If You Love Your Wireless Customers, Set Them Free

By eweek  |  Posted 2003-04-18

If You Love Your Wireless Customers, Set Them Free

Don King would promote it as "The Hunger for the Number," a devious donnybrook for the digits of those who wish to change carriers but keep their phone numbers. In this corner, the FCC claims that phone-number portability is necessary to ensure competition. In the other corner, big carriers are mounting a last-ditch effort to prevent number portability. Carriers and the CTIA argue that the money spent updating the systems to handle the regulations would be better spent on updating their infrastructure for data networks. Those lawyers know the way to a regulators heart.

In this season of Passover, the conflict between the wireless carriers and the FCC over cellular number portability has a familiar ring. Three times the regulatory agency has gone to the carriers and said, "Let your customers go." They promise to with just a little more time, but ultimately their shareholders hearts harden, and they refuse.

Now, the carriers are laying down their staff of lawyers to swallow the FCCs staff of lawyers. Wouldst that Charlton Heston could come to the rescue, but his lobbying organization is more concerned with other small, long-range devices.

While carriers arguments that the cellular phone business is "competitive enough" seem hopelessly lost against an arbitrary yardstick, the United States has one of the most competitive wireless markets in the world, even after the consolidation weve seen in the past decade led to roll-ups like Verizon Wireless, T-Mobile and Cingular.

The notion of competitiveness was recently ruminated upon by "father of the cell phone" Martin Cooper on the occasion of the cell phones 30th birthday. Cooper insisted that the U.S. did it right in allowing aggressive competition early on. Indeed, the markets reward has been more aggressive pricing than users pay in Europe. But many contend that the FCC should have been more "hands-on" at the dawn of the PCS era, forcing the United States at least to choose GSM or CDMA. Such a move could have brought us closer to the more wireless societies we see in South Korea, Japan and Europe and given certain legislators less fodder to justify their jobs. At this point, though, the carriers can make an excellent case that the FCC doesnt need to regulate.

Local Loopy Precedent

The FCC counters that it has the authority to regulate because portability is offered in landline phone systems; the regulation was enacted in order to encourage competition in the local phone market. However, this move has had no material effect on local telco competition, which is as dominated today by incumbent Baby Bells as its ever been. So, the power of the precedent doesnt hold much sway. The bottom-line issues are whether this will help consumers now and whether that "public interest" is enough to justify regulation from what has been a fairly laissez-faire FCC.

The main differences between landline and wireless portability: Because of the nature of wireless, carriers wouldnt be as subject to geographic limitations, and the big boys would be butting heads with each other instead of mom-and-pop phone companies. The carriers have a good case that they could be adversely affected by number portability, but the FCC also has a stronger argument that it would help competition. Indeed, with the mandatory extension of phone numbers to include the area code while dialing, phone numbers are now 43 percent more of a hassle to remember.

Carriers argue that they will have to invest in new equipment to support the standard, but if their legal arguments are accurate and the industry is already competitive, they could gain substantially. Consumers comfort in knowing theyll be able to keep their cell-phone number for life would go a longer way toward "one-number" nirvana than any of the "follow-me" forwarding schemes hatched in the past 20 years. (Paradoxically, the landline telcos may have more to lose in cellular number portability than they did in landline number portability!)

Cellular number portability also most benefits dissatisfied customers; are these really the customers cellular companies want locked into a contract and spreading bad word of mouth? As Security Supersite editor Larry Seltzer argues this week, sometimes companies work to lose the war in winning a legal battle.

Then theres the opportunity-cost argument. Carriers claim that money spent on implementing portability will come at the expense of investment in data networks. In the short term, budget allocations will likely have to shift. Is there really a tradeoff, however? While phone numbers are associated with SMS, their main value is in driving voice calling. Removing the barriers to switching voice traffic will force carriers to invest in data networks to rely more heavily on data tie-ins to prevent churn anyway. Theyre not going to keep customers with better voicemail. If the FCC succeeds, it might make up for hampering data standards by its past lack of regulation by encouraging more advanced data services in the open market.

As for the legal fight, CTIA should tread carefully here. It isnt on the public-relations train-wreck ride the RIAA has taken with its anti-piracy campaigns. However, carriers will have a harder time selling consumers on the notion that wireless is all about freedom if they keep trying to lock them into a 10-digit jail.

Wireless Supersite Editor Ross Rubin is a senior analyst at eMarketer. He has researched wireless communications since 1994 and has been covering technology since 1989.

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