June 07, 2003

Good News for Cell Phone Competition

Good news for competition among cellular phone companies. Good news for those of us who will want to think about switching carriers without disrupting our network of cellular-phone contacts.

So why does the Washington Post's Mike Musgrove say it's a "victory for consumer advocates" rather than a victory for consumers? There's no technological reason why keeping your number needs to be difficult and expensive. And the rule of a well-functioning market economy is that there should be as few pockets of monopoly as possible. Yet Musgrove isn't willing to say that...

Cell Users Can Keep Numbers (TechNews.com): Mobile phone users should be able to keep their phone numbers if they switch to other wireless carriers, a federal court ruled yesterday, rejecting an appeal from big U.S. cell phone providers.

The decision was a victory for consumer advocates who argued that denying consumers the right to keep their phone numbers inhibits competition by locking in customers who might otherwise change carriers. The companies now have until Nov. 24 to comply with the ruling.

The Federal Communications Commission first ordered number portability in 1996, with an initial deadline of June 1999. The deadline was extended three times by the FCC in response to requests from wireless firms. But their luck ran out with the latest appeal, by Verizon Wireless and the Cellular Telecommunications and Internet Association, to the U.S. Court of Appeals for the District of Columbia.

The court called the FCC's rule "permissible and reasonable" and said the industry lost the appeal at least partly because it was six years late in filing.

Wireless companies said that complying with the rule would be expensive and that competition in the industry is already intense enough....

Posted by DeLong at June 7, 2003 09:51 PM | TrackBack

Comments

Try finding a radio station to listen to and think of how wonderful life will be when we really allow the type of oligopoly the media companies want. Of course, there will always be Fox. I guess, we will all soon soon be part of Fox. Competition is miserable except when you argue that there will be more competion if there really is less of it. Love you, Rupert Murdoch.

Posted by: dahl on June 8, 2003 09:26 AM

'So why does the Washington Post's Mike Musgrove say it's a "victory for consumer advocates" rather than a victory for consumers?'

Possibly because while the beneficaries will be consumers the advocates are the only one's doing the work to make it happen. I suspect the Mr. Musgrove, like most journalists, is interested in who was in the brawl. That the advocates are agents for consumers probably didn't even occur to him. What the brawl was about didn't either.

Agency isn't all bad :-).

Can the FCC change the rules before Nov 24th? What and who will prevent them? I presume the majority would be happy to change this rule, they do seem quite pro-incumbent don't they?

Posted by: ben on June 8, 2003 10:32 AM

My bet would be that those who say "consumer advocates" rather than "consumers" are those who believe that "free market" ("private enterprise + deregulation") is identical by definition to "free market" (Adam Smith). Therefore any intervention by actors other than corporations is a Bad Thing.

Unfortunately, many of your (Brad DeLong's) own profession encourage this kind of thinking in one way or another.

Posted by: Tom Slee on June 8, 2003 04:12 PM

Before anybody gets too excited, don't assume that this is sufficient to ensure the degree of flexibility to get the market benefits which are being looked for.

From a UK perspective - where this has been in place for quite a while - I rememeber trying to make a switch, and being given an obscure set of processes to work through which might or might not get the switch to happen, but with a period of anything up to several weeks of being in limbo between the two providers. I gave up before I started, which was presumably the idea.

I believe things are better here now, but not I assume as a result of the collective generosity of the providers. Of course we do have a regulator, which with all its flaws does at least believe that it is in the business of regulating. That may be the critical element missing in the US.

Posted by: Marek on June 9, 2003 05:57 AM

'So why does the Washington Post's Mike Musgrove say it's a "victory for consumer advocates" rather than a victory for consumers?'

The term I've heard is 'horserace' reporting. All events are win/lose for the political faction involved. Objectivity is redefined as 'he, said, she said', with no analysis allowed.

They couldn't say that it was a victory for consumers, no matter now obvious.

Posted by: Barry on June 9, 2003 08:14 AM

For people who do texting/SMS (like myself), it isn't a victory. For those who call technical support/customer (dis)service, it's not a victory. Cellular companies are not stupid. They KNOW that if number portability becomes a reality, there will be people who switch carriers.
The way SMS works is that you type a note out on your phone, which is then sent to your SMSC (Short Messaging Service Centre). The SMSC decides what network your recipient's on and forwards it there at which point that network decides how to route it to the other phone. To illustrate the problem, Switzerland, which does not have number portability, has a phone system set up which has assigned all numbers starting with +4179 to Swisscom. Hence, Voicestream's SMSC only needs to know to forward all numbers beginning with +4179 to Swisscom's SMSC. In the US, mobile prefixes are longer (+1650278 is a Voicestream prefix). So, Swisscom needs to program +1650278 to be routed to the appropriate Voicestream SMSC. But look what happens when number portability becomes a reality! The prefixes are now the entire number and all providers must keep their SMSCs in sync as soon as some poor sod changes their carrier.
Customer service is affected because, when I dial 611 on my phone, I expect to get MY mobile carrier. Once number portability is implemented and if I switch to AT&T or Cingular or whomever, who knows who I'll get when I hit 611. I'd MUCH rather have a known devil than an unknown (but definitely unhelpful) entity.
As for my third point, currently, there are very few carriers that allow a postpaid plan to exist without contracts. Most tie you in to a one (or two) year contract with huge penalty fees (I remember asking Cellular One back in the day how much breaking my 2-year contract would cost and getting a response of US$525 -- for a $40 bill!).

Posted by: Hasan Diwan on June 9, 2003 03:17 PM

re: cell phone number portability. Regardless of the nuts & bolts, if the internet can do it -- my domain name doesn't depend on who my ISP is -- why not cell phones?

Posted by: cg on June 12, 2003 10:51 AM

re: cell phone number portability. Regardless of the nuts & bolts, if the internet can do it -- my domain name doesn't depend on who my ISP is -- why not cell phones?

Posted by: cg on June 12, 2003 10:53 AM
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