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June 25, 2003

Verizon Quits Fight on Rule for Cellphone Numbers

By MATT RICHTEL

Verizon Wireless said yesterday that it would drop its opposition to a government plan to allow callers to keep their wireless phone numbers when they switch carriers. The about-face by Verizon Wireless, the nation's largest mobile phone company, probably means that some other mobile phone operators will have little choice but to yield to the arrangement.

Verizon, which has led a protracted, industrywide effort to prevent the Federal Communications Commission from requiring that cellphone numbers be portable from provider to provider, said it now supported F.C.C. rules scheduled to take effect on Nov. 24 and would end its legal and legislative campaign against them.

Several competitors in the wireless industry said they were surprised by Verizon's announcement and would continue to fight against the changes even without Verizon's cooperation. The industry has argued that the F.C.C. lacks the legal authority to impose portability, and that carrying out the rules would cost it hundreds of millions of dollars.

But in a speech yesterday in New York at a conference for industry analysts, Dennis Strigl, the president and chief executive of Verizon Wireless, said it was time for mobile phone carriers to "stop moaning and groaning" about the portability requirement.

Mr. Strigl said the timing of the announcement was related to a decision earlier this month by a federal appeals court rejecting the industry's argument. The wireless companies contended that the portability requirement was not necessary to protect consumers. "The case was lost in court and now it's time to get on with providing customers with what we believe they want," Mr. Strigl said in an interview. "We're wasting too much time on this."

Roger Entner, a wireless industry analyst with the Yankee Group, a market research firm, characterized Verizon's change in policy as "a 180-degree turn" that removed the single biggest obstacle to portability.

Verizon, he said, had been "the standard-bearer of the opposition against wireless number portability." And now it has "basically turned into the biggest proponent," he said.

Mr. Entner added that Verizon appeared to shift because the legal and legislative options were running out and it did not want to seem like a sore loser. "This means there is no major opposition on the carrier side to portability," he said.

That conclusion was echoed by Senator Charles E. Schumer, Democrat of New York, who has been pressing the Senate to support portability and reject the wireless industry's delaying efforts. "It pretty much ensures that by November there will be portability," Mr. Schumer said, noting that Verizon had been particularly aggressive in lobbying Congress to prevent the F.C.C. from imposing the requirement.

Mr. Entner and other industry analysts say portability will increase the number of customers who switch wireless carriers — a trend that is already common and costly to the industry. Of the 145 million cellphone subscribers at the end of March, 40 million to 45 million will switch carriers this year, Mr. Entner said. If portability were in place, 10 million to 12 million more could be expected to switch, he said.

Mr. Entner predicted that the cost to the industry of portability would be $2 billion annually for subsidizing new handsets, activating service and paying sales commissions.

The F.C.C. has maintained that portability will be good for competition. But last July, at the industry's urging, it agreed to delay the effective date of the regulations until this coming November. It was the third such delay by the commission.

Jennifer Bowcock, a spokeswoman for Cingular Wireless, one of the companies that said they would continue to resist the requirement, said Cingular opposed portability because there were more important matters the industry should spend money on, like investments in building the wireless network.

Mark Siegel, spokesman for AT&T Wireless, said the company would press ahead with an appeal of the recent court ruling. Verizon's decision "doesn't change the fact that number portability is bad public policy," he said.

But the move may not be at all bad for Verizon, according to industry analysts. While the company has spent $50 million to prepare its system for portability, it may wind up gaining more customers than it loses, said Blake Bath, a wireless industry analyst with Lehman Brothers. Mr. Bath said Verizon had high customer satisfaction rates and was in "a great position" to capitalize on the dissatisfaction of customers who are signed up with its competitors and could be enticed to switch.


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