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JULY 15, 2003
By Jane Black Portability: Survival Tips for Cell-Phone Outfits Soon, users will be able to switch carriers and keep their old numbers. Here's how the players can stem a tide of consumer defections This Thanksgiving, America's 147 million cell-phone users will indeed have something to be thankful for: On Nov. 24, we'll all finally be allowed to switch carriers without having to change our phone number. It's the chance consumers have been anticipating. Now, without any inconvenience, we finally will be able turn the table on wireless carriers that have been torturing us for years with dropped calls, inconsistent customer service, and complicated price plans that require an advanced degree in comparative analysis to comprehend. By Christmas, analysts predict, most cellular outfits will find big lumps of coal in their stockings. Industry churn -- the percentage of customers who change service providers -- already tops 27% annually, according to industry group the Cellular Telecommunication & Information Assn. (CTIA). When so-called number portability kicks in, that percentage can be expected to skyrocket. A recent survey by Management Network Group, a communications research firm, revealed that 6% of cell-phone users -- some 8.7 million people -- would switch carriers within a day if they could take their phone numbers with them. Some 27%, or 39 million customers, said they would switch providers as soon as they received a better offer. Better than 50% of those who experienced service issues in the past year said they would at some point switch carriers. "BLOODBATH" AHEAD. Much has been said about number portability's impact on carriers. Industry watchers have speculated about the possible winners (Verizon (VZ ) and AT&T Wireless (AWE )) -- the anticipated losers (Cingular and Sprint (PCS )), and portability's total cost to the industry -- likely about $2 billion. But little has been said about just how the carriers plan to manage the impending chaos. Most of the industry, with the exception of Verizon Wireless, is still fighting the FCC mandate. And hypercompetitive carriers are paranoid about tipping their hands to their rivals. "There's going to be a bloodbath, and yet no one is talking about how to avoid it," says Jeffrey Kagan, an independent telecom analyst in Atlanta. So, here are a few unsolicited suggestions about how cell-phone carriers might best respond to the new rules. Based on interviews with disgruntled customers, marketing experts, and telecom executives who survived the transition from regulated to competitive long-distance telephone service, wireless outfits should follow three simple guidelines to make sure they win more customers than they lose. Embrace change. According to Consumer Reports, customers rate the cell-phone industry as the worst for customer service. That's why it's important for wireless providers to show that they have turned over a new leaf. "Consumers think they're being screwed," says Mark Pettit, president of Atlanta-based advertising firm Creaxion. "It's time to become an advocate for the consumer and use that to sell the customer new service." Pettit would know. He was director of communications at MCI during the first days of competitive long-distance service. As an example, he points to MCI's 1993 marketing campaign for 800-number portability -- the first time business customers had the right to buy 800-numbers from any carrier, not just their primary long-distance provider. MCI's ads pictured customers dressed as prisoners. The tagline: You deserve freedom. "We wanted them to know we were on their side. We positioned it like 'I want my MTV,'" Pettit remembers. In the first year, MCI gained eight points of market share from AT&T.
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