New Economic Study Demonstrates Multiple Regional NPAC Providers Will Offer Significant Competitive Benefits to Industry and Consumers
PISCATAWAY, N.J., Sept. 14, 2011 /PRNewswire/ — Telcordia, today released a study finding significant economic and information advantages for telecommunications carriers and consumers from having multiple regional providers of Number Portability Administration Center (NPAC) services. Conducted by Dr. William Rogerson, Professor of Economics at Northwestern University and former Chief Economist of the Federal Communications Commission, the study evaluates how the upcoming NPAC service procurement could be organized to allow for multiple regional providers and the costs and benefits of doing so.
“Planners should not discount the potential magnitude of the price-reducing effects of increased competition,” said Rogerson. “In defense procurement it has been found that dual sourcing generally lowers prices by 20 percent, even though dual sourcing sacrifices some economies of scale.” Costs of NPAC services are projected to reach $500 million annually by 2015.
Telcordia Technologies has been a strong advocate for greater competition in NPAC services, including open, competitive bidding. “Introducing competition in number portability services through a properly run and structured procurement that results in multiple vendors can easily save industry and consumers over $100 million per year starting in 2015 when a new contract takes effect,” said Richard Jacowleff, President of Telcordia’s Interconnection Solutions group.
Rogerson compared sole-source procurement designs to multiple-source procurement designs, including flexible procurement design. Sole-source procurement enables a provider reduce its costs of production to the extent that there are economies of scale and scope. A multiple-source procurement to select multiple regional vendors, however, would yield four significant benefits: performance and price benchmarking, increased innovation, back-up capabilities in the event of technical or financial failure, and increased competition in future NPAC and related procurements.
Telcordia, a global leader in the development of mobile, broadband and enterprise communications software and services, enables Communications Service Providers (CSPs), enterprises, suppliers and governments to successfully deploy innovative and advanced services that help our clients realize operational efficiencies, drive revenue, and maintain a competitive edge. As the industry’s go-to expert for solving the most complex communications challenges, Telcordia is known for getting it right the first time and for having the depth of expertise to fully understand our customers’ situation, respond appropriately, and deliver as promised. Telcordia has globally trusted expertise in software and services to meet the needs of customers and partners, including, consulting, next-generation OSS, network and application interconnection, service delivery and charging solutions, industry research and new technology development. Telcordia is headquartered in Piscataway, N.J., with offices throughout North America, Europe, Asia, Central and Latin America. (www.telcordia.com).
Telecommunications providers by law must implement database number portability to permit telephone customers to keep the same telephone number when they switch service providers. To do this, the Federal Communications Commission (FCC) appoints providers of NPAC services, known as number portability administrator(s). NPAC services contracts are funded by FCC-mandated assessments on all telecommunications carriers and interconnected VoIP providers, and indirectly by consumers. The contracts for NPAC services were last competitively bid in 1997. The FCC, the North American Numbering Council (“NANC”) and an industry group, North American Portability Management, LLC, are currently designing a procurement for NPAC services.
About Dr. William Rogerson
Dr. William Rogerson is a professor of Economics at Northwestern University, and former Chief Economist of the Federal Communications Commission. His research focuses on applied micro-economic theory, industrial organization, regulation, cost accounting, telecommunications, and defense procurement. He has worked as a consultant for the Federal Trade Commission, Institute for Defense Analysis, Logistics Management Institute, Office of the Secretary of Defense (Program Analysis and Evaluation), RAND Corporation, and US Department of Justice. Dr. Rogerson can be reached at email@example.com or (847) 491-8484.
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