Cellphone number portability has barriers

Seventyper cent of an estimated 18.5 million Canadian mobile phone userscan switch service providers with Wednesday's arrival of wireless number portability — but is it a significant arrival, and what are the obstacles and costs?

It's clear that cellphone users eager to exercise their newfound ability to switch carriers and still keep their phone number may find doing so more difficult — and costly — than they anticipated.

But while most industry professionals and observers interviewed by CBC News Online view the capability to move a phone number to or from a cellphone — or a traditional wired telephone across the wired-wireless divide — as a positive development for consumers and ultimately the industry, they also regard it as insignificant in the short term.

"We think it will be a non-event," Odette Coleman, manager of corporate communications for Rogers Wireless Inc. in Toronto said, describing its anticipated impact on the carrier as "business as usual."

Industry and analysts alikeare unimpressed based onhistorical knowledge: customer defections in the United States when wireless number portability was introduced there amounted to fewer than 10 million people, and a range of other obstacles remain to the change, which was mandated by the Canadian Radio-television and Telecommunications Commission (CRTC).

New phone needed

One of the key barriers that could confront consumers moving between service providers is that they will almost certainly have to buy a new cellphone.

People who want to switch to or from the Rogers network or its Fido brand will need to do that, said Elvino Sousa, director of the wireless lab at the University of Toronto.

Rogers' network uses the GSM (Global System Mobile) wireless communications standard, whereas other carriers primarily use the competing CDMA (Code Division Multiple Access) standard.

"They're different technologies," Sousa, a professor at the university's department of electrical and computer engineering said.

"For you to be able to take your phone somewhere else and use it, the technology has to be compatible, otherwise you have no hope."

But even if people have a phone from a carrier that uses the same technology used by the service provider they plan to move to, it is still unlikely to work.

Cellphones locked to networks

"In Canada, and most places around the world, you can't take your handsets with you to a new carrier because handsets work with a network in a very interactive way," Jim Johannsson, director of media relations at Telus Corp., said.

Coleman confirmed the statement.

"Every Canadian carrier offers devices optimized for their own network and they don't let you use devices from other carriers," she said.

What's more, customers of Rogers and its Fido brand — already limited to which carrier they can use because both services use the GSM standard — will also have to buy a new phone if they want to switch between the parent or its subsidiary, Coleman said.

Even so, that shouldn't prevent people from switching, Johannsson said, noting that most carriers offer discounts on cellphones to customers who sign term-based contracts.

"Those who opt to choose a longer contract generally get a larger subsidy," he said.

There's a good reason that carriers want to lock customers in to a long-term contract, Lawrence Surtees, vice-president and analyst at market research firm IDC Canada, said.

"They don't see a profit on a subscriber unless they've been with them for two years," Surtees said, explaining that it takes that long to recover the costs associated with obtaining and keeping a customer, including the subsidized cellphones.

Switch without new phone fee possible

But people who may have left any of the service providers for a competing carrier in the past and are contemplating switching back to their original cellphone company should still be able to use their original phone, if it's still around.

"As long as the old phone is a Bell phone, the customer could port a number from an existing account at a different carrier to Bell and use the old phone," Paolo Pasquini of Bell said.

Representatives of carriers CBC News Online spoke to confirmed a similar arrangement.

And in a bid to scoop new customers, Virgin Group Ltd. founder and chairman Richard Branson, whose Virgin Mobile service operates in partnership with Bell in Canada, announced Tuesday in Toronto that anyone who switches to Virgin on March 14 will get a free cellphone.

Branson made the announcement during a publicity stunt in which he was suspended from a cage hanging from a crane in the city's downtown core, representing the number restriction Canadians can now free themselves from.

The move is indicative of things to come as carriers try to retain their existing customers, while wooing new ones, according to Surtees.

"It is going to be a constant battle of one-upmanship to keep the base," he said.

Costs associated with switching

Even if people moving from one carrier to another get a free phone or use an old one to avoid an expense, they will likely still have to pay fees linked to signing on with a service provider.

None of the carriers CBC News Online spoke with plan to charge a direct fee to move a customer's phone number to or from their networks, according to their representatives. But the same cannot be said for other costs.

"Any customer coming to use would be considered a new customer so there are some account fees like account activation," Johannsson of Telus said, echoing comments by rival companies.

Contract penalties may also come into play for some customers, Coleman of Rogers said.

"You need to take into account the early cancellation fee from any customer switching from one carrier to another unless of course their agreement [has] come to term," Coleman said.

And other inconveniences remain, such as the difficulty of transferring a contact list from one phone to one with the new carrier, said Ronald Gruia, an analyst at the business research and consulting firm Frost and Sullivan Inc. in Toronto.

Gruia pointed to European carriers that offer a service that lets customers store their contact list on the network, enabling them to use it with any phone — for a fee.

"Moving your contact list is very difficult here," Gruia said. "[Wireless service] companies are missing a big opportunity."

Market growth predicted

Whatever opportunities Canadian companies may be missing, they all stand to gain, according to Ken Wong, a professor of business and marketing at Queen's University in Kingston, Ont.

"There's a tremendous opportunity that hasn't received a whole lot of attention," Wong told CBC News Online.

Because the number portability also crosses the wired-wireless divide, it means that a barrier to people figuratively cutting the cord on their phone at home and moving to a cellphone only is now gone, he said.

Surtees of IDC agreed, describing the capability as a "windfall" for wireless carriers.

"The opportunity for local subscribers to ditch their wireline may give a boost to wireline substitution … or moving your number to a cellphone only," Surtees said.

"It isn't just good for the consumer … it's of great benefit to service providers."