A Number Game

Imagine an industry where customers are leaving more quickly than they are joining. If you were part of that industry, would you:

  • try to increase your level of customer satisfaction ? or
  • fight any provision that would increase competition in your industry?

If you are the wireless phone industry, you will go for the latter.

The issue at hand is number portability.

What is number portability?

Well, put quite simply, it is a way to be able to use the same phone number regardless of which service provider you are using. It is essentially what now allows us to change long distance service or local service carriers from our incumbent bell operating company (for example, Verizon in New York) to another service provider (following the same example, one could now go to AT&T or RCN for phone service).

Technically, and from the consumer standpoint, it’s a really great idea that fosters choice and increases competition. To the existing phone monopolies, it’s a nightmare because it means that they now must be offering better service or face losing their customers to the competition.

The history

In 1996, under section 251(b)(2) of the Telecommunications Reform Act, the US government specified that all phone carriers, whether they were offering wired lines or wireless services, should offer to their customers a chance to change providers without having to change their phone numbers. The FCC later reiterated the government’s position to increase competition in the wireless space by requiring number portability to be completed in the wireless industry by 1998. A later report by the FCC pushed that date back to 2000. After some further lobbying, providers like Verizon managed to get that date pushed to a later time.

So far, no problems. A little delay seem to be OK but that wasn’t enough for the industry. Now that there has been a change of administration, Verizon is trying to get rid of the wireless number portability requirement altogether.

The arguments

Maybe they have a point. Today, we look at the arguments they are making and will see if any of them makes sense or whether it is just FUD that will allow them to hang on to otherwise unhappy customers.

The industry says

: Customers don’t care. It is a service they do not really want.

Customers reply

: One of the arguments the wireless industry is making is that customers don’t really care much about being able to keep their phone number. Yet, it seems that every story on the subject shows that a number of people want to be able to change providers without changing their number. Every day, a lot of people are forced to send messages to their contact list about their new phone number.

The industry says

: It’s too expensive to provide this service. Customers would not be willing to pay for it.

Customers reply

: Cell phone services already have a number of extra charges tacked on to this. As a result of this being implemented, competition in the wireless space would increase even more, putting further pressure on the overall price of packages that the wireless providers would offer. Nowadays, most wireless providers offer plans for $30-40 to most customers. Tacking on an extra dollar to support this feature (along with supporting the E911 initiative that also needs to be implemented to allow 911 operators to pinpoint cell-phone users) would not represent a tremendous leap in the overall bill given to a customer. When you spread the cost across several hundreds of millions of customers, the initial investment to implement number portability would end up costing the customers about $2 a year, or an average of less than twenty cent per monthly bill. Hard to say but does it look too expensive to you? To me, it looks like something I would be willing to pay if it gave me a chance to switch provider when they fail to deliver on overall customer support.

Furthermore, if such thing is too expensive, why are wireless phone companies in that business in the first place and why are they rolling out new services like 3G (high speed access) when the business model behind such service has yet to be proven. It seems that the industry is using the price issue only when it is convenient.

The phone companies say that the requirement is unnecessary, will distract them from improving service and will raise prices. Analysts and consumers say that the carriers want to keep subscribers.

The industry says:

It can’t be done on the existing time line.

Customers reply

: Since 1996, the FCC has issued technical guidelines and requirements as to what the providers would have to do in order to comply. The guidelines are very clear as to what needs to be done in order to accomplish this. Several providers are already offering the capability as part of the telecom equipment they sell. And, unless the American market is extremely different from any other, it seems that the argument is disingenuous at best as other people have already proven that it is doable.

So when all is said and done, there doesn’t seem to be a single argument made by the wireless industry that holds any water. The bottom line is that this provision was presented as a fact of law in 1996 (now 6 years ago) and the industry has dragged its feet on it. Why did it do so? Because, quite simply, it is not in ITS best economic interest to let customers have choice.

Outraged yet? Here’s what you can do.

This is not an issue that the wireless industry want to make very public. However, the FCC is here to protect consumers and as such, must hold formal request for comments when the industry wants to quash something like this. While it has not be widely reported in the mainstream press, the best way to deal with this is to make oneself heard on this issue.

You can first contact your congressman or congresswoman and tell them that you believe that wireless number portability is an important issue and that you are in favor of it. This will start generating a debate on the Congressional end of things.

Moving beyond that, you can contact the FCC wireless telecommunications bureau and tell them that you are in favor of wireless number portability. If enough of us do it, we may yet prove to the wireless companies that there are customers out there who watch out for the customers’ best interest and won’t stand for tricky moves to subvert existing laws.

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