Carriers choose low-key number portability promotions
MELBOURNE, Australia-With the advent of mobile number portability (MNP) in Australia, the forecasted marketing blitz has largely failed to materialize, despite some initial predictions that mobile-phone companies would spend big to draw customers away from their competitors.
Introduced on 25 September, MNP allows consumers to change their mobile carriers while retaining their phone numbers. Instead of staging an aggressive price war, carrier advertising has continued in the main to promote coverage, service and value-added features, pillars of pre-MNP marketing activity. As well, marketing has begun to look at ways of rewarding both customer loyalty and holding onto customers rather than acquiring new business at all costs.
Newcomer Virgin Mobile has maintained a high profile through aggressive outdoor advertising, which included one of the Australian “Big Brother” television show contestants, beginning in late September. A Virgin spokeswoman said it is a value war, not a price war.
Orange promoted its flat rates in recent 30-second television spots and offered a A$50 (US$25) credit for customers porting their business from another operator to Orange.
In the lead-up period to MNP, Optus strongly promoted improvement in its network coverage through outdoor media and press advertising. After the introduction of MNP, Australia’s second-largest carrier launched a No Risk Switch campaign that offered users who changed to its service a 10-day period to leave without penalty.
Simultaneously, Optus unveiled new, more flexible pricing plans for consumers and businesses. In particular, MNP was seen to present greater opportunity in the business market, because business people were previously reluctant to switch services and give up their business numbers.
“MNP isn’t a single date-it started many years ago. It’s about differentiating yourself,” said Paul Kitchin, Cable & Wireless Optus marketing manager.
Although Telstra, which enjoys about 46 percent of the mobile market, has spent the past 18 months preparing its marketing strategies, many of its offers developed around MNP remained under wraps.
“MNP hasn’t been what was anticipated,” said Telstra’s Tim Scott. “Activity is well below expectations.”
It is estimated that only about 30,000 customers at press time had taken advantage of MNP and switched carriers. Teething problems in transferring customers in the days immediately after MNP’s launch did not help matters. Because of problems during the first week of MNP, the Australian Communications Authority (ACA) stepped in and put in place stricter interim standards that required at least 90 percent of transfers to be done in less than three hours and for no port to take longer than two days. These arrangements are in place until at least 18 November.
Also, customers are savvy and prefer to wait and see how MNP plays out in the longer term.
Scott said it is likely that Telstra might release some of its “shelved” offers closer to Christmas. The carrier, he said, is placing greater emphasis on customer loyalty and retaining customers than it has in the past. To that end, Telstra launched Access Holidays in September, waiving four months of access fees for signing up for 18 months. Already Telstra offered heavy discounts to customers who bundled fixed, Internet and mobile accounts.
Vodafone, which relaunched its brand and new tariffs earlier in the year, has not changed its marketing in the wake of MNP, said spokeswoman Emma Terleske, describing it as “business as usual.” “Marketing is concentrating far more on retention, far more on applications and services for customers,” she said.
But Paul Budde, independent telecom commentator, is disappointed at the lack of marketing activity, accusing Telstra’s nearest competitors, Optus and Vodafone in particular, of missing their biggest opportunity to claw market share from Telstra.
“The opposite has happened,” Budde said. “Telstra is winning customers, but it reflects badly on the state of mobile competition in Australia.”
He blamed “battle fatigue” and financial difficulties for the low-key marketing response to MNP so far. “I expected call charges to drop 20 percent to grab business. That hasn’t happened. We’ve only seen between 5 percent and 10 percent. It’s not enough,” he said.
Dropping subsidies
Coinciding with the launch of MNP, carriers have decided to no longer subsidize mobile handsets as a result of a more mature mobile-phone market with a penetration level of 55 percent and to push contract-free deals.
Vodafone was first to drop subsidies on handsets, and Orange has introduced contract-free plans. Telstra recently announced it too would drop subsidies; likewise, Optus has signaled that it is moving in this direction also.
In the past, subsidized handsets were a way of building a customer base. Now carriers in a tougher market are aiming to reduce expenses and revise marketing models to retain customers.
