Wireless Number Portability To Spur Churn: In-Stat Report

Scottsdale, Ariz.— Wireless subscriber churn is set to go into overdrive in November 2003 when carriers must comply with the FCC's demand for Wireless Local Number Portability (WLNP) — the ability for cellular subscribers to retain one phone number as they move from carrier to carrier.

According to In-Stat/MDR, a research firm owned by TWICE parent company, Reed Business Information, similar legislation in other markets overseas has driven churn rates as much as 25 to 50 percent higher. As far as impact on the United States is concerned, In-Stat predicts an additional 22.2 million churning subscribers in the first full year after WLNP is introduced.

Current U.S. wireless customers churn on average of 30 percent a year.

Retailers are poised to benefit when the FCC decree goes into effect, said Kenneth Hyers, senior analyst, In-Stat/MDR.

"There will be more new sales and new handsets associated with new customers," Hyers said.

In a customer survey, In-Stat found that a majority of respondents (52 percent) indicated that number portability would make them more likely to switch carriers.

The cost to the carriers of implementing WLNP will be significant. According to In-Stat, the U.S. wireless industry will spend between $900 million and $1 billion to roll out WLNP across their networks and the annual costs to support it will approach $500 million.

Customer acquisition for carriers, which now hovers at about $300-$400 per customer, will jump to about $500, Hyers noted.

He expects carriers to impose a moderate fee for end-users to recoup some of the expense, about 50 cents per month, and absorb the rest.

Wireless carriers have been battling WLNP, initially mandated in the 1996 Telecommunications Act, and had succeeded in pushing the deadline for implementation back from its original June 1999 deadline. This time, however, the FCC will hold firm and carriers will be forced to comply with the November '03 deadline, said Hyers.