Subject: [NEXTEL-1] Mobile phone number portability neither cheap nor easy

From: [email-masked]
Date: Mon, 11 Aug 2003 03:41:54 -0400

Mobile phone number portability neither cheap nor easy

Monday, August 11, 2003
By Jube Shiver Jr., Los Angeles Times

WASHINGTON -- Come November, mobile phone customers will be able to take their
numbers with them when they switch carriers. But as Erin Cocoran knows, it won't
necessarily be cheap or easy.

Fed up with poor reception in her Washington apartment, the 30-year-old lawyer
relished the thought of booting her current carrier and getting a new one. Then
she tallied up the costs and hassles. "I'm going to have to buy a new phone,"
Cocoran said. "I'll have to manually enter all my numbers into the new phone. And
I will have to pay a cancellation fee because I have a two-year contract."
Consumer advocates rejoiced in June when the U.S. Court of Appeals upheld the
Federal Communications Commission's so-called number portability rule, allowing
customers to transfer their 10-digit phone numbers when they change wireless
carriers. But the rule, which takes effect Nov. 24, might not free customers held
hostage by their phone numbers to seek out better service in the $77-billion
wireless market. Hefty contract cancellation fees and incompatible equipment will
continue to pose significant obstacles to jumping ship because wireless service
providers, already battling high defection rates, have little incentive to make it
easier for customers to leave.

"There will be surprises for consumers," said Jane Zweig, chief executive officer
of Shosteck Group, a Wheaton, Md., telecommunications consulting company. An
estimated 50 million of the nation's more than 141 million cell phone subscribers
switch carriers each year in a costly migration known in the industry as "churn."
A Harris Interactive poll last year found that an additional 17 percent of cell
phone users would switch carriers for a one-time fee of $50 if they could keep
their phone number. The price of change probably will be far higher than $50,
however. "I think carriers may double their" current $150 to $200 early
termination fee to discourage subscribers from leaving, said Roger Entner, a
wireless analyst for Yankee Group research company in Boston. Having spent an
estimated $1 billion to overhaul their networks to offer number portability,
carriers are loath to let subscribers easily abscond, Entner said.

"It cost us $350 to $370 to acquire a customer," said Sprint PCS President Len
Lauer. If the customer quits Sprint in less than a year, "it costs us money."
Lauer wouldn't say whether Sprint plans to increase its cancellation fee. But he
said the number portability rule wouldn't make the company back off from enforcing
contracts. The tough talk doesn't deter some consumers. Cocoran says she plans to
dump her current carrier in November, even though she faces a cancellation fee of
more than $100. "It will save me money in the long run to switch to a company with
better coverage in my apartment," where she will be able to make long-distance
calls on her cell phone and pay less than she would on her land line, she said.

Unlike in Europe and Asia, where uniform wireless standards make choosing cell
phone service relatively simple, the U.S. market is divided among three major
wireless transmission standards. Carriers exploit these differences -- and couple
them with long-term service contracts with hefty termination fees -- to bolster
customer loyalty. For example, Verizon Wireless and Sprint PCS use a digital
technology called code-division multiple access to transmit phone calls. As a
result, the two carriers' phones can't be used on networks run by AT&T Wireless
Services Inc., Cingular Wireless and T-Mobile USA Inc., which use the competing
GSM standard or global system for mobile communications. They also cannot be used
with Nextel Communications Inc., which uses a third transmission standard.

Consumers can't even switch among carriers using similar technologies. Phone
equipment used by Verizon and Sprint is incompatible. And carriers offering GSM
technology employ software to "lock" the subscriber's telephone handset to their
network. That has created a cottage industry of entrepreneurs such as Lincoln Han
of San Diego. He operates a Web site that does brisk business unlocking GSM
phones. "For people who just want to switch providers or to use their GSM phone
when traveling abroad, this is the only option," Han said. "Without unlocking the
phone first, consumers won't be able to make the switch to another GSM network
without throwing away a perfectly usable phone."

Providers such as AT&T Wireless and Nextel argue that, with six major national
carriers, the industry is already plenty competitive and that money spent on
number portability would be better used to improve customer service and network
coverage. The wireless industry sued to stop the number portability rule but lost
the case. Now the industry is looking for ways to make the rule more palatable:
It's pressuring the FCC to amend the rule to discourage consumers from breaking
service contracts. "When you ordered that a wireless carrier may not require a
consumer to live up to his/her contractual obligation, you put the federal
government on the side of marketplace malfeasance," Thomas Wheeler, president of
the Cellular Telecommunications & Internet Association, wrote in a July 11 letter
to the FCC. "I cannot walk away from my new car lease just because I see a
snappier new model at another dealership. Why should I be encouraged by federal
rules to walk away from the commitment I made when I signed a contract for
wireless service?"

In an interview, FCC Wireless Telecommunications Bureau Chief John B. Muleta urged
the industry to let the marketplace sort out the terms of service agreements,
which he said are currently "not presented very accurately" to consumers.
"Our thinking process on this is that those decisions on contract terms are all
things consumers can make choices about," Muleta said. "It might be worth it for
you to pay $100 and terminate the service if it is not meeting your expectations."

http://www.post-gazette.com/pg/03223/210894.stm

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