On the Front Lines of the Customer Revolution: Part 1

The Phone Number Portability Skirmish

April 11, 2002

We call your attention to an easy-to-miss regulatory battle being waged in the U.S.—the battle over telephone number portability. This has been mandated by law in the U.S., but the telco providers keep gaining delays from the FCC. When will customers really gain the upper hand?

Will Customers Win?

There are a number of battles being waged on the front lines of the Customer Revolution in the Spring of 2002. Be alert! The outcome of these skirmishes may impact your future--both as a consumer and as a business.

We predict that customers will win each of these battles eventually. But it's possible that we may see some setbacks along the way. The customer revolution is being waged on many fronts simultaneously. Here is one battle that is taking place in the U.S. this Spring:

Will U.S. customers gain the ability to retain their cell phone numbers when they switch carriers?

PHONE NUMBER PORTABILITY

There are a number of places in the world (U.K., Germany, Australia, Hong Kong) in which mobile phone number portability is now mandated by law. Why? Customers find it disruptive to have to change phone numbers each time they change their phone service. In European and Asian countries, mobile phones have become extensions of each person's business and personal personas. Most people rely on their mobile phone as their primary communications vehicle. By the time they've had that mobile for a few months, there are hundreds, if not thousands of people who rely on that mobile number as a way to reach that individual. The difficulty of having to notify literally thousands of people that you have a new phone number has been deemed to be an unacceptable form of lock-in in many countries.

Phone Number Portability in the U.S. Is under Siege by Wireless Providers

In the U.S., phone number portability was mandated as part of the Telecommunications Act of 1996. However, the telcos have successfully lobbied for delays in implementation. The FCC granted an extension in 1999 that expired in March 2000. The Federal Communications Commission has given U.S. cell phone carriers a second extension until November 24, 2002 as the date by which they must begin to offer phone number portability for their mobile/cell phone users in 100 cities nationwide.

The next skirmish in this battle will come very soon. Verizon Wireless has petitioned the FCC to either scrap the entire regulation or to exempt Verizon Wireless. The FCC is expected to rule on whether a third extension should be granted and, if so, for how long. Other wireless carriers have added their support and ammunition to Verizon Wireless's petition. The carriers claim that it will cost them $1 billion to implement "this unneeded regulatory idea." Only Nextel Communications and San Diego's Leap Wireless appear to be in favor of the move to phone number portability. They hope to be able to woo customers more easily as a result.

We believe that it is in customers' best interest to have phone number portability. It makes customers' lives easier and promotes healthy competition among carriers. The U.S. wireless providers will point to the already-hefty churn rates in their industry as proof that there's already ample competition. Nevertheless, we feel that customers' needs should take priority. And customers need the convenience of owning "their" mobile numbers as well as having freedom of choice.

We feel that U.S. regulators should do everything they can to improve the mobile/wireless infrastructure in the U.S. and the quality of the service provided to customers (in terms of coverage, bandwidth, and customer service/convenience). If more money is needed to enable the seamless transfer of mobile phone numbers, perhaps the FCC could rebate some of the exorbitant license fees it extorted from these wireless providers when the government auctioned off its 2.5 and 3G spectrum. But don't let the mobile/wireless providers block or postpone phone number portability!

MORE SKIRMISHES TO COME

Over the next few weeks, I will bring to your attention a couple of other battles being waged on the Customer Revolution front. Stay tuned.

Resources:
FCC to Vote on Phone Number Crunch , by Ben Charny, Cnet News.com, March 28, 2002

****ENDNOTES****
See " On the Front Lines of the Customer Revolution: Part 2: The Internet Radio Royalties Battlefield ," April 18, 2002,
" On the Front Lines of the Customer Revolution: Part 3: The Potential of Broadband Wireless, " April 25, 2002.
****ENDNOTES****


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