Carriers Might Profit From Cell Number Portability

Makarand writes "Carriers that are adding cell-number portability fees to your monthly cell phone bills (while fighting against actually implementing the requirement) may actually rake in profits from these levies as the total amounts collected will be more than the projected costs of meeting the FCC's number portability requirements. Although federal law requires that such fees be 'just and reasonable', it does not require reporting of their actual expenses. Consumer advocates feel that the number portability verification processes required are similar to those used by long-distance phone companies when a customer switches from one service provider to another and there is little reason to believe that expenses to meet portability requirements should vary widely among carriers and be so excessive as to bring profits for the carriers."

Comments

And ...

[Vanieter]

is this supposed to be surprising or something ?

We're talking about private corporations trying to make more profit after all.

"Although federal law requires that such fees be 'just and reasonable', it does not require reporting of their actual expenses."
That pretty much sounds like giving the cell phone corporations carte blanche.

Re:And ...

[Anonymous Coward]

"That pretty much sounds like giving the cell phone corporations carte blanche."

They can charge $100/minute if they feel like it. And there is nothing you can do about it. If you don't like it, then do not do business with them. Is that too difficult?

How long will this last?

[tynman]

What makes me ill about the FCC allowing them to charge for this is that we're still going to be paying that $1 "number portability fee" 20 years down the road when all the carriers have long since paid off the expenses of "upgrading" their networks. Does anyone know if there's a date set for when they can't stop milking us on this anymore???

Re:How long will this last?

[Anonymous Coward]

Well given that in America you must still pay a fee to have touch-tone dialing, 20 years after it was first introduced I'd say that the evidence indicates you'll all still be paying your number portability fee in 20 years time, too.

Breaking News

[thebatlab]

This just in....companies out to make a profit!! :)

Ok, seriously, this feels like just another article to get everyone all riled up over "the man". Yes, it seems outrageous what companies like Sprint and NextTel are charging. Does this mean that they aren't just trying to cover their costs and possible pot a bit of profit off of a new service offered to customers? Ok, maybe it seems like they want to make an excessive profit. Don't like it? Well, it looks like the gov't already has a watchful eye on them (if that's any comfort ;)) and is ready to impose regulations if they really get carried away.

Everything a company does can't be done just at cost. A company needs to make a profit to be able to fully survive. It looks like Verizon is able to recoup these costs thanks to existing reserves or they are willing to take the hit for increased customer satisfaction which is great to see. It's so great to see that if I was in the States, I would probably switch over to Verizon as soon as my contract with one of those other companies was up (or sooner!).

It's very hard

[toddhunter]

To be terribly surprised by anything like this. Just wait until the portability measures are implemented and forgotton too. Don't be surprised if the charges are still there, especially since they are effectively 'hidden' from view.

How soon will we run out of phone numbers again?

[zakezuke]

Ok, number portability... this is cool... I have to say keeping your old number when switching carriers, this is just spiffy. Paying a fee for it... well might as well, you are nickled and dimed on this issue anyway... not a big thing.

I live in the States, while I mobile use isn't quite up there with the rest of the world, we already have had create quite a few extra area codes. That pesky issue of running out of seven digit phone numbers.

What I want is a system where by you actually keep your freaking landline number, and dial a diffrent prefix to hit the users mobile or fax/data device.

Now that would be what I call real number portability!

Adding fees while fighting implementation?

[phalse phace]

Sounds like they're up to their dirty old tricks again. But then again, what are we to expect?

Not against profits, against OBSCENE profits

[release7]

Gotta love it. When you try to balance the playing field and have genuine, open competition by allowing number portability, the corporations can find a loophole to slant it in their favor. And once again we see that the embracing of deregulation by corporations is merely a ruse to get government off their backs so they can make obscene profits from customers.

I'm all for capitalism. However, it works best when there is a somewhat equal distribution of wealth. If corporations are permitted to squeeze every last dime from consumers and workers pockets, we will soon find our economy in shambles.

The regulatory pendulum has swung to far in one direction. It's time to put the regulatory squeeze back on corporations. We must ensure that, instead of leeching off our economic engine, corporations contribute to it in a healthy, productive way.

Re:Not against profits, against OBSCENE profits

[lyonsden]

But that's the amazing thing about the free market.

Some provider will get the bright idea that they can entice customers to switch to them because the offer "number portability at no extra charge". Thus Provider A gains customers and Providers B-Z have to figure out how to keep up or go out of business.

Re:Side effects-Nailing customers to a tree.

[grahamm]

It works both ways. While they do not want existing customers to port to another provider, I am sure that they would like other providers customers to port to them.

A Big Game....

[TygerFish]

It's all a game really. Living under pure capitalism is an attempt to make life as much of an adventure as possible and it produces some odd statements, none of them odder than the some of the ones generated by using a cell phone cellular.

The ellipses of cellular usage are bizarre things, from: 'The fact that American companies and ONLY American companies charge both the person who placed the call AND the person receiving it doesn't make us BOTH suckers,' to 'technological fashion demands that I pay a lot of money so my boss can reach me while I'm making love.'

Yes, the inner game of cellular use is a strange one and you've got to play it as smartly as possible on your end because you are an amateur while the people working for the multibillion-dollar corporations whose whole reason for existing is to replace the payphone are trained professionals who think of ways of rogering their customers on overtime.

So where does this leave you when it comes to number portability?

Stay flexible. As the poster from Finland pointed out, where he is, number portability lead to companies making big efforts to keep customers from switching to other companies. Something like that *might* happen here--you can certainly imagine that entering the mix when the legislation is enacted--but it is just as likely that the same class of businessmen who brought you the eternal copyright will certainly use the fees the law grants to hide another fifty-cents on your bill every month while kicking and screaming to avoid giving you a choice. Why would anyone expect them to do otherwise? There's no downside for them.

Your part of the game as a customer is to maintain all the flexibility, and the best bargaining position you can in dealing with them. Look at it this way. As things are now, switching out of a new contract with a provider already means, handing a company that has proven its lack of worth a stack of bills so you can own a dead cell phone.

Cellular providers hold all the psychological cards against switching so it's your job to find the company that combines the strongest mix of features with the strongest motivation for keeping you. If that means paying ten dollars a month so you can plan-hop when they offer something better than what you have, or jump ship if someone else outbids them, so be it.

Making the right decision can surprise you: I use a phone from one of the smaller fish in the big game and during the recent blackout, my web service functioned for a while even after my voice service didn't, and I ended lending my phone to several people whose service only came back hours later.

I think the best way of thinking about ones relationship with cellular providers is to think of it as friendly warfare. :D

Re:Portability in action

[netbiker]

Wrong. In a market where people will use all possible tricks to switch mobile phone providers at the drop of a hat, especially when they want to switch to a new mobile phone model, it's actually cheaper to subsidise the customer that stays:

You pay the same amount of subsidy on the phone as for a new customer, but you don't have all the acquisition costs, since the guy is already with you.

New customers that switch to your service and get a new phone and then bugger off after 6 months or a year only end up consting you money, since most likely they didn't subscribe to use the service, but only to score a new phone...

In the long run, you can actually attract customers if you build up a rep for good service and pampering your established customer base with new gizmos on a regular basis. That can, and will, make ppl switch to your service over someone else's. And why move away if you can get a new phone without the hassle of switching, carrying your "portable" number along etc?

Think about it.

It's a cash cow and has been for a while

[BrynM]

The last time we /.ers were talking about portability, someone tried to say that their company was going to lose money on implementation and that's why they were fighting it. He stated that they had already spent $100 million on the transition. That struck me as a challenge and I dug up some numbers. Sorry to quote my own post, but it seems pretty relevant to this - especially since the SBC numbers weren't quoted in the article.

This says that "Southwestern Bell charges 33 cents to each customer" and has been for since 1999. So let's see, this says that SBC has "6.9 million wireless customers across the United States" as of 1999. It's been 54 months since January 1, 1999 including this month. 54 * 6,900,000 = 372,600,000 months of total charges. 372,600,000 * $0.33 = $122,958,000.00 which makes a $22,958,000.00 profit(!!!!) on the $100,000,000.00 re-tooling you mention if it were SBC. That's not even counting the growth of the customer base since 1999!