Subject: [NEXTEL-1] Forbes.com: Cell Number Portability: An Update-DUD!

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Forbes.com: Cell Number Portability: An Update-DUD!
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Telecom

Cell Number Portability: An Update

Aude Lagorce, 03.09.04, 6:00 AM ET

NEW YORK - As corporate doomsday scenarios go, it was right up there with the biggies. Millions of Americans would dump their cell phone providers, we were told last fall, when wireless number portability came into effect.

Oops.

Between Nov. 24 and mid-January, just slightly more than one million Americans switched providers, far fewer than originally predicted. But number portability hasn't been all good news for the carriers. A very large percentage of switches couldn't be completed and complaints were far greater than had been anticipated. While some of those problems have been fixed, a second round of number portability looms.

"It was a tempest in a glass of water," concedes Roger Entner, a program manager at the technology research firm the Yankee Group, of the switching hubbub. Entner, who had expected that up to five million users would change carriers, puts the actual tally at 1,015,000 as of Jan. 12, the latest period for which statistics are available. Gartner analyst Tole Hart writes in a report that "the amount of porting was generally lighter than the industry expected."

What was much greater than expected, however, was the so-called fallout rate--the percentage of phone numbers that carriers couldn't switch in a reasonable amount of time, or at all. According to Gartner, fallout in the first weeks that switching was available was in the range of 50% to 70%.

"The implementation was just rotten," says Entner.

So rotten in fact that, as of Feb. 25, the U.S. Federal Communications Commission had received a record 5,852 complaints about wireless number portability. The agency, however, denies having been caught by surprise. "Overall the porting went as expected," it said. "We knew there would be glitches: that's unavoidable when you're going live with a new system."

Some of the glitches were clearly of the carriers' own making. A study by the telecom consultancy The Management Network Group reveals that while 94% of retail stores got an average of three hours of training in preparation for the new rules, only 46% of the retailers received an upgrade to their order management systems in the store.

Additionally, "The carriers didn't do as thorough a testing as they could have," says Jeff Maszal, director of research for TMNG. Entner of the Yankee Group agrees, saying, "They behaved like high school students praying that the exam date would be pushed off. They kept telling the teacher [the FCC] that they weren't studying for the test in the hope that it would eventually be cancelled. But the date wasn't moved."

And it probably would have helped if the carriers had all used the same system for exchanging subscriber information or if the two competing systems had used the same standards. As it was, AT&T Wireless
(nyse:
AWE -

news
-

people
)worked with NeuStar and the five other U.S. carriers opted for TSI, now Syniverse Technologies. Isolated AT&T Wireless ended up paying a high price for its choice: It registered the highest number of complaints with the FCC.

The fact that these technological glitches were widely reported by the press may help explain why more people decided to wait before ditching their old provider.

But the press alone didn't discourage people from taking advantage of the new rules. The low carrier-switching figures may also stem from the fact that more consumers than expected were locked into contracts when November came. Several carriers had stepped up their promotional efforts around that time to try to increase customer loyalty. T-mobile, which is owned by Deutsche Telecom
(nyse:
DT -

news
-

people
), started offering three-day-a-week unlimited calling, while Sprint PCS
(nyse:
PCS -

news
-

people
) offered after-7 pm unlimited calling for just $5.

But overall, Verizon Wireless, the mobile arm of Verizon Communications
(nyse:
VZ -

news
-

people
), has come out as the big winner in the first round of number switching: For every customer lost, the operator gained three new ones. Meanwhile Nextel
(nasdaq:
NXTL -

news
-

people
) and Cingular, a joint venture of BellSouth
(nyse:
BLS -

news
-

people
) and SBC Communications
(nyse:
SBC -

news
-

people
), broke even and AT&T Wireless lost four to five customer for every customer gained, according to Entner.

Now comes the second part. Cell phone number portability will be extended to customers in the rest of the United States on May 24. The fallout rate has dropped dramatically--it now hovers at around 25%. How much that helps the carriers that fumbled round one remains to be seen.

More From Forbes

Untangling Your Wireless Number 01.05.04

Wireless Frenzy 11.18.03

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