Consumers have leverage on wireless deals
By PÉRALTE C. PAUL
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Divorcing your cellphone company is about to get easier. But to keep you faithful -- and contractually obligated -- wireless providers are preparing to whisper sweet nothings into your handset.
For years, if you left for another company, you would lose your phone number. But starting Nov. 24, the nation's 150 million cellphone users can keep their numbers after a breakup.
Several wireless carriers already have begun calling their customers to offer free or heavily discounted phones, rebates on monthly service fees or several months of free service. In return, customers are expected to commit to a one-year or two-year contract.
"They're doing what they can to lock them in," said Roger Entner, a telecommunications analyst at Yankee Group, a technology consulting firm. "There's certainly more pressure on the carriers to keep customers right now."
Most of the wireless companies vigorously fought the Federal Communications Commission's portability rule, arguing it would mean spending millions of dollars in technology upgrades and would create consumer confusion.
About a third of cellphone users already switch carriers every year, a practice known in the industry as churn. That rate has been kept at bay largely because most cellphone customers don't want the hassle of changing phone numbers and distributing their new numbers to friends and business associates.
But the churn rate may rise dramatically, at least in the first few months of portability, partly because consumers can keep their numbers and partly because all the major carriers will be heavily promoting their services to steal each other's customers.
"It's one of the benefits of this," said Allan Keiter, president of myrateplan.com, an Atlanta-based company that helps consumers compare cellphone rates and services. "It's easier to walk away."
To switch, cellphone users will have to purchase a new handset that's compatible with the carrier's network. And if they're under contract, they will owe an early termination fee that ranges from $150 to $240, depending on the carrier. But customers and consumer advocates welcome the choice.
"This will play out well for consumers and this will make the marketplace more competitive," said Audrey Curtis, executive director of Graduate Programs in Telecommunications Management at Stevens Institute of Technology in Hoboken, N.J. "They're going to compete on some other basis because they're now going to have to work to retain those customers."
For the companies, it's cheaper to keep an existing customer. Trying to sign up new customers can cost a wireless company anywhere from $200 to $250 per account, when marketing and other costs are factored in.
The portability rule goes into effect just days before the start of the traditional holiday selling season, one of the busiest and most competitive for the wireless industry.
Atlanta-based Cingular Wireless -- with 23 million customers the nation's second-largest cellular company -- has opened a customer retention center in Jacksonville, where it plans to hire up to 400 people.
Their mission: Persuade longtime customers from switching over to competitors by touting special plans, discounts and offerings such as rollover minutes and a global system for mobile communication capability, which allows customers to use their phones overseas.
Similarly, Verizon Wireless, the nation's largest carrier, has opened an 800-person call center in Murfreesboro, Tenn., to deal with the expected volume of calls linked to portability. Verizon also has been calling and sending mailings to its customers.
As part of its marketing strategy, Verizon, which has 34 million customers, has been pushing portability.
"We're encouraging people to ask around and see what is your carrier charging you today," said Jim McGean, president of the company's Georgia-Alabama region.
Verizon probably can afford to take a more laissez-faire attitude, analysts say. The company has one of the most extensive wireless networks in the country and has one of the lowest churn rates in the industry.
And while most cellular providers say their plans have a set price, customers can make deals and get better packages not generally offered.
How much negotiation room you might have will depend on how long you've been a customer and whether you're still under contract.
"If you are fairly satisfied with your carrier and don't feel the need to switch, you may call just to see what you get," said myrateplan.com's Keiter.
That's what Martha Hutchinson did. A 10-year Cingular customer, the Woodstock resident recently renegotiated her plan.
"I know a lot of people are jumping around looking for better rates," she said. "But they were very accommodating. I was pleased."
Kathryn Simpson, vice president of information technology at Atlanta-based Acuity Specialty Products Group, soon will be negotiating her company's cellular contracts.
Acuity, which makes chemical products for institutional, industrial and retail markets, had a cellphone bill of nearly $500,000 last year. So the company plans to disconnect half of its six providers.
With 300 company-owned phones in use, curtailing the number of service providers will help Acuity's goal of trimming costs by 25 percent next year, Simpson said. That includes the cost of replacing equipment.
Besides offers of free phones, some carriers are offering more daytime minutes or are including nights and weekends on plans that don't already have them.
"The carriers don't generally call you when they lower their prices," Keiter said. "But a lot of carriers are willing to work with you on changing your plan."
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