mobile num portability

8/3/2019 Mobile Num Portability

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White PaperGeorge A. GrabowichVice President – New Product Development

Arbinet

Jim GuyVice President – GNPC and Registry Services

Arbinet

Mobile Number PortabilityNetwork Correction

In a globally integrated telecommunications community,local regulatory changes can have eects thatreverberate worldwide. The implementation o numberportability initiatives in many key markets created newopportunities and improved the consumer’s experience,but terminating calls into number-portability countriesbecame more dicult, conusing and expensive asa result. Awareness is only now emerging regardingthe intercountry routing challenges posed by numberportability, and the market has yet to embrace an eectivesolution. Telecommunications pioneer Arbinet hasintroduced several initiatives to address cost and routingineciencies in a global number portability environment.

What Is Number Portability?

Number portability allows end users to keep theirphone number when they switch service providers.Regulators embraced mobile number portabilityto promote healthy competition between mobile carriers.

Changing numbers, while not impossible, was an obstaclethat discouraged customers rom switching mobile serviceproviders. Carriers were sometimes lulled into a degreeo complacency about serving their existing customers.Number portability made it easier or customersto shop around or the best deal and shited the marketto a “consumer-centric” number ownership model,rather than the “carrier-centric” number ownership modelthat was previously in place.

The result was lower prices and greater customersatisaction. In all, number portability sparked a new wavein customer acquisition or competitive mobile carriers thatcontinues to this day.

During the last 10 years, a robust ecosystem has ormedaround number portability. Most o this ecosystem hasocused on implementing number portability withina particular country, since number portability is eithera country-specic regulatory edict or one mandatedregionally – as in the case o the European Union.

However, the impacts o number portability onintercountry trac have largely fown under the radar,despite their large and growing impact. A detailed lookat mobile number portability within Europe – a representativemarket with a signicant population o mobile usersand several years o number portability experience –illustrates key trends and points toward possible solutionsto the challenges around global number portability.

In Europe, EU lawmakers mandated mobile numberportability under the Universal Service Directive, whichbecame eective on July 25, 2003. Each countrywas allowed to implement number portability withthe methodology and technology that best matchedexisting carrier architectures and customer needs.In addition, carriers’ rates were reviewed and setperiodically to encourage competition as well as to allow



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1 Source: Telegeography 2006 – Global Trac Statistics &Commentary – Data exact or extrapolated.

2 Source: European currency conversion rate in Wall StreetJournal dated 12/14/07 at $1.47 to €1.00 Euros.

3 Using a known 1.5 Euro cent-per-minute penalty rate times the

number o ported minutes.

4 Source: Jonathan Banks, SVP or Law & Policy, U.S. Telecom Association to the Committee on Commerce, Science & Transportation, 7/12/2007 statement o 57M ports divided by June2006 FCC report o 219M US mobile subscribers less 3 percentwireline-to-wireless ports.

5 Source: Telegeography 2006 – Global Trac Statistics &Commentary: Mobiles p. 58-59.

new entrants to recover hety initial investments whilecompeting eectively with established mobile providers.

Impact of Number Portability Today

Intercountry global trac in 2007 reachedapproximately 329B minutes, o which 115Bminutes, or 35 percent, terminated to mobiletelephone numbers.1 No ocial numbers exist, butbest estimates suggest that o these 115B mobileterminated minutes globally in 2007, 37.8 percent wereto mobile number portability countries, or a total o 43.5B minutes directly impacted by mobile numberportability. Across markets, that number is experiencinga double-digit rate o growth per year.

Assuming, on average, 10 percent o these minutes are

to ported numbers within portability-enabled countries,a potential 4.35B minutes are being incorrectly rated peryear. Collectively, these minutes may be incurring as muchas €65M, or $96M,2 in unnecessary transit penalty costs3 and several times that in misrated Mobile TerminationRate (MTR) charges (higher or lower). This is a signicantimpact on an industry continually looking to cut costs.

A Swiftly Growing Problem

The chart below illustrates the degree o portability uptakeby EU countries.

This snapshot does not actor in the growth rate o mobiletrac, the portability uptake lag created by multiyearconsumer contracts, and the increased competition in themobile sector since portability began.

The rate o mobility growth in Europe was 21.7 percent in

2004.5

Globally, it averages 22.5 percent per year and isstill climbing strong into 2008, according to projections. Aew examples o that growth, and o the amount o portingbetween in-country mobile carriers, are shownat right.

9 / 1 / 2 0 0 2

9 / 1 / 2 0 0 3

9 / 1 / 2 0 0 4

9 / 1 / 2 0 0 5

9 / 1 / 2 0 0 6

9 / 1 / 2 0 0 7

Germany

1.2 millionports - 6.5%

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

Switzerland

500,000ports - 6.5%

5,000,000

6,000,000

4,000,000

3,000,000

2,000,000

1,000,000

2 / 1 / 2 0 0 2

2 / 1 / 2 0 0 3

2 / 1 / 2 0 0 4

2 / 1 / 2 0 0 5

2 / 1 / 2 0 0 6

2 / 1 / 2 0 0 7

2 / 1 / 2 0 0 7

2 / 1 / 2 0 0 7

Belgium

1.6 million

ports - 15.5%

1,800,000

8 / 1 / 2 0 0 2

8 / 1 / 2 0 0 3

8 / 1 / 2 0 0 4

8 / 1 / 2 0 0 5

8 / 1 / 2 0 0 6

8 / 1 / 2 0 0 7

1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

France 1.8% Switzerland 6.5% Italy 12.8% Belgium 17.4% USA 22.9%4

Germany 1.3%Netherlands 11.3%Sweden 14.6%Finland 58.4%



Mobile Number Portability Network Correction

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As both the total amount o mobile tracand the percentage o ported numbers increase, so toowill the total number o misrouted minutes and the overallnancial impact on carriers.

How International Calls are Routed

In order to understand the degree o the mobile numberporting problem, one must understand how calls arerouted today to get rom the point o origin to their portedor unported destination.

The originating international carrier receives the call roman end user directly or indirectly and uses the dialednumber embedded in the C7 or SS7 signaling streamto decide how best to route the call. The dialed numberis then analyzed by the switch or an external SCP based

upon the ITU codes assignment schema (CountryCode [1-3 digits], National Number [max. 15 digits])and matched against their Least Cost Routing(LCR) system or how best to route the call. In someterminating country cases, the national number isbroken down urther to dene dierent cities, regions,xed carriers or mobile carriers. These designations aretypically xed and predictable until number portabilityis implemented.

Each sub-route may be at a dierent rate and thereore,based upon the LCR logic, may be sent to a dierent long-haul carrier to complete or sent down a bilateral routethey may share with the in-country operator. The LCR willalso determine routes based on needed call quality, ratesand other business rules. Regardless o nal route decided by the LCR businessrules, the call will be onward routed to a carrier servingthe destination country based on the presumed-to-be-correct assigned code o the nal terminating carrier. Itis this presumption and the uncertainty that numberportability injects into this process that is at the heart o portability problems.

Once the call reaches the designated in-countrycarrier, that carrier utilizes any one o the our ollowingtechnologies to determine which carrier currently servesa particular mobile telephone number. These our maintechnologies have been adopted to deal with in-countrynumber portability corrections.

1) All-Call Query Requires central database, all calls queried or status(most ecient)

2) Query on ReleaseRequires central database, only query ported

3) Call DropbackNo central database

4) Onward Routing No central database, additional circuit or duration o call (least ecient)

Depending upon the mechanism encountered, a transitpenalty charge may be assessed to cover the cost o an additional call leg, i the routing is identied

as incorrect.

For all methods, the originating carrier remains unawareo the nal destination o any particular call, whatpercentage o its calls are ported, which ones weremore expensive and which ones were less (assuming thelower-priced call is even passed back to the originatingcarrier) and i a transit penalty was applied or not. The billthat hits them in 30, 60 or 90 days cannot be validatedand may have added up to a relatively large sum.

Global Number Portability Creates PriceUncertainties

Increasing uptake o number portability increasesuncertainties around the rate an originating carrier willbe charged or a call to a portability-enabled country.Each originating carrier knows the termination rateto a mobile number based on codes-based routing.

However, i that number has been ported, the originatingcarrier has no visibility into the true rate.

The rate to a ported number may be the same, higher orlower than is suggested by codes-based routing. In some

countries, this amount is signicant; in others, a transitpenalty o at least 1.5 Euro cents6 may apply to eachminute o the ported call.

These uncertainties have largely been absorbed bytransit carriers that carry the call to the terminating mobilecarriers. However, the rate uncertainties have maniestedthemselves in terms o infated blended rates sold



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6 Please note: The transit penalty illustrated above is one knowntransit penalty encountered in several key European countries. Transit penalties are levied in each country and may be higher, thesame or lower. The gure, while accurate in some but not allmarkets, is used here or illustrative purposes only.

to originating carriers. These rates are based onthe original codes denition with an assumption on thelikely volume o calls ported to higher-priced networks(see diagram below).

Unortunately, as the pressure increases on transit carriersto reduce rates, they search or carriers with lower“ported” assumptions with the natural result that theircosts have to increase to handle these ported calls. Adda less scrupulous “cherry-picking” carrier into this mix witha deliberate attempt to pass o a high volume o portedcalls, and the whole structure starts to disintegrate.

Variable MTR Spreads

Rate uncertainties are amplied by the sometimes widespread between mobile termination rates (MTR) withinthe country – in some cases varying as much as 100percent between established PTT-owned mobile carriersand new entrants oering advanced 3G-capable voiceand data networks.

Regulators endorse these MTR dierentials to enable newentrants to recover high-priced spectrum and advancednetwork start-up costs.

An example o one country in Europe where the ratedierential compounds the number portability economicpain point is Poland, depicted in the diagram below.

Some countries, such as Germany, have MTRs thatare closer. Others, such as Italy, have even wider rate

spreads, caused by new 3G entrants charging privatelyestablished, even higher, mobile termination rates outsidethe regulated and established MTRs.

The Danger of Cherry Picking

The above-reerenced MTR dierentials also provide“cherry-picking” opportunities or some carriers that havepartial or complete knowledge o the ported numberuniverse in a destination country. That knowledge can helpthem concentrate ported trac and send it to codes-basedsellers. These calls appear to be to codes-based, low-priced, mobile carrier destinations, but are in act ported tohigher-priced mobile destinations. This leaves the codes-based carrier with a higher cost than they had predictedbased on portability penetration, eectively handing thema negative margin. This cherry-picking gamesmanshiphas been going on in telecommunications or years,and number portability opens up new opportunitiesor certain unscrupulous carriers with advanced knowledgeto take advantage o unsuspecting codes-based sellers.

A recent analysis o trac being routed to the Proximuscodes in Belgium conducted or one international carrieround that they were receiving seven times as many

calls ported to Base – a higher-cost mobile operator –than they would have expected given the true portabilitypercentages in that country.

Carr ier

M1

M2

Sells on “Codes” Buys on “Networks”

Mobile operators

trade on network-based pricing

International

community

trade on number

block ranges

International

Bilaterals10c

15c

PTC

PTC

PTC

Polkomtel

IncomingInternational

Traffic

Poland Example

13.3

16.0

21.7

“Spread” creates

cherry-picking

opportunity

In terna t ional Or ig ina t ingCarr ier

Telekom

Polska




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Unpredictable Cost Structures

Passing those surprise dierential costs back to originatingcarriers leaves them with several economic, business and

accounting challenges. These include:

1) Unauditable changes in terminating mobilecarrier rates

2) Possible transit penalties passed back to theoriginating carrier

3) Inability to identiy which carrier sent the higher volumeo ported calls

4) Altered costs charged back outside normal quarterlyoperating windows, making Sarbanes-Oxley (SOX)and other accounting compliance requirements nextto impossible to meet

5) Insertion o extra switches and connections to onward-

routed calls, increasing post dial delay anddegrading quality

Finding a Solution

While legislating uniorm MTRs and eliminating portednumber transit penalties would solve the nancial aspectso the portability problem, both ee structures provideimportant benets to the mobile market, and there areno in-country constituencies or eliminating them. Waitingor a regulatory solution is not a viable approach to theinternational number portability problem.

An ideal solution would leave in place the current regulatoryramework but provide access to mobile number portability(MNP) databases to inter-country carriers as well asin-country carriers.

Opening MNP databases to the originating carrier allows itto eectively determine the terminating carrier on a call-by-call level and rate the calls based on the true terminatingprice. With this data, the originating carrier can make thebest choice on how to route to the network-correct carrieror to an appropriate surrogate, and eliminate back-billingproblems.

This optimal solution nonetheless aces three challenges:

• Negotiating the regulatory and technical hurdlesassociated with accessing and processingdatabases established to dierent standards ineach country

• Devising ways to send trac to destination carriersthat isn’t mistaken as errantly routed calls,triggering unnecessary transit penalty anderroneously charged MTRs

• Creating ways to deal with trac or carriers withlarge dierences in technical capabilities

These challenges, while large, are not insurmountableand are presently being broadly addressed by Arbinet ona commercial basis.

Arbinet’s Solutions

Arbinet has been in the international voice business ornearly a decade, assisting carriers o all sizes to routetrac eciently and eectively around the globe. With

the advent o number portability, Arbinet has created aseries o products that helps carriers, regardless o theirtechnology and size.

External Switched Minute Solution

For smaller carriers, Arbinet oers a traded minutessolution. For certain number-portability countries, anoriginating carrier can send its minutes to Arbinet,who then delivers that trac via high-quality carriers.

This arrangement oers competitive pricing by eliminatingthe portability risk premium.

Internal Switch-Based Solution

For carriers wishing to maintain call control and completecalls using their own acilities, but who do not have theability to query external databases, Arbinet oers a switch-based query solution. This conguration utilizes an Arbinetswitch to lter trac on a signaling level. Arbinet returnscalls or number-portability-implemented countries tothe originating carrier tagged with the various terminatingmobile carriers. This allows the originating carrier to identiyported numbers and route calls accordingly using its ownacilities and routes.

Internal Query-Based Solution

For carriers with sophisticated switching architectures, Arbinet has assembled a growing and constantly updateddatabase or number-portability destinations that carrierscan query. Carriers maintain call control and are able todirect their trac correctly. The inormation also empowers



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carriers to negotiate new interconnection agreements withterminating carriers, driving unnecessary costs out o theprocess and improving call quality simultaneously.

Looking Forward

Number portability empowers consumer choice anddrives higher levels o service and competition. However,it also creates challenges in both in-country andintercountry call routing. Successul steps towardsolving in-country challenges suggest that intercountrychallenges are ultimately solvable as well. However, littleeort has been devoted to the intercountry challengeto date.

Arbinet and other pioneers have debuted solutions thatwill ease the number portability burden, resolve existing

nancial impacts and restore ecient network routing. Arbinet is working with carriers to crat a responseto realize cost reduction, quality improvement andaccount resynchronization. To participate in the industryconversation around global number portability, visitglobalnumberportability.org, where blogs, orums andother interactive eatures explore the latest developments ininternational routing in a number portability environment.

Authors

George A. Grabowich has served in vice-presidential positions at

several communications and web-based companies during the past 25

years. His telecommunications experience has concentrated in boththe wireless and wireline areas with companies such as Arbinet,

Portable Internet, Passport Corporation, AT&T Local Services, Teleport

Communications Group, RAM Mobile Data (formerly owned by Cingular),

Metromedia Communications and ITT.

Jim Guy joined Arbinet in November 2006 and is primarily responsible

for the services development and deployment of the Mobile Solutions

product suite. With 34 years of experience in global telecommunications

ranging from research, strategy and systems technology, he has

worked at leading service providers such as British Telecom, Concert

Communications, Teleglobe Inc. and Equant (Orange Business

Services).

While most o this paper has been devoted

to voice calls, the same principles applyto SMS and MMS routing as well. For

text and multimedia-style calls, number

portability poses even greater challenges

as the calls may simply not complete to

a ported number. Neither the sender nor

the recipient may be aware the message

was lost. Mobile number portabilitycorrection takes on an ever-greater sense

o urgency or mobile text and multimedia

messaging.




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Notes

mobile num portability

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