FCC rule likely to hurt rural carriers

Starting Monday, cell phone customers in small and midsize markets will gain the same right their big-market cousins enjoy: They’ll get to keep their numbers when they switch carriers.

About 36% of the 163 million U.S. subscribers are in smaller markets.

By Paul Davidson, USA TODAY

http://www.usatoday.com/tech/wireless/phones/2004-05-21-cellswitch_x.htm

The new freedom is expected to ignite a wave of customer defections that analysts say will likely exceed those in the top 100 markets, where number transfer has been required since Nov. 24. The likely winners will be big mobile phone companies such as Verizon Wireless and Sprint. Small, rural wireless and wireline carriers could lose subscribers.

But the rural companies are not ceding ground without a fight. About 900, or 90%, of rural wireline companies have asked state regulators for delays of several months. Under Federal Communications Commission rules, small-town wireline carriers also must be able to transfer home or business numbers to wireless carriers by Monday.

The rural providers say they are not equipped to do the transfers because they did not expect so many wireless firms to request the capability. Many can’t even provide cell phone service to customers in their regions, says Jill Canfield of the National Telecommunications Cooperative Association.

In some cases, rural wireline companies have sought permanent waivers, saying the cost per customer is too high. Big carriers are skeptical.

"They’re simply working hard to hold their customers hostage, and that’s too bad," says Verizon Wireless spokesman Jeffrey Nelson.

Small-town residents are more interested than their big-city counterparts in replacing their home phone with a wireless phone because in-state toll calls are pricey in rural areas, says Jeff Maszal of Management Network Group. Small wireless firms also stand to lose because larger providers have better brand recognition and pricing plans, Maszal says.

But Tim Raven of the Rural Cellular Association says small carriers "are adept at branding their service and creating customer loyalty. They go to church with" their customers. Many, he says, have offered sharp discounts to keep subscribers.

Although the FCC urges companies to complete transfers in hours, smaller firms could take days because their systems are not computerized.

Big corporations are also likely to start switching carriers in greater numbers. About 95% did not make a move after Nov. 24 because some of their offices are in smaller markets, says Nick Wray of Teldata Control. But by year’s end, as many as 35% could switch, he says.

In large markets, about 3.5 million customers — mostly wireless — have transferred numbers since November. That’s about 7 million fewer than expected. Many carriers offered specials to lock customers into new contracts.