Gartner Says Wireless Local Number Portability Will Create Significant Savings for Enterprises by Consolidating Wireless Services Providers
Analysts Warn That Initial Costs for Switching Corporate Users Can Be Expensive
STAMFORD, CONN., November 24, 2003 — By consolidating wireless service providers and managing services, enterprises can decrease their wireless costs by as much as 35 percent, according to Gartner, Inc. However, switching 1,000 users from one service provider to the next could cost companies more than $300,000.
According to Gartner, enterprises should wait until the first half of 2004 to move large groups of users to a new provider. That will allow time for service providers to put the appropriate processes in place and will lessen the risk of loss of service and lost phone numbers.
"The activation of wireless local number portability enables users and enterprises that were once hesitant to switch service providers to do so now because they can keep their cellular numbers," Phillip Redman, research vice president for Gartner said. "But before making the decision to switch providers, it is essential for enterprises to evaluate the total costs, especially when the entire subscriber base is involved. Coverage and customer service should drive the enterprise decision more than price when choosing a carrier partner."
Based on a model for 1,000 users, a majority of the cost, 74 percent, for switching service providers would result from purchasing new handsets, replacement parts (such as batteries) and accessories (such as car installations, hands-free kits or earpieces). Operational costs would make up 16 percent of switching costs, including the cost for the time taken to deploy phones, make directory changes and database updates to contact lists, and to change any other account management information. Administration and end-user costs would be minimal and equal 10 percent of the overall switching costs.
"Before making the final decision to move a large user base, a major consideration for enterprises should be whether users would be happy with the new service," Redman said. "Lower-cost services that don't offer the same coverage will cause a lot of unrest among users and may cost more in support calls and complaints. Another consideration is the contractual obligations enterprises have with current service providers and whether termination fees are involved."
Additional information is available in the Gartner Research Note Changing Cellular Providers Tops $300,000 for U.S. Firms. This document provides analysis on switching service providers and the best practices for saving costs when moving to a new provider. The Research Note is on the Gartner Web site. Extensive analysis on local number portability is available through a series of Gartner research reports that address the impact to the wireless industry as a whole, business wireless users, and personal wireless users. These reports are available at www.gartner.com.
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