The Principal of Portability

John Muleta prefers to focus on the possible rather than the impossible — on what can be done rather than on what can't. It's one of the factors behind the exasperation the chief of the Federal Communications Commission's Wireless Telecommunications Bureau has with wireless carriers, which have exhausted nearly every option in their effort to prevent number portability.

Muleta believes carriers should stop making excuses and do what needs to be done. At this point, that means getting their systems in place to guarantee they can handle the onslaught of porting requests that will come as soon as the mandate takes effect Nov. 24, and to educate consumers to ensure the process goes as smoothly as possible.

Muleta's get-it-done instinct comes naturally. His parents were faced with a difficult decision when Muleta was 10 years old and a Marxist government emerged in his native Ethiopia. Knowing that such regimes tend to be oppressive, Muleta's parents made the difficult decision to leave their home behind and move the family to America's heartland, first landing in Iowa and then eventually settling down in Lincoln, Neb. It was the mid-1970s.

“They were looking for the idyllic American environment and believed the Midwest was the place to find it,” Muleta said. “They felt that my future, and my brother's future, would be better there.”

The move to Lincoln wouldn't be the last time the family pulled up stakes. Muleta's father was a businessman who had to return to Ethiopia often. The leg from New York City to Ethiopia alone was 17 hours, and then there was the task of getting from New York to Lincoln, which even in the best circumstances is a logistical nightmare. So, the Muletas moved to Fairfax, Va., which turned out to be the final destination.

“They bootstrapped their way through life,” Muleta said. “They took risks, they were willing to go into uncharted waters. They're my heroes.”

Local number portability represents both a risky proposition and uncharted territory for wireless carriers. Deployment costs are at the top of their list of concerns. The Cellular Telecommunications & Internet Association estimates deployment costs will be $1 billion the first year and $500 million each succeeding year to keep systems and databases up to date. However, most of those costs will be recovered over time; some carriers already are tacking LNP surcharges onto customer bills, and the others are sure to follow.

Churn also is a major concern. Current rates industrywide are about 30%, but a study released in August by The Network Management Group suggested churn rates will spike to 50% after the mandate takes effect. With customer acquisition costs ranging from $150 to $300, and payback cycles as long as 14 months, carriers want to hang onto the customers they have for as long as they can. From their perspective, number portability is akin to flinging open the barn door.

Customer backlash is also a fear, should portability not go well. According to another study released last month by billing and customer care vendor Convergys, 49% of churning subscribers believe the transition will be completed via a single call to a service provider. “Carriers have built up an expectation that they will provision services quickly and efficiently,” said Rick Findlay, Convergys' director of wireless industry solutions. “Consumers are used to getting new services within a day, or even an hour. They're going to see LNP as just another application.”

The reality of provisioning LNP likely will be far different than the perception, however. A lot can go wrong. Customers' names will get misspelled, and some names won't match addresses. Customers won't realize that they must change handsets. Findlay estimated that half of all ports initially would fail.

That's why Verizon Wireless gave up the battle shortly after a federal appeals court in June affirmed the FCC's authority to set and enforce the mandate. Muleta wishes the others had taken the hint. Instead, Alltel, Cingular Wireless, Sprint, AT&T Wireless and Nextel filed a petition that asked the FCC for a declaratory ruling concerning guidance from Muleta that all carriers would have to port unconditionally. The carriers maintained they have the right to block porting until customers settle their accounts, either by completing a minimum term or by paying an early termination fee. The FCC ruled against them last month.

The effort wasted precious time, something that is anathema to Muleta, said one FCC source who requested anonymity. “He likes things to be done quickly and as efficiently as possible,” the source said. “He gets frustrated when people fixate on issues and processes and don't focus on implementation.”

That assessment might come as a surprise, since government agencies and bureaucrats typically aren't known for their quickness and nimbleness. That's something Muleta ought to know since he spent five years in the commission's Common Carrier Bureau (now the Wireline Competition Bureau), including a stint as chief of the bureau's enforcement division. However, Muleta also served an interim period as CEO of a Washington, D.C.-based systems integration firm before rejoining the FCC in January 2003. The experience contributed heavily to his current perspective.

“Rule number one in business is know what you want but think about what the other person wants,” Muleta said. “That's how partnerships are formed. You have to identify the obstacles and then focus on the things that allow you both to succeed.”

Muleta said he believes wireless carriers have focused for far too long on the obstacles standing in the way of number portability and should have spent more time thinking about the solutions. It's not that he minds the wireless carriers challenging his and the FCC's authority; he minds that they went about it in the wrong manner, he said.

“We believe in vigorous debate, but too often the wireless carriers' advocacy focused solely on their position and not on the real arguments,” Muleta said. “The better advocacy would have been for them to send over their technical people who could have explained what was happening on the street.”

The issue wasn't how to implement number portability, but whether the FCC had the right to force carriers to do it, according to a spokesman for Verizon Wireless. “We didn't think the FCC had the authority,” he said. “But while we were arguing our case, we also were getting ready for LNP. We agree with Mr. Muleta. It's time now to get the job done.”

Nevertheless, while encouraged by the recent barrier-free porting agreement reached by Verizon Communications and Verizon Wireless — which they believe could become a model for the industry, a notion that Muleta doesn't dispute — he couldn't resist chiding the carriers. “They could have done it six months ago.”