Accudata on the Challenges of WLNP

On Nov. 24, the largest carriers in the United States were required to implement wireless local number portability (WLNP) capabilities. That dull roar you heard for the last several months was the grumbling of the major carriers who, in addition to being concerned about dramatic increases in churn (an In-Stat/MDR report estimates 46 percent of U.S. wireless customers might consider switching providers), are spending large sums of money to comply with the FCC WLNP mandate.

Industry analysts estimate costs will eventually top out somewhere between $50 million and $100 million per carrier for the first year. The CTIA provides additional information, suggesting industry-wide, year-toyear updating costs for WLNP could run about $500 million.

Why are the estimated costs so high? Part of it, most likely, is that carriers are lumping in their churn costs with the costs of readying networks to do the actual nuts and bolts porting of numbers. Another factor to consider is the difficulty carriers face in the way they store and transmit their data since they aren’t working with the same storage or access protocol standards. Carriers have said that standardizing the setup is difficult and expensive.

Understanding why carriers claim the costs of WLNP are high merits an explanation of how LNP works in wireline. For wireline service providers, LNP takes place using a standardized system. Essentially, when a subscriber changes providers but keeps the same phone number, a location routing number (LRN) is assigned to the ported number. That LRN is managed by the Number Portability Administration Center (NPAC), which operates a central database and facilitates the updating of all necessary databases with the new routing information. This enables anyone calling the number to be routed to the ported number.

In the wireless industry, numbers and corresponding subscriber information generally are stored in home location register (HLR) databases. There are potentially hundreds of databases storing wireless customer information, and because they all have different architectures and use different access protocols, there is no standard setup. Before the deadline, wireless carriers were complaining they would have to develop a standard storage and access system for WLNP to be feasible. That standard system, they claimed, meant investment in new architecture and personnel to manage the hardware/software implementation and maintain the new systems.

When factoring in all of the new capex and opex elements, it isn’t difficult to see costs could run high for an ongoing project that is outside of the carriers’ core competency. Despite all their protests, most of the larger carriers in the industry had a WLNP plan in place and should have made the Nov. 24 deadline without much problem. Some, like Verizon, abandoned the fight against WLNP months ago, focusing instead on readying themselves. And many carriers have passed along the cost of WLNP to subscribers by adding a small fee to the monthly bill, building a sizable war chest that helped them pay for WLNP.

While the big boys have the money to pay for WLNP, the smaller regional carriers could have a more difficult time falling in line with the FCC mandate. Their deadline for compliance is May 24, 2004. The Nov. 24 deadline applied only to the top 100 Metropolitan Statistical Areas. For carriers that serve smaller markets, the extended deadline gives them a bit more time to get their ducks in a row, but they don’t have the large subscriber base that will help them with the upfront costs of WLNP.

The answer for these smaller, regional carriers could lie in outsourcing the WLNP compliance procedures. Since they don’t have the resources to spend the $50 million to $100 million to complete the task in-house, they could benefit from outsourcing the process of becoming WLNPready for less than $10 million.

Because there is no existing standard, compliance services must be supplied by a company with the ability to access and translate the information in each carrier’s HLR. That access company then acts as a conduit between the HLR and a central database — such as the one managed by NPAC — for porting considerations. The access company can continue to manage the process in the future, ensuring that the information is updated appropriately. The number of companies capable of accessing and translating between different protocols is very limited, but does exist; and outsourcing enables the smaller carriers to remain focused on attracting and maintaining subscribers with good service and competitive features.

Customers will churn as a result of WLNP, but it won’t be the underlying reason why they churn. Ultimately, they’ll churn because of price, feature availability, coverage quality or customer service concerns. Other than being competitive with price, there isn’t much carriers can do to minimize churn, but they will be looking to offer new features to offset it. Some features, like true calling name (CNAM), can even generate new revenue for carriers.

The companies providing the outsourced access and protocol translation for WLNP have the technology to access and understand all of the information in the HLRs — as well as the information in other storage locations such as line information databases (LIDBs). By contracting with a company that has this broad access and translation capability, the wireless provider can offer subscribers the ability to receive the name and number information for any wireless incoming call. Carriers can charge an additional fee each month for CNAM service.

Ideally, the wireless carriers would also select a LIDB to act as the storage unit for their numbers. LIDBs offer a standard storage setup, and numbers stored inside are available for others looking to access that information for CNAM and billing considerations, among other items. In some cases, the LIDB owner offers revenue-sharing to carriers who store numbers in the LIDB, and each time a query “dips” into the LIDB to check on the information, a portion of the cost of that dip is shared with the carrier storing the number in the LIDB. The full cost of the transaction is billed back to the query party.

Partnership with a company that has broad access to LIDBs, HLRs and other databases also enables wireless carriers to offer the ability to bill calling cards and collect calls to a wireless phone.

So, WLNP doesn’t signal a total setback for carriers. In fact, it acts as a catalyst that opens up new options and bodes well for competition — the original purpose of the FCC’s mandate.

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