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Consumers Anxious to Switch Cell Carriers After Ruling

Aired November 24, 2003 - 14:11   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

MILES O'BRIEN, ANCHOR: Well, it's the day that thousands of cell phone users have been waiting for, to have a truly mobile, mobile phone. A federal rule takes effect today that allows you to switch cell phone carriers but keep your phone number.
Some carriers say it's not laissez faire, while consumers call it freedom.

CNN's Chris Huntington, live from New York with more on the big switcheroo.

Hello, Chris.

CHRIS HUNTINGTON, CNN CORRESPONDENT: Miles, good afternoon.

Well, it's a big deal for consumers if it all works out. And there certainly are some concerns that there might be some technical snafus or some billing problems.

But by and large, this should be terrific for consumers. You should see lots of deals coming down coming down the pipeline.

Of course, it's a big headache for the carriers, who have to ramp up their technology. They have to, in many cases, add call centers, extra people to handle the volume of people wishing to switch their phones.

I'm here at a Verizon storefront in midtown Manhattan, New York City, where they say they've seen double at least double the traffic that they ordinarily get here.

They're telling us that in other storefronts up in New England, they've seen as much as eight times the normal foot traffic.

Let's take a look at some numbers of what's expected today across the industry. Best guesstimates put it at about maybe six percent of U.S. cell phone customers will look to just jump on today's deadline and go ahead and switch carriers and take their numbers with them. That's about nine million customers switching.

For the full year ahead, folks are looking for as many as 50 percent of the nearly 150 million cell phone carriers to go ahead and churn to another account. Churn is the industry buzzword for this. That 50 percent churn rate is much higher than the average; usually runs 30 percent per year.

We spoke with FCC chairman Mike Powell, who of course has been the lead sled dog in pushing this. The industry has been fighting this, pushing deadlines back and back. But finally, Powell said, you've got to do it now. And he said, yes, there may be some problems.

(BEGIN VIDEO CLIP)

MICHAEL POWELL, FCC CHAIRMAN: I think there always could be hiccups when you have such a monumental change. But we're pretty confident they're ready. They say they're ready. They've spent years preparing for today, and they've been testing pretty aggressively over the last several weeks. They've known this is a big sea change. So I'm pretty optimistic this will go well for consumers.

(END VIDEO CLIP)

HUNTINGTON: It will go well for consumers, Miles, but there could be some problems for the carriers. It costs them money, regardless of whether they're on the winning end or losing end of a switchover. So initially all of the carriers are going to be bearing a heavier burden, as they handle this switcheroo time -- Miles.

O'BRIEN: All right, Chris Huntington. Thanks very much.

Before you switch, be certain you're not headed for a fight over little details like those cancellation penalties that might be in your contract.

CNN's Daniel Sieberg, our wizard of wireless, joining us live from the local mall here in Atlanta with some details, some reaction, and some dos and, more importantly, the don'ts.

Hello, Daniel.

DANIEL SIEBERG, CNN CORRESPONDENT: Hello, Miles. That's right.

There are a lot of questions you need to ask yourself as a consumer before you make the leap to a new carrier. And to help us answer some of these questions is Allan Keiter. He formed a website called MyRatePlan.com. You're the president of that site.

Allan, let's talk a little bit about what consumers need to know, because there are a lot of sort of nuances to this story, if you will.

Do they need to, for example, get a new phone if they switch to a different carrier?

ALLAN KEITER, MYRATEPLAN.COM: Yes, most cases they do. The technologies between carriers are incompatible in this country. So if you switch from one carrier to another, you're going to generally need to purchase a new phone.

SIEBERG: Well, what about any fees that are involved? We've heard about termination fees if you cancel a contract. What about a portability fee?

KEITER: There may be small fees. You should ask your new carrier if they're willing to pay the fee from the old carrier. But even if they're not, those fees should not be more than a few dollars.

SIEBERG: OK. Now we have a list, if we can bring it up, of some of the pros and cons that we've put together.

First of all, a pro being you can keep your number if you go to another wireless carrier. You might save some money, and you might get some more options.

Now, is there anything you wanted to add to that, as well? Definitely a benefit for consumers?

KEITER: There's no question that all consumers will benefit. Over time prices should improve.

And I think -- it's not apparent, but behind the scenes I think the carriers are working to improve their customer service, and they're working to improve their coverage areas. So I think going forward, consumers will be less tolerant of bad service.

SIEBERG: Right. Now this going forward, again, plus we've got a list now, as well, of some of the cons or at least the things that are in the way. That would mean probably buying a new phone or possibly a new phone.

You also might get locked into a new contract. So you might want to look out for that, as well. You might not want to sign a new two- year contract.

KEITER: Yes. If you can, you generally have to sign a new contract. But if you can, you generally want to stick to a one-year deal. Most of the carriers are offering slightly better deals to go for two years instead of one. But in most cases, the added incentives aren't really worth it in our opinion.

SIEBERG: And important to switch over to your new carrier before you cancel your old service?

KEITER: Absolutely. If you do it the other way around, your old phone number goes back into the pot of your old carrier, and you lose the opportunity to port it.

SIEBERG: All right.

Speaking of consumers, I'm joined now by Michelle Nash who works for Mercedes Benz (ph). And you're here at the mall in Atlanta.

Now what question do you have for Alan in terms of going forward and any questions for him as a consumer?

MICHELLE NASH, CELL PHONE CUSTOMER: Starting off, instead of doing it now, waiting until later, are we going to see better rate plans? Because I know everybody's doing the switch now. But when time slows down and people aren't doing it several months from now, are we going to see even better rates?

KEITER: Well, it might actually be good to wait for a couple of reasons.

First of all, this is a brand new process. And so there's bound to be some glitches between the carriers as this goes forward.

Also, this is a very happy shopping week so you might be waiting quite awhile to get the switch to happen.

I think going forward after the holiday period ends, one or two carriers may realize they're not doing well as part of this process, and you may see them lower prices. And so we may see some better pricing at the beginning of 2004.

SIEBERG: All right. Well, Michelle Nash and Allan Keiter, thanks so much for joining us.

And again, Allan, where can people go on your web site for more information?

KEITER: Visit our home page at www.MyRatePlan.com. We have all the carriers and all the web -- phones in your local area.

SIEBERG: All right. Allan Keiter, thanks so much for joining us.

Again, Miles, that's the message here. Do your research, do some homework, look around, there's a lot of information out there on the Internet. And do that before you make your decision.

It's always the sort of grass is greener philosophy with this, where people think that they might get better service somewhere else. You might want to look into the coverage area, all kinds of things to do with this story. But good for consumers which is what we've been hearing.

Miles, back to you.

O'BRIEN: All right. Hopefully people will have time to do all the homework associated with all this. Daniel Sieberg, thanks very much.

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