Cell-phone users should be allowed to keep their numbers when they switch to new providers, a federal court ruled yesterday in rejecting an appeal by wireless companies.
Consumer advocates say not having that option is one of the biggest barriers preventing more wireless customers from switching in search of better service and prices. The Federal Communications Commission is requiring wireless carriers to provide “number portability” by Nov. 24.
Verizon Wireless and the Cellular Telecommunications and Internet Association (CTIA), an industry group, challenged the requirement in April, telling the U.S. Court of Appeals for the District of Columbia that the FCC overstepped its authority. They argued the rule will raise costs while doing little to promote competition.
The court’s three-judge panel rejected that challenge, calling the FCC’s action “permissible and reasonable.” The court also said the cell-phone companies waited too long to object to the rule.
“It is obvious that any regulation that frees consumers from staying with carriers with whom they are dissatisfied affords them protection,” the court said. “It was reasonable for the FCC to conclude that wireless consumers would switch carriers at even higher rates if they could keep their phone numbers.”
CTIA President Tom Wheeler said he was disappointed by the decision.
He said that if the FCC doesn’t provide more guidance on how number portability will work, “consumers will find chaos in the market.”
While fighting the requirement, cell-phone companies have been preparing to provide the service by creating technology, training workers and making agreements with competitors. Readiness varies among carriers.
Verizon Wireless, which has been working for months to meet the deadline, said it would push for Congress to undo the requirement.
“Requiring local number portability is bad public policy,” the company said in a statement.
“The resources required to fulfill this new mandate will unnecessarily be redirected from our core business activities: expanding network quality and reach, improving customer service, and initiating new services and products.”
The wireless industry estimates that number portability will cost more than $1 billion in the first year and $500 million each year thereafter.
Chris Murray, an attorney for Consumers Union, publisher of Consumer Reports magazine, called the court ruling a “a big win for consumers.”
He said the lack of portability particularly harms small businesses and self-employed people because when switching carriers they lose numbers known by their customers.
Congress decided in 1996 that people can keep their traditional local phone numbers when they change phone companies.
The FCC said soon afterward that wireless carriers should offer that ability to people in the largest 100 U.S. cities by June 1999.
The FCC extended that deadline three times, most recently granting a yearlong extension last summer after Verizon Wireless asked the commission to eliminate the requirement.
Most wireless companies argue that their industry is competitive enough and doesn’t need a regulatory boost.
They estimate there are about 146 million U.S. cell-phone subscribers and about a third of them change carriers each year.
Many cell-phone users outside the United States, in places such as Britain, Australia and Hong Kong, already have the option of keeping their numbers when they switch carriers.