Cell-phone carriers fight number portability
By Tom Giles
Bloomberg News Service
SAN FRANCISCO — Verizon Wireless Inc. customer Alan Deng says he may change mobile-phone carriers as soon as rules let him keep his phone number when he switches.
Verizon, the biggest U.S. wireless company, and rivals such as AT&T Wireless Services Inc. and Sprint Corp. are concerned that there are millions more customers like Deng.
The providers say they would be forced to spend about $1 billion on technology to let customers retain their numbers. Consumers hope phone number portability will mean better service and lower prices.
"The competition will be fierce," said Deng, 30, an engineering consultant who wants a cheaper rate and better reception without giving up the number he's had for five years. "That's good for the customer."
Mobile-phone providers will ask an appeals court this month to strike down a Federal Communications Commission rule requiring wireless companies to let customers take their phone numbers to competitors.
The FCC plans to stick to its November deadline for the change, commission Chairman Michael Powell said.
"Carriers are finally starting to accept the reality of this and beginning to make the changes," Powell said last month.
When a similar rule letting customers take wireless numbers with them took effect in Hong Kong in March 1999, 16 percent of the city's 2.9 million mobile-phone users switched carriers in the subsequent six months, the Hong Kong telecommunications regulator said.
"There may be many people who have had their numbers for a long time and would take a look at chopping their carriers," said Alex Peters, a money manager at Franklin Templeton Investments, which owns AT&T Wireless shares.
U.S. wireless companies added 6.2 million customers, for a 4.6 percent growth rate in the second half of 2002, the slowest six-month increase ever, the Cellular Telecommunications & Internet Association trade group said. Of the three largest publicly traded U.S. carriers — AT&T Wireless, Sprint PCS and Nextel Communications Inc. — only Nextel was profitable last year, with net income of $1.39 billion, or $1.78 a share.
About half of the U.S. population owns mobile phones, or 141 million subscribers. Number portability may boost the average monthly disconnection rate as high as 3.2 percent of customers, from 2.7 percent at the end of last year, said Ned Zachar, a Thomas Weisel Partners analyst.
Verizon, owned by Verizon Communications Inc. and Vodafone Group Plc, and its rivals persuaded regulators to delay implementing the rule three times on the grounds that they needed more time to install equipment. The Cellular Telecommunications & Internet Association filed a brief in the U.S. Court of Appeals in Washington in December challenging the commission's authority, said Tom Wheeler, the group's president.
Mobile-phone companies also say number portability isn't needed in a crowded industry where as many as one-third of customers switch service providers annually. The money would be better spent on system improvements, Nextel Chief Executive Tim Donahue said.
"Wireless companies should be taking those dollars and investing them in enhancing current networks and building new networks," Donahue said.
Nextel expects to spend at least $100 million to prepare to comply with the rule.
