Late last night, the FCC released an order that will shorten the time to move most landline telephone numbers from one carrier to another from four business days to one business day. This change, though significant, will not take effect for at least a year, and so will not have an immediate effect on carrier operations. This order, which was adopted earlier in the day at the FCC’s open meeting, also opens a rulemaking that will consider other ways to streamline the number portability process. The order and the press release describing it are available on the FCC’s web site at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-09-41A1.pdf (order) and at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-290708A1.pdf (press release).

OVERVIEW

The roots of this decision trace back to November, 2003, when the FCC implemented number portability for wireless services. Wireless providers created a process that permitted them to port telephone numbers in a few hours, and were concerned that porting numbers between landline and wireless providers (known as intermodal porting) would, instead, still follow the late-1990s rules that required up to four business days to switch numbers between carriers. Industry efforts to reach consensus on a shorter period failed, so FCC action was required.

This order mandates a maximum time period for “simple ports” – typically those involving a single telephone line – of one business day. The new maximum interval eventually will apply to all porting, but is not likely to come into effect for about one year for larger carriers and about 18 months for smaller carriers. The new rules will apply to all providers, including wireless, traditional landline and voice over IP providers, although it is likely that wireless carriers will continue to use shorter intervals when porting among themselves.

The order also asks for comments on how the porting process can be improved. As described below, the FCC’s questions focus on ways to streamline the process for both simple and non-simple ports.

WHAT THE RULE REQUIRES

The order changes only one element of the FCC’s rules on number portability: Rather than allowing carriers to take up to four days to switch a telephone number to a new carrier, the rules will require the change to take no more than one business day.

The revised rule applies only to “simple ports.” A simple port is one that meets the following requirements:

  • It does not involve any unbundled network elements, such as loops;
  • It involves only “an account for a single line;”
  • It does not include “complex switch translations;” and
  • It does not include a reseller.

Even with these restrictions, most number portability involves simple ports, and the vast majority of residential customers fall under the simple port rules.

More complex ports are not subject to these rules, and also are not subject to the fourday porting interval. This means that most ports involving business customers can take longer than four business days.

The new rule will cover all simple ports, regardless of the providers involved. In particular, and in response to comments from AT&T, which asserted that “some cable VoIP providers claim that they are not subject to the porting interval,” the FCC reiterated the determination in its 2007 voice over IP number portability order that all “interconnected VoIP providers are obligated to take all steps necessary to initiate or allow a port-in or port-out” in compliance with the FCC’s rules. Thus, voice over IP providers will be required to meet this requirement in the same way as other carriers.

There also are no special rules for wireless providers, so as a matter of regulatory requirements they will be subject to the one-day period, rather than the 2½ hour window they use today. However, it is likely that wireless providers will continue to comply with their voluntary agreement to use the shorter interval.

IMPLEMENTATION

The new rule will not be implemented immediately. The FCC concluded that it would be necessary to modify the “provisioning process flows” established by the telephone industry in the late 1990s to account for the change in the porting interval and that, once those changes were made, service providers would need a significant period to modify their own internal systems.

The FCC also concluded that smaller carriers might require additional time to comply with the new requirements. As the order explains:

[W]e recognize that some providers that do not employ automated systems for handling port requests and have limited resources to upgrade their systems may have to make more significant changes or upgrades than other providers that already employ automated porting interfaces.

In light of these considerations, the FCC adopted the following implementation schedule:

  • The order will become effective 30 days after official notice is published in the Federal Register. This is the normal period for an order to become effective.
  • The North American Numbering Council, the FCC’s official advisory committee on telephone numbering issues, will have 90 days from the effective date of the order to adopt new processes to implement the order and submit those processes to the FCC
  • Landline carriers with two percent or more of the total telephone lines in the country and all wireless providers other than Tier III providers will be required to implement one-day porting intervals within nine months of the date the new processes are submitted to the FCC.1
  • Landline carriers with fewer than two percent of the total telephone lines in the country and Tier III wireless providers will be required to implement one-day porting intervals within fifteen months of the date the new processes are submitted to the FCC.

Based on these time frames, larger carriers will have between ten and thirteen months, and smaller carriers will have between sixteen and nineteen months, to implement one-day porting. It is most likely that the total amount of time will fall towards the far end of these periods because it probably will take most of the allotted 90 days for the North American Numbering Council to adopt the new processing flows. However, the chairman of the council indicated that the local number portability working group would begin working on this issue as soon as the FCC’s order was released, so it is possible that the processing flows will be adopted more quickly.

It is noteworthy that the order does not include any provision for FCC approval of or comments on the new processing flow. This reduces the implementation period by several months.

COST RECOVERY

One other question the FCC considered was whether it should adopt a specific cost recovery mechanism for the change in the porting interval. The FCC declined to do so.

The FCC focused its analysis of this issue on three considerations. First, the FCC noted that its existing rules already address cost recovery issues, permitting carriers to recover their costs through mechanisms like surcharges and inclusion of ongoing number portability costs in the rate calculations.

In addition, the FCC concluded that small carriers that would find the expense of implementing a one-day interval burdensome have the ability to ask state regulators to modify or suspend their compliance with the new rule, through a specific provision of Section 251 of the Communications Act. In fact, some smaller carriers used this process to delay their number portability obligations when the initial rules were adopted, and some of those modifications and suspensions are still in effect.

Third, the FCC noted that carriers that believe that the new requirements are unduly burdensome may seek a waiver from the FCC itself. The order indicates that any waiver request would have to include information on “the number of port requests [the carrier] typically receives on a monthly basis as well as the specific costs that complying with the reduced porting interval would impose.”

One carrier, Windstream, argued that the existing mechanisms for recovering costs were not sufficient because they would not meet “competitive neutrality” requirements in the Communications Act. The FCC concluded that this issue had been addressed in its previous orders, which decided that the competitive neutrality requirement did not mean that carriers must be provided with a mechanism to recover all of their costs, but only that a “carrier’s ability to compete for subscribers” must not be “significantly affected.”

FURTHER NOTICE ISSUES

While the order is very specific, the further notice of proposed rulemaking is quite vague. The FCC does not propose any specific rules or changes to improve the number portability process. Instead, it asks for comments

to refresh the record on what further steps the Commission should take, if any, to improve the process of changing providers and provide any new ideas that reflect and build upon the new one-business day interval.

The individual issues identified by the FCC for comment are:

  • Whether the definition of simple ports should be modified.
  • Whether the validation process for number portability should be modified to include different or additional information.
  • Whether there should be a standard form for local service requests used to start the portability process.
  • Whether there should be a standard time period for the carrier losing a customer to respond to (as opposed to implement) a porting request.
  • The nature of the benefits and burdens of any new rules for number portability.

This list does not appear to be intended to be inclusive; rather it is suggestive of the types of issues that the FCC hopes to address. Comments and reply comments will be due, respectively, 30 days and 60 days after notice of this proceeding appears in the Federal Register.

Given the general nature of the FCC’s initial framing of the issues, it is likely that this rulemaking will be used to address a wide array of number portability issues, ranging from the treatment of non-simple ports to the basic mechanisms for implementing a porting request. The breadth of the proceeding could lead to significant changes in the porting process, but also could delay action on narrower issues that the FCC might have been able to address in a more focused way.

COMPETITIVE IMPACT

The most significant effect of this proceeding likely will be to make it easier for customers to switch between landline and wireless service. This change will benefit wireless providers more than landline carriers, and it is one reason that the wireless industry supported reducing the porting interval.

Conversely, it is unlikely that the new rules will have much effect on wireless-towireless number portability. As noted above, wireless providers are likely to continue using their existing processes and to maintain the 2½ hour wireless-towireless porting interval.

Reducing the porting interval also may reduce the opportunities for landline carriers that are losing customers to engage in “winback” marketing. While FCC decisions forbid the carrier losing a customer from using porting information to target winback efforts, the longer the interval between the time the customer decides to switch and the time the customer actually changes carriers, the more opportunities there are for the old carrier to change the customer’s mind.

It is possible that, as a consequence, carriers may attempt to take other steps to impede customer changes. These steps could include trying to have customers agree to freezes on carrier changes; requiring carriers that are seeking to port numbers to provide information that is not easily available, such as account numbers or customers passcodes; or trying to prevent competing carriers from having access to customer account information, which often is used to validate service requests from customers who are changing carriers.

The change in porting intervals may lead many smaller carriers to seek modifications or suspensions of their portability obligations, particularly if they conclude that the new rule will require them to incur significant expenses to automate their systems. When smaller carriers sought this type of relief from the initial portability requirements, they had some success, but it is difficult to know if they will be as persuasive now, since the expense of automation may not be as significant as the expense of implementing portability.

Whatever impacts there are, it also is important to recognize that the competitive consequences are likely to be deferred until a year from now. Moreover, if there are implementation issues, there is at least some possibility that the FCC could be convinced to delay the one-day requirement past the original deadline.