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It's all in the numbers for local number portability

Don't look now, but you are being followed.





Don't look now, but you are being followed. No, this is not some high-tech stalker or crazed wireless fan, although you may feel a little like a celebrity given your increased recognition and the level of respect brought about by your new shadow.

The follower in this case is your cell phone number, which as of Nov. 24 will remain with you even if you decide to swap service providers to get a better rate deal, or upgrade to the latest phone technology without paying full price for a device. The ruling, brought about by years of lobbying and a legal such by the Federal Communications Commission (FCC), will initially impact some 100 major U.S. markets. Wireless service providers throughout the entire country will be required to comply with the FCC local number portability (LNP) ruling by spring of next year.

Basically, LNP seems like a breath fresh air for a wireless industry that has for too lung been under the oppressive thumbs of many wireless service providers.

Consumers will benefit from the new rule since it means they no longer have to learn new phone numbers or update their address records when they switch wireless carriers to take advantage of a batter plan. Business users will see even more benefits since LNP translates into a considerable cost savings when you consider the amount of money spent on updating business cards, letterheads and mailing material -- not too mention eliminating lost business opportunities because of an abrupt number change.

Dig a little deeper into the more immediate impact LNP will have on the wireless carriers and their customers and you will quickly understand why some people may view this government-mandated rule as something perhaps as frightening as the Y2K scare a few years ago.

Most analysts, including yours truly, agree that LNP is a very positive move in terms of growing the wireless industry within the U.S., many industry experts predict that getting there will not be much fun for the carriers or a large chunk of their customer base. Research indicates that over the course of a year as many as 18 million people in the U.S. will switch wireless services plans because of LNP to getter a better deal on service plans. An additional 12 million may also make the jump because they wanted to switch anyway, but LNP has provided that extra nudge to swap wireless allegiances, according to data provided The Management Network Group, Inc. At present, there are roughly 151.4 millions wireless subscribers in the U.S., according to the Cellular Telecommunications and Internet Association (CTIA).

Service plan pricing has consistently been the top reason why consumers decided to abandon one wireless plan in favor of another, a fact that has created a price war among most vendors -- especially during the holiday season, when cell phones are favorite gift purchases. Businesses are not so apt to base their service plan decisions on price alone, although LNP makes for a more compelling reason to do just that since it has the potential to save a lot of money on business supplies and marketing efforts.

Young consumers, within the 19-to-25-year-old age group, are considered to be the most likely candidates to switch because of LNP, since many have less than a year remaining on current service plans and this group has always been fast to act on new developments and ideas. (For example, people within this age group were the first to purchase picture-capable cell phones and are the ones footing the bulk of the bill service charges related to sending and receiving digital images on their cell phones).

Wireless carriers like T-Mobile and AT&T Wireless have already been hit hard by customer churning, and may not be in the best position to weather a mass exodus or keep up with too many requests for changes, says market researcher Intelliseek.

Cell phone caveats
Many consumer groups are advising new and current wireless subscribers to be on the lookout for a flood of deals and enticing package plans from the wireless carriers as they try to lock in customers before the Nov. 24 LNP deadline. In fact, the Consumer's Union group is advising buyers to wait until after the Nov. deadline to shop around for the best deal, since the carriers are expected to come up with clever marketing and pricing plans to attract post-LNP customers.

Sounds like a winning deal for the cell phone consumer, doesn't wait. Well, before you run down the street shouting "long live LNP!", take a look at the numbers behind the single number movement. Wireless carriers and industry trade groups are concerned that most people do not realize the initial implications of LNP, and that many may be shocked when they are hit with early termination fees should they decide to switch vendors prematurely. Many of these organizations are also telling people to be prepared for delays and interruptions in services as they switch carriers, since it may take some time for messaging and other enhanced features to follow.

The news gets worse. The CTIA trade group, which represents nearly every wireless service provider and manufacturer worldwide, has actively petitioned the Federal Communications Commission (FCC) to postpone, and in some cases amend its decision regarding LNP. The CTIA claims that some wireless carriers, particularly those servicing rural areas, may not be ready for the massive move toward single-number nirvana. The Washington, D.C. based group has also petitioned the FCC to issue a declaratory ruling stating that wire line carriers must let customers keep their telephone numbers when they transfer to a wireless carrier. Right now, it is assumed that wired numbers can be ported, but there is a concern that some carriers may restrict this practice.

Proponents of LNP and other federally-mandated services, such as enhanced 911, who claim that forecasts of the enormous costs associated with these actions may be exaggerated need only look at the amount already spent by wireless carriers of the associated fees for these services. According to the Center for Public Integrity, a consumer watchdog group, the major wireless carriers have already spent more than $629M in fees since January 2002, and have passed the bulk of these charges along to their wireless subscribers.

The cost for these fees is expected to increase after LNP becomes law on Nov. 24, and a number of new fees will likely be added to the list. One of these new fees is a monthly porting and pooling charge to cover the cost for LNP transients, which is expected to vary from as little as five cents to one dollar or more per customer.

So, while LNP is a step in the right direction in terms of easing the grip the wireless carriers have on each and every wireless consumer in the U.S., it is absolutely clear which segment is still in charge and who exactly will be footing the bill for changes and improvements.

Tim Scannell is the president and chief analyst with Shoreline Research, a Quincy, Mass.-based consulting company specializing in mobile and wireless technology and initiatives. Shoreline works with end users, looking to implement mobile solutions, and vendors, developing new products and seeking business and customer opportunities. The company also specializes in training and strategic planning projects. For more information on Shoreline Research and the company's strategic services please go to http://www.shorelineresearch.com.


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