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Cell Phone Carrier Switches May Encounter Hang-Ups

Posted on: Wednesday, 19 November 2003, 06:00 CST

Consumers are promised a big gift this holiday season -- the ability to keep their numbers when switching telephone carriers -- but it could get stuck in the chimney.

After six years of delays and more than $1 billion in setup costs, the telephone industry is preparing to implement new federal rules on Monday allowing people in the largest urban areas to move their numbers between cell phone companies or from home phones to cell phones.

But analysts are predicting the complex number handoffs between dozens of rivals will lead to technical snarls, especially if 1 million people try to switch the first day.

Moreover, the industry is still divided on whether to back the new rules. While most cell phone carriers have stopped resisting, a group of local phone companies last night asked the Federal Communications Commission to delay the rule allowing home numbers to be switched to cell phones. The United States Telecom Association, which represents local phone companies, said that if the FCC doesn't grant its request by Thursday, it will ask the courts to intervene.

Separately, several rural phone companies filed a lawsuit on Friday seeking to delay rules allowing number transfers between wireless carriers.

But FCC Chairman Michael K. Powell said yesterday that the agency would "doggedly" fight any legal challenges, calling them "against the interests of consumers." He urged customers to switch to carriers that are not fighting the rules.

Powell also said the government is committed to ensuring that the portability rules are "ultimately effective."

Many analysts expect the rules to survive the last-minute legal wrangling but say more hang-ups could lie ahead.

"So many things that can go wrong, will go wrong," said Carl Hilliard, president of the Wireless Consumers Alliance Inc. "The industry's been saying all along there's technical problems that need to be resolved, and they don't have enough time to get their systems in working order. . . . We're expecting it's going to be rocky for a couple of months, maybe longer."

Eventually, analysts expect the new rules to translate to sweeter deals and improved phone service for consumers. But for the telecom industry, already reeling from frenetic competition and change, analysts are predicting more turmoil and an eventual shakeout.

"This is a transformational event for telecommunications," because people will own their phone numbers in a way they never have before, said Jeff Maszal, director of research at the Network Management Group Inc., a consulting firm.

Maszal estimated that at least 10 percent of number transfer requests will fail because of mismatched orders, typos, insufficient information and other glitches. "And that's a conservative estimate," he said. Privately, cell phone company officials said the failure rate could be higher -- around 25 percent.

The FCC has told phone companies that they should move numbers between wireless carriers within 21/2 hours of customer requests, and switch home numbers to cell phones within four business days.

The new rules initially apply only in the 100 most populous metro areas, and permit home-phone-to-cell-phone transfers only if the two companies' calling networks overlap. The rules take effect in the rest of the country May 24.

Traditional phone companies are upset that the FCC issued no guidelines for consumers transferring wireless numbers to home phones. The FCC is still mulling such rules.

"Real competition is a two-way street," Walter B. McCormick Jr., president and chief executive of the telecom association, said in a prepared statement last night. "These rules place the FCC in the role of 'traffic cop,' directing consumers away from wireline companies and toward wireless ones."

Backing the association's legal action are CenturyTel Inc. and BellSouth Corp., among others. A spokesman for Verizon Communications Inc. said it does not support the action.

The industry has been bracing for the fallout by hiring thousands of customer support workers, negotiating information-sharing deals between carriers and tweaking computer systems to automate the process. Verizon Wireless has staffed a call center with 900 people ready to handle number-switching requests. AT&T Wireless has 500 such employees, and Cingular Wireless has 400. In addition, the telecom industry reports it has spent $1 billion upgrading its technology.

The system is supposed to work like this:

Customers submit transfer requests to the carrier they want to switch to, or to a retailer such as Best Buy, which forwards the customer's address and billing information to the new carrier. The new carrier hands off the request to an independent company to verify details. After verifying each request, the independent firm passes it to the customer's old carrier, which has a limited amount of time to disconnect the number and release it to the new company. After a transfer is complete, the verification firm passes the information to yet another firm -- NeuStar Inc. -- which maintains a database called the "number portability administration center" that helps carriers know where to send calls.

TSI Telecommunication Services Inc., the firm handling most roaming agreements between cell phone companies, has been tasked with verifying most number switches, too. The Tampa firm said it expects as many as 1 million people to switch numbers the first day and is prepared to process 64,000 requests an hour.

Joe Esparza likely will be among the first in line. For more than a year, the Washington resident has been busting at the seams to break free of his Sprint PCS cellular service.

"I get dropped calls every day . . . and when I walk into a building it's almost guaranteed I would lose service," said Esparza, who works at a health care nonprofit organization.

But because so many of his friends have his cell phone number, Esparza said, the benefits of keeping his number have outweighed the hassle of his erratic calling service. To avoid paying a termination fee to Sprint PCS when he switches carriers, he declined to renew his long-term contract when it expired last year. Instead, he is paying a $20 monthly premium for a month-to-month plan.

Like many people, Esparza has been comparison-shopping, trying to finagle the best deal from either T-Mobile USA Inc. or Verizon Wireless, his two top choices.

Deals are a key part of the game plan for wireless companies, as they try to retain old customers and woo new ones. Already, nearly a third of the 150 million Americans who have cell phones switch carriers every year. Analysts say that could increase to 40 percent under the new rules. So carriers are upping their offers, in the form of extra minutes, free talk time, cash credits and discounted phones.

Analysts and phone company employees have been shopping, too, inquiring anonymously about number-switching to see how knowledgeable store clerks seem. Results, they say, have been mixed.

"One would expect that with this two weeks away, there would be more consistency," Maszal said last week, after he shopped a few retail outlets and found that some employees were familiar with the switching rules and others were not. Employees of Circuit City Stores Inc., Best Buy Co., RadioShack Corp. stores and other retailers selling cell phones need separate training by each wireless carrier, and the process isn't complete, he said.

Adam Goldberg, a policy analyst with Consumers Union, is recommending consumers hold off switching carriers until after Nov. 24 to let the kinks iron themselves out.

"Clearly, if everyone decides to switch on the 24th, it's going to be a heavily overloaded system," he said. Besides, the deals will only get better with time, he added. Esparza, however, said he'll be moving to a new carrier, even if the technical glitches are so bad they prevent him from keeping his old number.

"My expectations are so high at this point, and I'm so looking forward to it that if it doesn't work, I think I'll just have to start over and give up my number."

Reported By TechNews.com, http://www.TechNews.com

(20031119/WIRES /)

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