Long-Awaited Cell Phone Rules Go Into Effect

Most U.S. cell phone users can now switch to a new wireless service without losing their telephone number under a long-awaited new regulation that has carriers bracing for lost customers and technical snafus.

The new federal regulations are expected to set off a scramble as customers line up to shop for the best cell phone deals. They no longer face the hassle of changing their phone number every time they change carriers. Also beginning Monday, consumers can move their home landline phone number to a cellular phone.

"We're seeing some survey data that suggests some 21 percent of the population with cell phones may be interested in doing that," the chairman of the Federal Communications Commission (search), Michael Powell, said.

"You can already see carriers competing very aggressively to get those new consumers," he said.

For wireless companies, the stakes are high. Any carrier that sees a customer exodus will suffer not only a loss of revenue, but will also take a hit to its public image if people line up in stores to cancel their service.

Phone companies have been gearing up for the switch with new marketing and price plans and new technology. They collectively spent about $1 billion to make their networks ready for the technical challenge of swapping phone numbers with rivals. SG Cowen forecasts wireless companies could spend as much as $3 billion more next year in efforts to hold onto their customers and win new ones.

Companies say the moves could still be plagued by technical snafus.

"We'll all experience pain in the short term." Randall Stephenson, chief financial officer of SBC Communications Inc. (SBC). SBC, along with BellSouth Corp. (BLS), owns Cingular Wireless, the No. 2 U.S. wireless phone company.

TSI Telecommunication Services Inc. (search), a company that serves as intermediary for the process of switching from one company to another, brought on 200 additional workers to handle the expected workload.

"We've heard estimates as high as 9 million on day one," TSI spokeswoman Helen Harris said. "We believe it will be more in line with 1 million, and we have engineered our systems to handle more than the anticipated volumes."

But if the number of requests approaches millions, she said, "It's reasonable to expect some hiccups on day one with an implementation of this magnitude."

Although the FCC has set a target of 21/2 hours for cell carriers to complete the transfer of a number to a rival, experts and most of the companies say the process is likely to take at least a day at first. The number transfer from a landline to a cell phone will take about four business days, Powell said.

"We'll be a heck of a lot better at this on Dec. 30 than on Nov. 30," said Howard Waterman, a Verizon spokesman.

Martin Dunsby, an analyst with the consulting firm inCode Telecom Group, said that it could take weeks before the process is "seamless and speedy" and that problems will persist much longer.

Powell advised consumers who are considering changing carriers to compare services.

"There's going to be a dizzying array of choices here," he said.

Cell phone users also need to review their current contracts to be prepared for any fees that may be charged for getting out of service contracts early.

The process to change companies is easy, Powell said. "You just contact the new carrier you want to switch to and they're responsible for handling the rest."

Analysts believe the new rules will shed light on what customers think of their current service providers.

Market leader Verizon Wireless may be the big winner due to public perception that it has the best network quality, analysts said.

"We think Verizon Wireless could be a beneficiary ... but only if it can maintain its network quality," said UBS analyst Colette Fleming in a note to clients.

Conversely, Sprint PCS (PCS) is plagued by the perception that its network quality is poor, analysts said. AT&T Wireless Services Inc. (AWE) just started a new ad campaign after its mLife ads failed to connect with customers.

Shares of BellSouth Corp. and SBC Communications Inc. closed up slightly on the New York Stock Exchange Monday. Verizon, which owns Verizon Wireless with Britain's Vodafone saw its stock finish up 30 cents at $32.50.

Stock in AT&T Wireless closed up 4 percent at $7.31 and Sprint PCS finished the day up nearly 6 percent at $4.61. Nextel shares rose $1.08, or about 4.7 percent, to $24.09.

Reuters and the Associated Press contributed to this report.