Number portability rule threatens US wireless cos

CHICAGO: Walk into a U.S. wireless telephone carrier's shop these days, and you might be jolted by the friendlier service, and improved quality of sound on the cell phone.

That's because the wireless industry is feeling an urgent need to keep customers happy before the advent of a new government rule on switching services. Come November, customers will be able to keep their old phone numbers when switching wireless services.

The so-called number portability rule scares wireless companies because it essentially makes it easier for disgruntled consumers to go elsewhere. And in the $91 billion wireless industry, winning and retaining customers is what it's all about.

"This is a wakeup call," said Rich Nespola, chief executive of management consulting firm, the Management Network Group Inc., or TMNG.

As the deadline nears, wireless companies are now trying to head off the potential damage by making network improvements, re-evaluating customer service, and stepping up their marketing.

According to a recent study by TMNG, 24 percent of large businesses - the most likely segment to take advantage of number portability, are ready to switch services.

The research also found that 33 percent of businesses that use more than one carrier are likely to consolidate their wireless accounts to a single provider.

"What you're going to see now is a lot of positioning, a lot of repairing and a lot of bridge-building," said independent telecommunications analyst Jeff Kagan.

"That comes both on the perception side, where you see a lot of advertising and marketing, and a lot on the reality side, which is improving the systems and the operations."

CUSTOMERS WILL WIN EITHER WAY

Sprint PCS Group, the nation's No. 4 wireless telephone company, has made changes in everything from greetings at stores to its automated voice services to the way it deals with customer complaints.

The company has also invested in its network by adding new cell sites and increasing signal density so there are fewer dropped or blocked calls.

"Overall, it's been a large culture change that we're not done with yet," said Len Lauer, president of Sprint PCS, who took over the reins of the company last fall to address the company's declining subscriber base.

"We're doing a lot of work to be ready for (number portability)," he told Reuters, adding that the company is even informing customers if they are paying too much.

Lauer emphasized that Sprint PCS needed to make the changes regardless of number portability.

However, analysts said companies are feeling a greater urgency ahead of the new regulation.

"No carrier will admit they're going to do anything," said Craig Mallitz, wireless analyst with Legg Mason. "(But) all of the carriers seem to be taking somewhat of a defensive mode."

Companies like Cingular Wireless are offering two-year contracts to keep customers longer while AT&T Wireless Services Inc., the No. 3 operator, is waiving the activation fee on two-year contracts.

Meanwhile, Sprint PCS recently launched advertisements targeted at businesses that tout its superior network quality compared with AT&T Wireless.

Many of the operators' efforts so far have come as they posted solid second-quarter gains in key industry metrics-customer growth, average revenue per user, and customer turnover.

Verizon Wireless, the largest U.S. wireless operator which analysts believe will gain the most from number portability, demonstrated exceptional strength, adding twice as many customers as its nearest competitor.

"At the end of the day it's going to benefit consumers either way," said Mallitz. "You're either going to get better quality if you stay with your carrier or you're going to get the ability to leave and go to another carrier, who is also trying to improve their quality."

© Reuters