FCC says portability rule didn't boost defections

Loss of mobile-phone clients called relatively steady

May 14, 2004|By BLOOMBERG NEWS

WASHINGTON - A Federal Communications Commission rule allowing mobile-telephone users to keep their numbers when switching carriers hasn't boosted the rate of industrywide customer defections, defying some forecasts, the agency said yesterday.

The "overwhelming conclusion" is that churn has stayed relatively flat since the rule took effect in the 100 largest U.S. metropolitan areas Nov. 24, FCC wireless-bureau chief John Muleta said at an agency meeting. "What has actually happened is that it has shifted market share."

Churn is the average percentage of customers who disconnect service each month. It's a closely watched measure because a carrier may spend $300 to $400 to win a subscriber and it takes more than six months to break even on that client.

FCC officials are discussing the rule's impact two weeks before it takes effect outside the top 100 markets, a move FCC Commissioner Michael J. Copps said may reverse a decline in the rate of consumer complaints. AT&T Wireless Services Inc. lost customers and Verizon Wireless gained them in the first quarter partly because of the number-portability rule.

Carriers switched about 2.6 million mobile-phone numbers through the end of April, said David Furth, the FCC wireless bureau's associate chief.

The Number Portability Administration Center Forecasting Group, an informal set of industry representatives, last year forecast more than 12 million phone-number transfers just for the final five weeks of 2003.

AT&T Wireless shed 367,000 customers in the first quarter, its first-ever loss, sending the rate of customer churn to 3.7 percent, the highest among the six biggest U.S. mobile-phone operators. Redmond, Wash.-based AT&T Wireless blamed the losses in part on the number-switching rule.

Verizon Wireless, which gained 10 AT&T Wireless subscribers for every one it lost to AT&T Wireless, had the lowest churn, 1.6 percent.

The FCC has said it received 7,040 complaints about wireless phone-number transfers since Nov. 24. AT&T Wireless was a subject of 3,104 of the complaints, the FCC said.

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