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The Fallacy of Local Number Portability

I will preface the following diatribe by stating that I work for one of the largest wireless carriers in the US, whose name starts with an "A", a "T", and another "T", and ends with "Wireless" (oh, and there is an ampersand in there somewhere too). But what follows is my opinion as a consumer of wireless service, and does not necessarily represent the views of my current employer. I do not have landlines at home, I am 100% wireless (and have been for years, even prior to my current employment). However, I do have a unique insight into what is happening in wireless, thanks to my position in the company.

A couple years back, the FCC came down from the mountain and told wireless service providers "Thou shalt allow subscribers to take their phone numbers with them when switching to a competitor". The concept is called "local number portability" (LNP), and has been commonplace in traditional land-line services for many years. Wireless carriers, however, fought LNP tooth and nail, because the rate subscribers leave (or "churn", as it is called) is a key metric for measuring the success of a carrier. Anything that encourages churn is BAD, if you are a carrier.

On the surface, LNP seems like a boon to consumers, who will now have an easier time moving from one carrier to another as the fancy strikes them. In practice though, nothing could be further from the truth. And here is why:

LNP Monthly Fees: Recently appearing on your bill, and continuing for the next 5 years, is a new service charge. Go ahead, look. I'll wait. Some carriers call it out as a "Number Portability Fee", others just add it into the regular service fee. But it's there, honest. That is how much every consumer is paying for LNP, whether they intend to take advantage of it or not. Everyone with a mobile phone in the US will be paying for LNP. Has anything the government mandated ever come without a cost to the consumer? Why would this be any different? Here's the kicker. The carriers can charge whatever they want. There are no rules laid down by the FCC, and no reporting required to ensure the charge is inline with the costs involved with the implementation of necessary systems to support LNP on the carrier's network. In fact, some people are starting to wonder if these LNP charges are going to become a new profit center for carriers. The FCC, in effect, just gave carriers carte blanche to stick the consumers for however much they wanted to, so long as they claim the funds are being used in some way to support LNP. And without any reporting requirements, the FCC just has to trust that they are using the funds for that purpose. Now it becomes clear why all the major carriers have given up the fight against LNP, and are now embracing it.

Contracts: Once carriers are forced to support LNP, you can bet the contracts for service will get a LOT more restrictive. You want out of a 1-year agreement after only 6 months? Sure, you can take your number to a competitor. But you owe your original carrier for what they would have collected from you if you had fulfilled your contract entirely. Right now, many carriers don't sweat contract lengths, and often let unhappy subscribers off the hook. You can bet that won't be the case any longer.

Handsets: Many consumers don't realize that the handset they get from one carrier will not necessarily work with another. Not only are there 2G/2.5G/3G issues, but carriers are often using entirely incompatible frequencies even if they are using the same base technologies. An Ericsson t68 originally acquired from AT&T Wireless may be completely useless when taken to another carrier. So you have to buy a new phone, as well as agree to yet another long-term contract.

Wireline Switches: The carriers are only required to support LNP if there is a wireline switch in the same rate center as the wireless switch. Only 1 in 8 rate centers actually have wireline switches, so 90% of consumers won't even qualify for LNP.

LNP sounds like a great deal for consumers on the surface, but once you start digging you realize that EVERYONE is paying for a feature that HARDLY ANYONE will ever actually use. Some have called LNP a "fraud on consumers". The more I learn about it, the more I tend to agree.

Posted by Beau Monday on Saturday, August 23, 2003 1:42 AM

Feedback

# re: The Fallacy of Local Number Portability 11/7/2003 3:54 PM Scott

would like to learn more about what the process is how LNP works? What is AT&T doing for example to elicit me as a sprint customer and my company to switch?

scott@dgxonline.com

# re: The Fallacy of Local Number Portability 11/23/2003 12:02 PM Brian

AT&T and Sprint use completly different systems(IE: GSM and TDMA) So in order to keep the same number- as the above article suggested, is if you switch from carrier to carrier you have to make sure that they are under the same network, so you wont have to buy a new phone. No sprint phone will ever work on an AT&T, Cingular or T Moble system, just as these wont work on a sprint system. Although I do know that AT&T will allow you to trade in your old phone if you switch....Just FYI

# re: The Fallacy of Local Number Portability 11/29/2003 8:45 AM Frank McPherson

But, what exactly do the companies do to prevent churn? Do they increase service? NO. Do they provide good offers to existing customers? NO

Why?

Could it be because the lack of number portability creates lock-in?

The point is, all of the wireless companies do next to nothing to keep existing customers, and put all their focus on new customers. Why, for example, are low prices on new handsets only offerred to new customers? I think it is time the wireless providers realized they are to blame for churn, and to stop bitching about it.

# re: The Fallacy of Local Number Portability 5/17/2004 1:41 PM Kirk

Correction: Sprint PCS uses CDMA, *not* TDMA.

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