Case Study: Carriers Ready for Challenge of Portability

By Christine Lacy

For years, mobile phone users have lamented their inability to switch carriers without losing their 10-digits call number. But come September 25, this is set to change when the veil is lifted on mobile number portability (MNP).

For business most particularly, the cost of changing has far out-weight the benefits of gaining a better deal on price.

But MNP – the right to change service providers and keep your phone number - will allow pre-paid and contract mobile phone subscribers, along with small to medium enterprise (SME) and larger corporate customers, to pick and choose their way through the carrier landscape brandishing a mobile telephone number no-one can take away. Telstra Corp, as the Australian market’s dominant player with 45 percent of the industry, has the most to lose.


It closest rivals, Vodafone Australia and the Singapore Telecommunication-controlled Optus, are circling Telstra’s customer base on what is set to become an even more competitive market-place.

Australian Financial Review
19 September 2001

Question

1.      Why does the journalist, Christine Lacy, expect the mobile phone market to become ‘an even more competitive market-place’?

2.      Use a supply and demand model to explain what will probable happen to Telstra’s share of the mobile phone market, and the price of joining Telstra’s mobile phone network, after the introduction of mobile phone portability.

3.      With the introduction of mobile phone portability what do you think will happen to”

a.       the price elasticity of demand for Telstra’s mobile phones?

b.      the cross-elasticity of demand between Telstra, Vodafone and Optus mobile phone networks?

Case Study: Carriers Ready for Challenge of Portability