Phone industry turmoil feared

New federal rules go into effect tomorrow

Number portability will arrive

Competition is expected, with lively consequences

November 23, 2003|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

Consumers itching to switch wireless phone providers now that they can do so while keeping their number should expect glitches, delays and headaches at first, experts warn.

New federal rules that take effect tomorrow will allow consumers to "port" their cell phone numbers between companies or switch their land-line phone numbers to wireless phones.

Long resisted by the major phone companies, the changes are expected to further shake up telecommunications by removing a major obstacle to competition: the inability to keep one's phone number. But experts said telephone companies might not be immediately prepared to accommodate "local number portability," or LNP as the industry refers to it.

"This could be a really bumpy ride," said Ron Cowles, vice president of Gartner Inc., a research company in Connecticut. "Not all phone companies are prepared for LNP so we're expecting a lot of little problems in the beginning. Besides, you'll probably see better rates offered if you wait a while longer."

Industry executives and analysts predict that in the long term, number portability will continue to reshape an industry that has been revolutionized in the past decade by wireless technology, the Internet and deregulation.

Some predict that as many as a third of the country's 152 million cell phone users could switch providers over the next couple of years. Perhaps a tenth of the country's 179 million wired customers could move their home numbers to wireless phones.

The industry has invested more than $1 billion in preparing for tomorrow's rule change.

Verizon Wireless, the largest U.S. carrier with nearly 35 million subscribers, opened a customer service center in Tennessee and packed it with nearly 1,000 service representatives to deal solely with "porting" requests.

Sprint PCS, the fourth-largest carrier, has focused on network improvements to expand its coverage area. And AT&T Wireless, the second-largest, has been busy signing agreements with competitors to ensure that the process functions smoothly.

As of tomorrow, consumers who want to port their numbers will be able to call or walk into any wireless carrier's store and ask that a number be switched from the old carrier.

Customers shouldn't have to wait more than 2 1/2 hours to switch a number from one wireless carrier to another, and about four days to switch a number from wire line to wireless, the Federal Communications Commission estimates.

For companies, the procedure is more complicated, involving 12 to 100 steps.

Once a customer authorizes a new carrier to switch his number, the carrier sends a computerized request to a data clearinghouse. It contacts the old carrier to verify the customer's information and billing address.

After the data are verified, the clearinghouse or the new carrier sends the phone number to the Number Portability Administrative Center, run by Neustar Inc., a neutral third-party company in Virginia whose job is to notify all national carriers that the number has been switched to the new provider.

Wireless carriers aren't publicly discussing what tactics they'll use to lure customers, but experts say consumers should expect a marketing war. From offers of more free minutes to promises of better service to offers of low-priced but snazzier phones, customers are likely to be inundated.

"This is not something where every wireless phone user on Earth will run out and change their carrier," said Ken Hyers, a wireless analyst for In-Stat/MDR, a market research firm in Arizona. "Carriers are not going to be crushed by all the customers who port their numbers.

"But this is coming right in the middle of their busiest time, during the holiday shopping season. I would recommend that everybody who doesn't have to change their numbers in the fourth quarter, don't do it. Being a guinea pig is no fun. It's going to be a huge mess - no question, in my mind. In the business community, I'd say wait until next year."

When Congress passed the Telecommunications Reform Act of 1996, a major goal was to allow consumers to retain phone numbers when switching providers. The ability to keep one's number when switching land-line carriers began in 1997.

Wireless companies fought number portability for years. They succeeded in delaying its start three times. Executives argued that the cost and complexity were unreasonable. They argued that the government didn't need to prod competition because wireless phones were already hotly competitive and even cutting into land-line business.

The FCC and the courts upheld the rules for wireless portability this year. Two weeks ago, the FCC upped the ante by expanding portability to extend between land line and wireless.

"That was just ridiculous," Hyers said. "That certainly didn't give them enough time to prepare for this. That's going to make an even bigger mess."

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