Number portability is killer, competition is a bitch.
[ Posted by Dan on June 11, 2003 | 3 Comments ]

A very good point about cell phone number portability was made at winterspeak recently...

The FCC has ruled that cell phone users can take their numbers with them when they change service. Is this a victory for consumers? It is in the sense that the phone company owned the number before and they do now, so the transfer of wealth is now going to go from the phone company to the consumer, not the other way around. But I also anticipate more expensive and draconian upfront service agreements--if phone companies can't lock customers in as much (and they were never much good at this) they're going to try and get more of their money upfront.

Could it be argued though that the competition for new subscribers that goes on today will simply be applied to those who currently have cell service? After all, I am pretty much not the target of any cell phone adverts right now. If Verizon, Sprint PCS, T-mobile, AT&T and Cingular suddenly all want my business, wouldn't they attempt to appeal to me somehow?

Of course they would. But, if the current state of the industry is to offer long term contracts for lower monthly bills to NEW subscribers (even when the subscriber gets locked into the service by leveraging the number lock) then why would they not do that with those with service plans? What would stop them from doing that when people can come and go while keeping that one killer feature?

I suppose you'd have to tempt the subscriber with money, in the form of savings or perhaps in the form of contract buyouts, just like credit cards or car sales. "If you come over to us, and agree to a 2 year contract, we'll pay x amount of dollars towards your contract cancellation fee."

I'd have to guess that there would be at least a drop in monthly fees.

 

		A drop? I doubt that. The optimist in me says that carriers will play a feature/quality race, with acceptable fees and contract terms that will find an equilibrium that the market bears. The pessimist says they will lock down and just play hardball with the consumer, perhaps even collude to reduce market forces. The realist says that the industry will panic and consolidate slightly (rather than the slight recent growth), for a while. During this time, they will probably push non-number-based services like Net connectivity. Basically they will introduce barriers to churn to replace the big hole left by number portability. The simplest example is getting people to invest in equipment (phones, cards, PDAs) that only works on their network. -Posted by Eric on June 13, 2003 12:47 AM

		it will probably be similar to the way long distance carriers compete now... "stay with us for 6 months and we'll give you $50 dollars... and we'll pay your transfer fees up-front" and so on. -Posted by JC on June 15, 2003 05:17 PM

		Verizon says it won't charge users for keeping their number when they switch carriers... http://news.com.com/2100-1039_3-1020501.html -Posted by Dan on June 27, 2003 11:22 AM

Comment posting has been turned off because I don't have enough time and will to deal with the constant comment spamming. I'm very sorry and will fix this sometime soon (soon = before 2004 ends).