Monday, May 24, 2004

Big switch didn't happen

Cell customers can change
carrier but keep number

By Mike Boyer
The Cincinnati Enquirer

Amy Johnson gets ready to cut the cord. Today, federal rules go into effect that allow all U.S. cell phone users to switch carriers while keeping their phone number. Customers in Cincinnati and 99 other large cities have been able to do so for the past six months. Most opted to stay with their carrier.
(Photo illustration by Joseph Fuqua/The
Cincinnati Enquirer)

The biggest mystery about local telephone number portability is why it never turned into a bigger problem.

The federal rules that allow wireless customers to keep their phone numbers when they switch carriers go national today, six months after taking effect in the nation's 100 largest cities - including Cincinnati.

There were predictions last November that the rules would have a dramatic effect on the wireless industry. Analysts predicted that as many as a third of the nation's 163 million cellular customers would switch providers. Carriers spent millions on programs to retain customers and attract new ones.

Three explanations for the stampede that didn't happen include:

• Carriers' fears about portability were overblown.

• People were more satisfied with their cell phone service than nearly everyone believed.

• Portability isn't always free, particularly if a customer has to pay an early termination fee.

"Basically, it's a tempest in a teapot," said Roger Entner, manager of wireless services at the Yankee Group, a Boston consulting firm.

Relatively few complaints

Portability hasn't been a big problem for carriers. The number of consumer complaints to the Federal Communications Commission has dropped from 2,400 initially to 400 last month.


Local number portability allows consumer to keep, or "port,'' their numbers when they switch carriers.

It only applies when switching carriers in a local calling area. If you're moving across country, you can't keep the same number.

Here are some other tips from the industry and the Federal Communications Commission.

• Don't cancel your existing service, until you've signed up with your new carrier.

• When contacting the new carrier, consumers should have their phone number, billing address, account number and the latest bill. Only the person whose name is on the account can authorize the change.

• A number transfer from a landline company should take about four days. For wireless-to-wireless transfers, the FCC says the goal is to transfer a single number within 2 1/2 hours after the new carrier calls the old provider.

• Carriers can charge their customers for switching the number, though a new carrier could agree to pay the transfer fee.

• Consumers with cell phone contracts will have to pay early termination fees, which can reach $200, if they switch before their agreements expire.

• Most customers will have to buy a new cell phone when changing providers because each company uses different technology.

The number of people retaining their number when they switch carriers is running about 1 million a month - including wire line subscribers, who have been able to do so since 1998 if their exchange falls within the same geographic area.

"I don't expect a big change," said Entner, when wireless number portability goes national today.

While the major national wireless carriers are ready, several hundred small rural wire line carriers - required to comply for the first time - are not.

About 900 nationally, including two dozen small carriers in Ohio, have sought a waiver under FCC rules, citing the high cost of compliance.

On Wednesday, the Public Utilities Commission of Ohio, which must rule on the Ohio petitions, gave the rural carriers - including Germantown Independent Telephone, which serves parts of Warren and Butler counties - an additional 90 days to comply.

The commission said that would give its staff more time to look into the issue and allow the companies to work out agreements with wireless carriers.

A spokeswoman for United States Telecom Association, an industry trade group, said rural companies are doing all they can to comply with the mandate.

"There are tremendous costs associated with porting numbers for the first time in rural areas," spokeswoman Allison Remsen said.

Service is the key

The FCC and the cellular industry say about 2.8 million wireless customers have kept their numbers while switching carriers since the new rules took effect Nov. 24.

Yet in a recent report, the FCC concluded local number portability hasn't had a significant impact on wireless "churn." Churn, or the number of customers dropping service each month, typically runs 2 percent to 3 percent for wireless carriers.

That's been mirrored in the Cincinnati area, which has about 1.1 million wireless subscribers.

For Cincinnati Bell Wireless, which has about 300,000 monthly customers, the churn rate was 1.8 percent in the first three months of this year - unchanged from the prior quarter and the prior year.

Cincinnati Bell, which has operated without customer contracts since its inception five years ago, said local number portability hasn't been an issue.

"Initial industry expectations were that churn would go through the roof. But essentially it's been a big yawn," said John Willis, director of consumer marketing.

Verizon Wireless, the nation's largest wireless carrier with about 39 million customers, said its first quarter churn was 1.6 percent, lowest in the industry and down from 2.1 percent in the same period last year.

Verizon won't disclose customer counts or churn rates in specific markets, but Laura Merritt, spokeswoman for Verizon in Ohio, said, "We've added more customers than we have had leave. We feel good about (portability)."

Susan Kristof, spokesman for Sprint, said that number portability "hasn't been what it was expected to be" but over time more consumers will opt to keep their numbers when they change carriers.

And she said carriers have improved their customer service.

"It's a win for consumers, no matter how you look at it," she said.

Alliea Phipps, who operates a public relations firm out of her Norwood home, feels like a winner.

She was dissatisfied with her cellular provider, but her phone number was her link to clients and news contacts.

Since porting her number to a new carrier in late November, she said, "It's been fabulous. My biggest fear was that something would happen and people couldn't reach me."

Contented callers

Just why portability hasn't evolved as expected isn't clear.

Travis Larson, spokesman for the Washington-based Cellular Telecommunications and Internet Association, a trade group, says, "People are more satisfied with their wireless service than many experts assumed."

He cites two studies, one by the federal General Accounting Office and the other by the association, showing more than 80 percent of those surveyed said they were pleased with their service.

Lauren Patrich, an FCC spokeswoman, said the carriers raised so many questions about the move that it fueled a lot of the dire expectations.

What's unmeasured is just how much fear of losing customers has improved customer service industrywide.

Entner agreed the industry scared many consumers with horror stories about the delays and problems they would face.

"Basically (they) told people 'if you try this, you will have a lot of trouble,' " he said.

"The other thing that happened is that carriers increased the number of subscribers on contracts," he said. "They were really good at containing churn in that way."

That could create a bubble of new switching when those customers' contracts expire in six months or a year, he said.

The Associated Press contributed to this report.


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