Mobile Number Portability: Evaluating the Swedish Mobile Market

Switching costs are one of the barriers to entry in telecommunication and also reduce consumer welfare. Many European telecom regulators including Nordic countries have decided to introduce Mobile Number Portability (MNP) policy to the mobile market. The regulators believe that MNP plays an important role in lowering consumers’ switching costs. However, there is no evidence to evaluate the impacts of this policy, in particular in the Swedish mobile market. This paper presents empirical evidence for investigating MNP in the Swedish mobile market after it was implemented in 2001. It also provides the results of the switching costs. Using Shy’s (2002) model we analyze the change in switching costs among subscribers in the Swedish mobile market. We then assess the effect of introduction of MNP on these switching costs. Our results indicate that the switching cost of Swedish mobile subscribers has decreased over time since the introduction of MNP, in particular for subscribers who switch from the largest operator to smaller operators. We also show that the competition in the Swedish mobile market is changing from pure price strategy to a mixed strategy which can create network externalities. Moreover, porting time and handset subsidy policy might be the reasons why MNP in Sweden has not been well accepted by mobile subscribers. Thus, the role of the regulator is still needed in the Swedish mobile market in order to promote competition and protect consumer welfare from the competition policy point of view