WLNP Winners & Losers

Posted: 1/2004

WLNP Winners & Losers
Analysts Cite Verizon Wireless as Early Victor
By Josh Long

Verizon Wireless, the No. 1 U.S.
mobile carrier, appeared to be growing just one week after a new federal rule
went into effect allowing consumers to keep their wireless phone numbers if they
switch providers, analysts say.

As expected, Verizon Wireless appears to be attracting
customers based on the perception of its network coverage and quality. T-Mobile
USA appears to be gaining customers based on the perception of value, Merrill
Lynch analyst Linda Mutschler said in a Dec. 1 research note. Also as
expected, particularly for the New York area, the most commonly cited carriers
from which customers are parting appear to be AT&T Wireless and Sprint PCS.

Analysts with Wachovia Securities made similar remarks in a
Nov. 25 research note, citing Verizon Wireless as an early winner, explaining
while we spoke only with a limited number of stores, most salespeople we
spoke [to] said they received the most porting requests from users wanting
to leave AT&T Wireless and Sprint PCS.

Verizon Wireless has declined to provide any hard numbers as
to how many customers it has won or lost, but spokeswoman Brenda Raney says stores
all reported above average business on [Nov. 24], the day WLNP took effect,
and a majority were people looking to become Verizon Wireless customers from
another carrier.

Overall, the initial level of requests to switch providers
fell below analysts estimates. TSI Telecommunication Services Inc., a thirdparty provider of
number portability for five of the six largest wireless carriers, says 80,000
porting requests were initiated Nov. 24. NeuStar Inc., the LNP administrator for North America,
declined to provide any figures on the number of porting requests it logged the
first week.

They [carriers] see a lot of extra attention but not a lot
of people switching carriers, says Gerard Brikkenaar van Dijk, a spokesman
for NumberPortability.com LLC, a New York company providing information about
the issue.

Jeff Fugitt, director of marketing with Traqwireless Inc., a
mobile communications management company working with the Fortune 1000, says
about 60 percent of companies surveyed said they are likely or definitely
going to port some numbers. But they are going to wait and let the system get
all the kinks out before they do that. It is critical they dont have a hiccup
in their wireless service, he adds.

Gartner Inc. advises in a report enterprises should wait
until the first half of 2004 to move large groups of users to a new provider, permitting time
for service providers to put the appropriate processes in place and … lessen
the risk of loss of service and lost phone numbers.

Image: Households Likely to Switch by Wireless Provider

Brikkenaar van Dijk says many consumers have complained on the
Web site about AT&T Wireless. One disgruntled cell phone user says she and her husband made
a request to switch from AT&T Wireless to Verizon on Nov. 24. As of Nov. 30,
they still were unable to use the Verizon phones. I made a call to Verizon
and per the Verizon rep, AT&T is having major system problems and has not
responded to their request to release our phone numbers, Debbie Tague says.

An AT&T Wireless spokeswoman did not immediately return a
phone call seeking comment on its ability to port numbers during the first week
of WLNP.

Current Analysis analyst Eddie Hold says fourth quarter
results should shed some light on how wireless carriers are faring. The fourth
quarter is definitely the time when there are more people coming out of
contract than there would be in any other quarter, says Hold.

Jeff Kagan, an independent telecommunications analyst,
cautions against judging the winners and losers too soon. This is a work in
progress and will continue to be for the next year, he says. Companies
will learn a lot from their wins and losses and make changes in their marketing
efforts.

I dont expect the best deals and most aggressive
marketing until after the first wave of early switchers are done and after the
annual holiday rush, adds Kagan. We may be able to start getting a better idea
after the first of the year.

Analysts with RBC Capital Markets report in Dec. 1 study WLNPs
impact on churn the percent of customers ditching their current provider q
should become evident only after the wireless carriers post their first- and
second-quarter results for the 2004 fiscal year.

Some analysts say LNP will erode earnings in the wireless
industry, but possibly create a wider gap between the weak and the strong. We
will not know for weeks, months or even a year whether there are any structural
changes to the wireless industry and business model, analysts with J.P.
Morgan Securities Inc. wrote in a Nov. 25 research note.

BETTER SAFE THAN SLAMMING

Spurred by wireless number portability, VoiceLog LLC rolled
out a speech recognition-based third-party verification package that lets
wireless carriers confirm customers decisions to move their wireless number
from one service to another.

VoiceLog says the program gives wireless carriers a tool to
document customer change requests as a safeguard against slamming complaints by
competitors, customers, or state and federal consumer protection agencies.
Although federal regulations exempt commercial mobile radio services (a category
that includes cellular and PCS carriers) from verification requirements as long
as they are not required to provide equal access to common carriers for the
provision of telephone toll services, VoiceLog says portability increases the potential for
unauthorized service changes.

VoiceLog also offers a TPV variation to satisfy the federal
E-Sign Act, which makes electronic signatures as valid and binding as
traditional signatures. VoiceLog allows a customer to sign an electronic
cellular service contract via the phone, without requiring a physical signature.
Wireless TPV starts at 50 cents per order, but service providers that offer
bundles of local, long distance and wireless will benefit from special
discounts.

SURVEY SAYS …

How many consumers will switch wireless carriers? Depends on
which poll you believe. Here are some predictions.

PORT CUSTOMER PHONE BOOKS, TOO

With an eye to increased service churn in the wireless sector due to
portability, FutureDial Inc. has launched the Cellphone Service Station (CSS), a software application for
transferring phone book and contact information between more than 140 mobile
phone models.

Even though they can keep their same phone number, subscribers who switch
cellular carriers often must change handsets too. Those who keep important
contacts in their mobile phone books can use CSS to avoid re-keying the
information.

Losing phonebook information when upgrading handsets has always been a
problem facing consumers. [Wireless number portability] creates urgency for
wireless carriers, retailers and corporations to find a solution, says
Christopher Waldo, vice president of sales and marketing for FutureDial. Cellphone
Service Station provides a productive business tool to turn that issue into a
benefit.

Available for license directly from FutureDial and its authorized distributor
Brightpoint Inc., the service is targeted to wireless carriers, retailers and
corporations. CSS supports phones from Sprint PCS, Verizon Wireless, AT&T
Wireless, Cingular Wireless, T-Mobile USA Inc. and MetroPCS. As new mobile
phones are launched into the market, FutureDial provides software updates
through Web downloads.

Carriers can use CSS as a competitive differentiator, while wireless
retailers can offer phone book swapping services at customer service desks
as a value-added service, says a company spokesperson. Besides porting phone
book information, CSS allows backup and restoration of phone books in case of
theft, loss or damage, and lets users print out reference copies of phone book
information.