Cellphone Deals Sweeten in Face of New Rule on Keeping Number

Bet Sirianni is the subject of an intensifying courtship. The overtures — like the recent offer for a free second cellular phone — may win her over to a longer-term relationship.

By MATT RICHTEL NY Times

Her mobile phone service provider, AT&T Wireless, wants her to commit to an additional two years on her contract. "I’m thinking about it," Ms. Sirianni, a 40-year-old corporate art director in San Francisco, said of the free phone proposal. "I may give it to my son."

Ms. Sirianni is one of millions of customers whom wireless companies are trying quietly to entice into renewing their contracts in the next few weeks. New phones, additional minutes and cash credits are being handed out — all with an eye to locking in customers who may not know that come Nov. 24 a new federal regulation will allow them, for the first time, to keep their cellphone numbers when they change mobile services.

Because mobile phones have become as important as traditional phone lines for many consumers, the desire to keep the same cellular number has prevented many from switching providers even if they are less than satisfied with the service. That is about to change.

Kathleen Abernathy, a commissioner at the Federal Communications Commission, recently cited a study that said as many as 8.7 million cellphone users would switch immediately after number portability became available.

The movement may be a watershed moment for the industry. For the six major national mobile phone providers — AT&T Wireless; Verizon Wireless; Cingular Wireless, a joint venture of SBC Communications and BellSouth; T-Mobile, a subsidiary of Deutsche Telekom; Nextel Communications; and Sprint PCS — this could be the start of a shakeout that determines which companies will thrive and which may be absorbed by others.

Heavy competition in this industry has always meant strong marketing and customer retention campaigns. One of the mobile phone carriers’ biggest problems has been customer churn, with tens of thousands of customers shifting from one provider to another every month in search of better deals or service. The regulation allowing customers to take their phone numbers with them will accelerate churn, and that is why wireless companies are eager to sign customers to new one- or two-year deals before Nov. 24.

AT&T Wireless is now giving away $50 credits to some customers signing up for an extra year of service as well as airline miles to particularly valuable users. Cingular is handing out free phones and big discounts on color flip-phones to people who sign up for two more years of service. Sprint PCS has been offering similar giveaways.

While many customers are taking up these offers, most are not aware of impending number portability. Industry analysts, research organizations and the wireless carriers themselves say that public awareness of the new regulations is low.

Wireless carriers are hoping that they can take advantage of that absence of awareness to make an 11th-hour hard sell. "They are trying to sign people up for multiyear contracts," said Patrick J. Comack, a telecommunications industry analyst with Guzman & Company, an investment banking firm. "They’ve significantly upped the incentives, and it’s going to get crazy going forward."

By signing customers to longer contracts now, the companies will be able to keep more of them after portability takes effect — or at least force customers to pay termination fees if they do jump services before their contracts expire.

The industry has been trying to address the portability issue since the beginning of the year, and has had notable success in reducing the percentage of customers changing carriers, said Roger Entner, an analyst with the Yankee Group. He said that 2.2 percent of mobile phone customers switched carriers each month during the quarter that ended June 30 compared with 2.7 percent a month on average in 2002.

Nonetheless, Mr. Entner and other analysts expect the numbers of customers switching to soar immediately after Nov. 24, when news coverage and advertising campaigns by wireless companies to lure away their competitors’ customers will increase public awareness. He projects that 50 million people will switch providers in 2004, up from the 39 million the group expects to change carriers this year.

The companies are quite aware that number portability gives them a huge opportunity to compete for existing subscribers. Indeed, media outlets are expecting already sizable advertising campaigns by those companies to take off over the next few weeks.

Sprint, for example, has recently published 10 tips for consumers who want to keep their phone numbers and plans to put brochures in stores explaining the process. Three weeks ago, Verizon Wireless put up a Web site where customers can learn about their right to keep their phone numbers and sign up to be contacted by a company representative.

John Stratton, chief marketing officer for Verizon Wireless, said portability would not change the company’s long-term retention strategy, but would "magnify it." One strategy is to provide subscribers with a new phone every two years.

Jonathan Tinter, who oversees the portability strategy at AT&T Wireless, said the company did not plan to change significantly its effort to keep customers. But he said he had contingency plans to sweeten the deals if the other carriers started to cut into his customer base, noting that the whole industry was "getting more aggressive with retention."

Other carriers admit that they are already pursuing a hard sell. Andy Wilson, the vice president for marketing at Cingular, said it was offering better incentives to customers whose contracts were about to expire and that he had seen a "much higher than a normal response."

Mr. Entner from the Yankee Group said many people were surprised and pleased with the new deals. "When I talk to unsuspecting friends, they say, `Look at the coup my carrier just offered me.’ "

But he said the packages were likely to get even better after it becomes possible to keep a cellphone number when switching carriers. "The smart people are holding out to Christmas" to see what kind of deal they can get to stay with their carrier, he said.

One holdout is John Engelhardt, 51, the director of public relations at River Downs Racetrack, a thoroughbred race track in Cincinnati. He said he was a satisfied customer of Cingular, but he planned to march into one of its stores after Nov. 24 to see if he could get more weekly minutes or free voice mail. "I’m going to ask them what they can do to sweeten the deal," he said, his voice growing with enthusiasm. "This is America. We’re built on competition."

Other mobile phone users have circled the date on their calendar for a different reason: they are bent on changing service providers. Vanessa Stagi, 28, a medical sales representative who has been with AT&T Wireless for seven years, said she was tired of dropped calls, poor coverage and high bills.

She has not switched until now because her friends and business clients all have her current cellphone number. "If I switched, I’d have to notify every single hospital and the doctors, surgeons, nurses, hospital directors," she said. Very soon, she added, she will be liberated.

But, all that said, she could be persuaded to stay with AT&T Wireless, she said, if it sweetened the pot enough. "If the offer was right," she said, "I’d consider staying."