Subject: [NEXTEL-1] The Principal of Portability

From: [email-masked]
Date: Mon, 03 Nov 2003 14:42:10 -0500

The Principal of Portability
November 3, 2003 11:26am
Wireless Review

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.”

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