Portability, A Year Later
By Carlo Longino, Wed Nov 24 20:15:00 GMT 2004

A year ago today, mobile number portability started in the US, and 8 million people have taken advantage of it -- a far cry from the apocalyptic scenarios carriers laid out to fight the move.

It was 12 months ago that the US mobile operators were bracing themselves for what they billed as one of the most egregious wrongs and formidable challenges to their businesses in all of recorded time.

Or something like that, anyway. Instead, here things are a year on, and less than 5 percent of all US mobile subscribers took advantage of the rule change allowing them to take their number if they switched providers. The top five carriers all added customers during the time, with Cingular (including AT&T Wireless) growing by about 5 percent on the low end, and T-Mobile growing by more than a third on the high end.

So has number portability turned out as the demon most carriers (with Verizon Wireless the notable exception) made it out to be? Hardly -- it looks like it's filling a role as a matter of convenience for some of the consumers who decide to change companies. And with most users locked into 1- or 2-year contracts with high early termination fees, switching still isn't so easy.

But one upshot of portability is that it may be leading carriers to compete on something other than price. Though they may loathe being forced to innovate, the last year has seen data and content services progress, but more persuasively, operators are making network performance and customer service a higher priority. Verizon Wireless, which has added about 6 million subscribers, or 17%, in the past year has been a major benefactor of WLNP. But it certainly isn't the cheapest carrier around, far from it. But its advertising, centered on its network quality, has been incredibly effective. Similarly, T-Mobile's awards for customer service and its fast growth probably aren't a coincidence.

All this makes consumers the real winners. If prices haven't dropped, they've certainly been held down, and calling plans are changing to offer more included benefits. Holding on to someone's number if they left the company was a tremendously powerful, though artificial, churn reducer, and its removal has forced carriers to serve their customers better -- and this competition benefits end users.

But the most interesting aspect of hindsight is watching people who made the wrong bet change their story -- in this case, it's the operators' trade group, the CTIA. It's released a cheery press release celebrating the anniversary, with its president saying the industry "will continue to work for each and every customer". He of course neglects to mention the fierce rhetoric his predecessor used to battle LNP, when he called it "a double deception for consumers," "a fraud on consumers" and said expecting it to increase competition was "as realistic as a fish on a bicycle," all in a single press release.

The crux of the argument was that requiring operators to implement portability would siphon money away from things that the CTIA said mattered more to consumers, like improved service and network coverage. Funny just how wrong it was -- so wrong, in fact, that it took portability to improve those things. But that's not something you're likely to hear the group trumpet anytime soon.