The new wireless portability rules have been viewed as a boon for both consumers and businesses: The difference, analysts say, is that businesses will be able to use their new freedom to strip down their telecommunications infrastructures into lean, centrally managed organizations.
Few companies reported any changes to their wireless carrier plans after the Federal Communications Commissions local number portability rules went into effect on Monday. The rules allow businesses and consumers to transfer their wireless numbers from carrier to carrier.
But while consumers are likely to hop from plan to plan, analysts say businesses will be far more deliberate in their choices. Businesses will likely take the necessary time to assess how quickly wireless carriers actually transfer accounts and wait until early 2004 to assess their budgets and the offerings from carriers. By consolidating on one or two carriers, customers say, businesses can streamline their billing and IT infrastructure, saving cost.
Firms that have already switched probably had laid plans well in advance, according to Mark Lowenstein, managing director of consulting firm Mobile Ecosystem, in Wellesley, Mass., and a former executive vice president at The Yankee Group. Altiris Inc., of South Lindon, Utah, for example, switched about 100 lines to AT&T Wireless to consolidate the companys wireless infrastructure on a single provider, AT&T representatives and an Alaris spokeswoman said.
Overall, TSI Telecommunications Services Inc., of Tampa, Fla., received about 80,000 portability requests, the company said Tuesday. TSI was selected by five out of the top six wireless companies to route portability requests to the Number Portability Administration Center (NPAC). AT&T Wireless chose to manage the process itself, TSI spokeswoman Helen Harris said. Harris said she did not know what percentage of those requests were from businesses, or whether one request was needed per user.
In all, however, the immediate impact of portability will be relatively insignificant. “We see it as a productivity increase,” sad Gene Trudell, vice president of business services at U.S. Steel, in Pittsburgh, which employs approximately 23,000 workers.
Trudell and his user base wont receive new numbers if they shift carriers, which will save the incidental costs of printing new business cards and updating corporate databases. “Its not going to be one of those things where it will reduce our cost by a million or more,” he said. “It will just be another thing in our bag of tricks.”
A spokesman for Intel Corp., of Santa Clara, Calif., said the new rule “hasnt changed anything for us.”
Analyst Clint Wheelock said customers will have the upper hand in the short term. Wheelock is director of wireless research for analyst firm In-Stat/MDR, in Scottsdale, Ariz., which in a recent study of wireless churn found that small businesses are the most likely to shift carriers, followed by midrange and large enterprise businesses.
“I think it gives companies more bargaining power,” Wheelock said. “Overall, this is a real win for business customers, and carriers are going to have a lot of difficulty with it.”
By being able to shift from carrier to carrier, companies may have some short-term freedom to sign favorable contracts. To date, carrier-to-business contracts have been predicated on simple volume discounts. AT&T Wireless currently controls the market for wireless services sold to business, Wheelock said, followed by Verizon Wireless, Sprint and Nextel. Businesses will likely use the portability rules to consolidate the number of wireless carriers they do business with, placing additional strain on carriers to deliver.
Carriers will more frequently offer a “pool” of minutes that employees can tap into, rather than force employees to sign individual contracts, Wheelock predicted. The pool will help businesses negotiate volume discounts, while at the same time allow carriers to “lock down” hundreds or thousands of employees at once, Mobile Ecosystems Lowenstein said.
At some point, most businesses and consumers will likely take the plunge and transfer their service to another carrier, Wheelock said. By that time, both groups will have been able to assess how carriers have handled the portability process, as well as the various wireless packages offered.
“I think the impact on portability in business markets will arrive in the Q1 timeframe as companies make their telecom budget decisions and begin renewing their contracts,” Wheelock said.
At that point, Wheelock said, corporations will likely take the first steps toward integrating cellular phones and services into an infrastructure that can be deployed and managed from a central location. Today, U.S. Steel allows its regional centers to purchase their own cell contracts with local suppliers, Trudell said. However, the $2.4 billion steel producer has also begun developing an internal organization that is being asked to explore all the opportunities for centralized purchasing. “Were going to be there in the future, I can guarantee you that,” Trudell said.
The impact of centralized billing has also begun to be felt at companies like The San Francisco Chronicle, owned by media giant Hearst Communications Inc., based in New York. Hearst runs The Chronicle as a separate company, although Hearst also negotiates contracts for the paper with the companys two wireless vendors, AT&T Wireless and Nextel Communications. Overall, the newspapers employees use a total of about 500 cell phones, said Henry Sandigo, the telecommunications network manager for the paper.
The papers employees can purchase blocks of minutes for their own personal use, as well as make business-related calls, Sandigo said. Employee minutes are monitored with an application called TraqWireless, which also ensures that employees are on the right cellular plan.
In the future, carriers will attempt to “lock in” customers through additional services, like Nextels push-to-talk feature and high-data-rate services, analysts said. More value will also be placed in the handsets, as they become centralized repositories for personal and corporate information.
“Once youve got contacts, corporate applications, even the VPN stored on your phone, the more you have configured beyond just the voice calls the more painful it is to leave,” Lowenstein said.