UK regulator Ofcom has proposed reforms to make it quicker and easier for both business and residential consumers to switch mobile service provider. The reforms take account of responses to previous consultations in March and July 2016 and are themselves under consultation until the end of June 2017. Ofcom’s proposals reflect the aims of the country’s Digital Economy Act by allowing consumers to exercise choice and take advantage of competition in the sector. Under the plans, customers would no longer need to speak to their old provider; instead, their porting authorization code (PAC) could be requested via text or online. A final policy statement is expected to be published in 4Q17.
Ofcom stops short of proposing a fully recipient-led approach to mobile switching
Under the Digital Economy Bill, which was adopted in April 2017, Ofcom was given new powers to instruct providers to release data about their services that could help customers make more-informed decisions when choosing a supplier. However, to support this, a simplified switching process is needed to enable customers to act on this additional information.
Ofcom’s planned reforms introduce an “auto-switch” process that ensures customers can request PACs via text or online, so they have only to contact their new provider once to port their existing number or cancel their old service (saving UK mobile phone customers around £10m each year). The entire process should be completed within one working day. Consumers will also no longer be expected to pay for a notice period once they have switched provider, ensuring that they do not pay for a service they no longer receive. However, in order for these plans to be successful, it is crucial that customers are made aware of the new process. Ofcom has therefore outlined new transparency measures that mandate operators to provide their customers with clear information about how the switching and number porting process works. Ultimately, these measures should incentivize providers to improve overall service quality to encourage customer loyalty.
While these reforms are an encouraging step for customers, particularly for the 2.5 million (38%) in Ofcom’s analysis who have faced major problems during the switching process, the regulator could be accused of adopting a rather cautious approach. During its initial consultation it reviewed two alternative options – one that simplifies the existing number porting process (costing the industry around £44m over 10 years) and one that would go further by introducing a recipient-led switching approach (costing the industry £87m over 10 years). A recipient-led process places the responsibility for the switch entirely in the hands of the company to which the customer is moving. This has been the case in the fixed-line market since 2015 and was initially Ofcom’s preferred option for the mobile sector too. It is also a common approach throughout the rest of the EU. However, Ofcom has since chosen to adopt the auto-switch process instead.
Although the costs involved are substantially different, Ofcom has suggested that consumers would actually prefer to use the auto-switch process. The regulator consulted people who had switched previously and kept their mobile number, and found that 78% of them would be likely to request a PAC by text in future, compared with 66% who said they would use a one-stop recipient-led process.The auto-switch approach is a positive move away from a traditional donor-led process, as it removes the requirement to contact the incumbent provider and potentially engage in retention discussions. Indeed, it seems to be a more proportionate means of achieving Ofcom’s objectives and addressing consumer harm without unduly burdening operators financially, which could have an impact on investment levels.
UK (Country Regulation Overview),TE0007-001097 (January 2017)
"Ofcom's overhaul of the mobile switching process promises to simplify number porting” TE0007-001012 (April 2016)
Sarah McBride, Analyst, Regulation