Soon, keep your cell number, leave your carrier

Deregulation is expected to spur more competition

October 12, 2003|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

Tracey McCarthy is puzzled by the generosity of her cell phone company.

When a batch of its new, color phones was about to hit the market, Cingular Wireless made sure McCarthy got one at a deeply discounted price. When Cingular discovered that her husband's phone plan included many more monthly minutes than he needed, it contacted her to help chop the bill in half. And when her 14-year-old daughter got hooked on text-messaging, Cingular added the service to McCarthy's family plan for just a few dollars a month.

"I can't figure it out," said McCarthy, 38, a real estate settlement officer from Crofton. "They want to make less on us. They're always trying to save us money. I love it."

It's a good time to be a wireless customer - and a tenuous time to be a wireless company.

Next month, a new federal rule takes effect that allows customers to keep their cell phone number if they change carriers, as they've been able to do for several years with their landline phones.

The change, known in the industry as "local number portability," is affecting the stock prices of wireless companies and causing analysts to predict enormous customer "churn." It's being predicted as possibly the biggest development in wireless communications since the late 1990s when AT&T Wireless offered the first fixed-price plan. That move sliced the price of cell phones and led to massive adoption of the technology by an estimated 146 million subscribers today.

Although the impending change hasn't received much attention yet outside industry circles, it's likely to unleash a flood of advertising and promotions from wireless companies hoping to steal new customers from competitors and not lose their own.

It's also likely to spur improvements in customer service for the $75 billion industry. Even wireless companies lampoon the propensity for dropped calls and poor reception in TV commercials.

Many wireless companies fought the idea of number portability for years, arguing that the cost and complexity were prohibitive, until the Federal Communications Commission and the courts upheld the concept this year. Perhaps as early as next year, consumers will also be able to switch their home phone number to a wireless phone.

"Telephone numbers are the last thing that ties people to a particular carrier," said Allan Keiter, president of MyRatePlan.com, an online phone shopping service. "Some people get really attached to their numbers, for instance, contractors or real estate agents who have used the same cell number on their business cards for years. If you're a wireless customer who hates your carrier, your time is coming. It's going to lead to a pricing war I think, which means now is a uniquely good time to be a wireless customer."

After fiercely opposing portability for years, wireless companies are scrambling to position for it. They have spent hundreds of millions of dollars to prepare, from upgrading systems to enhance reception to improving customer service.

Sprint PCS, the nation's fourth-largest carrier with 19 million subscribers, pumped $2.1 billion this year into network improvements, including the addition of 1,700 cellular sites to expand coverage. Kansas-based Sprint currently has 20,000 cell sites.

New Jersey-based Verizon Wireless, the largest carrier with nearly 35 million subscribers, built what it describes as a state-of-the-art customer service center in a vacant strip mall in Tennessee to deal solely with portability transactions.

And the Web site for Nextel Communications in Virginia tells potential customers, "Get a new phone. Keep your old number. Come to Nextel."

To persuade current customers to stay put and to woo dissatisfied ones from rivals, carriers are also offering a slew of deals - from unlimited minutes at night from Nextel, to free phones from T-Mobile USA, to Delta Sky Miles from AT&T Wireless.

"This is one of the largest developments we've seen in the industry in quite some time," said Randy Mysliviec, president of wireless solutions at Convergys Corp.

The Cincinnati customer service business, which helps telecom companies with billing and customer service, estimated that one-third of all U.S. cell phone users are likely to switch once portability is available. Others predict a lesser effect: Management Network Group Inc., a Kansas-based telecom consulting company, estimates that 1 in 17 cell customers will switch carriers.

"When you think about today's environment, when you leave carrier X and go to carrier Y, you have to buy a new phone and change your number," Mysliviec said. "It's a real pain. With this inhibitor gone, companies have a choice between using a carrot or a stick to get you to stay or lure you to move. I think you're going to see companies focusing on having great customer service, great coverage, fewer line drops, bill accuracy and more convenience in monthly plans."

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