to start up with a discount providers offering. Up to now, discount mobile telephony has very much been a Danish phenomenon, but there is no doubt that most of the Western European mobile operators will have to start looking at their strategies in the near future, as the discount mobile service providers come marching through their territories.

The new business area of discount mobile telephony has just been thoroughly analysed in Strand Consults latest comprehensive report “The Moment Of Truth – A Portrait Of The Discount Mobile Service Providers Success”. This report has examined the Danish mobile market, where discount mobile telephony has in a very short period of time, managed to turn the whole mobile market upside down, completely changing the competitive parameters that were until recently governing the market.

The discount mobile service providers’ offerings are so simple and easy to understand, with often just one amazingly cheap price tariff, that they are pulling in the last die-harders – those people that have doggedly refused to have a mobile phone so far – but now simply have no reasons left not to get their first mobile phone. The report focuses on how the two Discount Mobile Service Providers (Telmore and CBB Mobil) have managed to acquire no less than 43.7% of all new mobile customers from 2H 2000 to 1H 2003! This is an outstanding achievement considering these two companies were both launched at the end of 2000.

But it doesn’t even end there, in 1H 2003, the Danish discount mobile service provider Telmore received 42.9% of all the number porting requests in those six months – that really shows that the established mobile operators’ customers will churn to a discount provider if they can port their existing mobile number with them – customers simply want cheap, easy to understand tariffs on basic mobile services.

The report also analyses the development of the end-user prices for voice and SMS messages. In the past 10 months alone the price has dropped by around 50%, so a discount mobile customer can today talk on his mobile phone for just 0.091 Euro and send SMS messages galore at only 0.026 Euro pr. message. It is only a question of time before we see a similar trend on all the other Western European mobile markets. Add to this that around 20% of the total Danish mobile customer base is using a Discount Mobile Service Provider today and you just have to be pretty impressed.

The Danish mobile operators were not prepared at all and had no warning that discount mobile telephony would explode so drastically and in such a short time, as has now been documented. This turn of events has cost the mobile operators millions in lost revenue and on top of that, the discount mobile service providers have – in contrast to most of the mobile operators and traditional service providers – black figures on their bottom lines.

So now the rest of the mobile industry in Western Europe has been warned, because there is absolutely no doubt that discount mobile telephony will spread. There is therefore only one thing to say to the European mobile operators: “Your number is coming up next – and if you don’t hang on to it, that number will probably churn to a discount mobile service provider”!

More information “”The Moment Of Truth” – A Portrait Of The Discount Mobile Service Providers Success”

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