Dueling Mandates

The Cellular Telecommunications & Internet Association has been pushing the FCC to mandate number portability between wireline and wireless carriers. It's a good idea. Conventional wisdom holds that intermodal competition — where cable companies, wireless carriers and telcos battle for the entire voice/data pie — is the Holy Grail. But it isn't yet within reach. Cable owns a majority of the high-speed data market, but cable telephony is still nascent. And while telcos have lost a big chunk of their markets to wireless competitors, only one in five wireless subscribers uses his mobile handset as his primary phone. That number must increase for intermodal competition to become more than a rumor.

For that to occur, customers must be able to port their wireline numbers to wireless phones. But it would be unfair to force wireline providers to fund the buildouts necessary to comply with a mandate that would cause them to lose more market share to wireless carriers. The wireless industry should cover the costs.

To make this burden easier, the FCC should drop its mandate for wireless number portability that takes effect in November. At press time, the CTIA was challenging the commission's authority to set such a mandate before a D.C. appeals court. The trade group argues that Congress limited the portability requirement to wireline carriers and that the FCC has no statutory basis for applying it to wireless. Proponents argue that such a requirement would boost competition because it would force carriers to improve service quality and lower prices.

That may be true, but the CTIA is correct when it says the wireless sector already is hyper-competitive. Prices have fallen 50% in the past five years, and 90% of all Americans have at least four wireless providers from which to choose. Also, with annual churn rates at about 30%, number portability's absence hasn't deterred subscribers from switching carriers. The CTIA says wireless number portability would cost the industry billions to implement. If so, it would be better to have the wireless industry spend the money to boost intermodal competition — or in other words, put its money where its mouth is.