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Verizon Drops Portability Fight ; Company Would Let Customers Keep Local Cell Phone Numbers

Posted on: Thursday, 26 June 2003, 06:00 CDT

Cell phone customers want it. The cellular industry hates it.

But local-number portability - the ability to keep the same phone number when switching cellular providers - came one step closer to reality yesterday when Verizon Communications, the nation's largest cellular provider, broke ranks with the rest of the industry and gave up a long battle against that feature.

"It would be a great thing to be able to keep my number, because then I wouldn't have to do a lot of follow-up with my friends and business contacts if I changed companies," said Verizon customer Kerry Bustetter, 40, of Olympia.

Customers want to keep the same number while ditching a company they have grown unhappy with. Cell companies fear they will be forced to spend billions of dollars to offer such portability, only to then face massive, unpredictable migrations of customers.

So was yesterday's development a happy ending for consumers? Maybe not.

Bellevue's AT&T Wireless Services Inc., the third-largest cellular provider, is continuing the fight in Washington, D.C., even while preparing to meet the Federal Communications Commission's Nov. 24 deadline for providing number portability.

Yesterday, Verizon Chief Executive Denny Strigl told analysts that the company will stop struggling against the FCC's rule, which the industry says will cost between $1billion and $1.5 billion initially and $500 million per year thereafter. Cellular companies also say the rule will increase competition in an already cutthroat market, possibly hastening a shakeout.

"Let's as an industry stop moaning and groaning about it," Strigl said in a speech. "Our government has spoken. Our customers tell us they want it. Let's clear the decks and get it done."

Roger Entner, a wireless industry analyst with the Yankee Group, a market research firm, characterized Verizon's change in policy as "an 180-degree turn" that removes the single biggest obstacle to portability.

About two weeks ago, Verizon and the industry's principal trade group, the Cellular Telecommunications and Internet Association, lost a court bid to overturn the FCC's rule. The industry had persuaded the FCC to delay the rule's implementation several times before.

Bedminster, N.J.-based Verizon, which says it has 33.3 million customers nationwide but won't release Puget Sound-area numbers, estimates that letting customers keep their numbers when joining or leaving Verizon will cost it about $60 million a year.

But Kelly Kurtzman, president of Verizon's Northwest region, said no charges will be imposed on customers until the actual costs become clear.

Unlike Verizon, AT&T Wireless isn't ready to quit the fight. Last week, that company joined Cingular Wireless, the trade association and a smaller carrier in contesting the FCC's jurisdiction to impose number portability.

AT&T Wireless spokesman Mark Siegel said federal law lets it impose such portability only on conventional phone companies, not cellular companies.

But, he said, the company is "pursuing two parallel tracks," preparing to meet the Nov. 24 deadline while still resisting the rule. It has already imposed a $1.75-per-month "regulatory programs fee" on new customers, those switching plans within AT&T, and those whose plans have expired, he said.

He said the company is pondering applying that charge to customers leaving AT&T Wireless.

T-Mobile USA Inc., also based in Bellevue, said it plans to be ready for the deadline and hasn't joined AT&T Wireless's FCC petition but is urging the agency to impose portability on wireline as well as wireless phones.

Surveys taken by various groups show that 11 percent to 30 percent of customers want number portability.

BY THE NUMBERS

What happened: Verizon yesterday became the first cell company to pledge that it will meet a federal rule letting customers keep their phone numbers even if they leave the company.

Why it matters: Customers may feel bound to stay with a provider, because don't want to change numbers.

What could happen: Cellular service costs could rise, or providers could go broke trying to remain competitive. And one company is still fighting portability.

This report includes information from Bloomberg News and The New York Times.

P-I reporter Dan Richman can be reached at 206-448-8032 or danrichman@seattlepi.com

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