[Senate Hearing 110-1163]
[From the U.S. Government Publishing Office]
S. Hrg. 110-1163
NUMBER PORTABILITY
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HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
JULY 12, 2007
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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75-680 WASHINGTON : 2012
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West TED STEVENS, Alaska, Vice Chairman
Virginia JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota KAY BAILEY HUTCHISON, Texas
BARBARA BOXER, California OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida GORDON H. SMITH, Oregon
MARIA CANTWELL, Washington JOHN ENSIGN, Nevada
FRANK R. LAUTENBERG, New Jersey JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas JIM DeMINT, South Carolina
THOMAS R. CARPER, Delaware DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota
Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
Christine D. Kurth, Republican Staff Director and General Counsel
Kenneth R. Nahigian, Republican Deputy Staff Director and Chief Counsel
C O N T E N T S
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Page
Hearing held on July 12, 2007.................................... 1
Statement of Senator Inouye...................................... 21
Prepared statement........................................... 21
Statement of Senator Klobuchar................................... 25
Statement of Senator Stevens..................................... 1
Statement of Senator Thune....................................... 30
Witnesses
Banks, Jonathan, Senior Vice President, Law and Policy, USTelecom
Association.................................................... 8
Prepared statement........................................... 10
Clark, Hon. Tony, Commissioner, North Dakota Public Service
Commission Chairman, Telecommunications Committee, National
Association of Regulatory Utility Commissioners (NARUC)........ 15
Prepared statement........................................... 17
Guttman-McCabe, Christopher, Vice President, Regulatory Affairs,
CTIA--The Wireless Association................................ 11
Prepared statement........................................... 13
Schremp, Ted, Senior Vice President and General Manager,
Telephone, Charter Communications, Inc......................... 2
Prepared statement........................................... 4
NUMBER PORTABILITY
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THURSDAY, JULY 12, 2007
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 10:06 a.m. in
room SR-253, Russell Senate Office Building, Hon. Daniel K.
Inouye, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. TED STEVENS,
U.S. SENATOR FROM ALASKA
Senator Stevens [presiding]. Good morning.
Senator Inouye is stuck in traffic, and asked us to start
the hearing.
Let me say that advances and innovations in communications
technologies are changing the communications marketplace. These
changes are very good for consumers. One of the changes is
increased competition for voice services. Ten years ago, when
Congress passed the Telecommunications Act of 1996, almost all
consumers had was telecommunications from their local telephone
company.
Today, consumers have many choices for voice services, from
telephone companies, cable companies, wireless companies, and
Internet-voice service companies. But, consumers are less
likely to take advantage of the new choices if they cannot keep
their phone numbers.
One problem is delay. We've heard instances from a number
of ports taking 10 to 30 days. And we have heard some providers
requiring more than 100 pieces of data to port a number. These
are unnecessary hassles that consumers complain about, and that
providers are slow to correct.
Another problem is that not all types of providers are
covered under the FCC rules. When the FCC first promulgated its
number portability rules, there were far fewer choices. It's
time for the FCC to revisit those rules, and expand them to
today's new voice service market. Consumers should not be
limited in their choices, because they cannot risk losing key
contacts or businesses as a result of having to change their
phone numbers.
Senator Inouye and I have introduced the Same Number Act of
2007, to help consumers. And the bill requires the FCC to
revisit its number portability rules, and extend them to all
applicable voice communications services, not just
telecommunications service. It does not advantage any one
industry sector, instead it requires all services to port
numbers on a reciprocal basis.
It also calls for a notice to consumers, so that consumers
will know what to expect when they change their services.
We look forward to hearing today from the panel, and we'll
try to find out how we can shape this bill to help consumers
take advantage of new choices, and lower prices, available in
today's communications marketplace.
Our witnesses this morning, Mr. Ted Schremp, Senior Vice
President and General Manager of Charter Telephone. Mr.
Jonathon Banks, Senior Vice President for Law and Policy, U.S.
Telecom Association, Mr. Chris Guttman-McCabe, Vice President
for Regulatory Affairs at CTIA, and Mr. Tony Clark,
Commissioner of the North Dakota Public Service Commission, and
Chairman of the Telecommunications Committee of the National
Association of Regulatory Utility Commissioners.
I'm delighted that you gentlemen would join us, and Senator
Inouye will be along, so I would appreciate it if you would
start your statement, and keep them short, if you can. We'll
print your full statements in the record, but we'll be pleased
to listen to whatever you have to testify.
Mr. Schremp, will you start, please?
STATEMENT OF TED SCHREMP, SENIOR VICE PRESIDENT
AND GENERAL MANAGER, TELEPHONE,
CHARTER COMMUNICATIONS, INC.
Mr. Schremp. Certainly. Good morning, Vice Chairman
Stevens, and my name is Ted Schremp, and I'm Senior Vice
President and General Manager of Telephone at Charter
Communications. From the company's headquarters in St. Louis,
Missouri, I direct and oversee all operational and business
matters concerning Charter's provision of residential and
commercial voice services.
Thank you for the opportunity to appear before you to
testify on an issue of real importance to millions of consumers
and businesses across the United States. And one which is
essential to the continued viability of competition in the
local voice services market.
Charter believes that clear and consistent--as well as
improved--number porting policies are essential to ensuring
greater competition among providers of local voice services,
and we greatly appreciate the Committee's efforts to review
these issues in this hearing, and its ongoing efforts to
enhance competition in the marketplace.
Charter is a broadband communications company, with over
16,000 employees, and approximately 5.7 million customers in 29
states. Our broadband network passes 11.7 million homes, which
we offer a full range of advanced broadband services, including
digital cable programming, broadband Internet access, advanced
broadband cable services, and telephone service.
Charter telephone is delivered, primarily, using an
Internet protocol-enabled platform, run over the cable
company's privately managed hybrid fiber coax network. We serve
nearly 600,000 phone customers, primarily residential phone
customers, in 18 states, including 9 of the states before this
Committee, and we will continue to roll out our competitive
voice service in additional markets this year and next.
Our customers are different than those of most of the major
cable operators, but as Senators on this Committee, you know
them well. They're predominantly located in less densely
populated regions of the country, including many that would be
defined as suburban, exurban, and rural areas, for example,
Worcester, Massachusetts; Kennewick, Washington; St. Cloud and
Mankato, Minnesota; Greenville/Spartanburg; South Carolina; and
Slidell, Louisiana.
Because many of these markets are in less densely populated
regions, Charter is often the only competitive alternative.
Charter also offers service, of course, in Eastern Missouri,
including the Greater St. Louis area, which is the location of
our corporate headquarters.
Because we're aggressively deploying our voice
communication service, we rely heavily on the number porting
process to compete with the incumbent providers. In fact, on a
weekly basis, Charter engages in approximately 13,000 porting
transactions. Unfortunately, in the course of these porting
transactions, Charter experiences a fallout rate of
approximately 15 percent, translating to over 150 rejected
orders every day. As such, Charter is acutely aware of the
value of efficient and effective porting procedures, and the
very real costs incurred when porting procedures are
undermined, or disregarded by other providers.
In addition, when ports take an unreasonably long time to
complete, it's extremely difficult for Charter to compete in
those carrier service territories, because a subscriber wishing
to move to Charter service must sometimes wait for as long as 2
weeks before they can switch providers, causing many
subscribers simply to decline to continue the process and
instead remain with the incumbent provider.
Charter believes the implementation of additional porting
principles would further enhance the competitive landscape, and
ultimately benefit consumers. We're confident that these
principles--if implemented--would further Congress's goal of
reducing barriers, and accelerating competitive entry to the
voice marketplace.
First, incumbent telephone companies often require
requesting providers--including Charter--to complete
complicated service order forms that require numerous data
points, many having little, if anything, to do with the
processes necessary to port a telephone number. As a result,
Charter believes that the port requests must be validated and
completed after the competitive provider supplies the minimum
necessary information to complete the port--generally, the
name, address, and telephone number of the subscriber.
In addition, although the FCC has established that all
wireline providers must complete port requests within four
business days, many providers do not. Many providers take well
over 4 days to return a firm order commitment, resulting in a
timeline of anywhere between 5 and 12 business days to complete
a port request. Therefore, another important principle that
could benefit competitors and consumers alike, is that all
wireline carriers must complete wireline-to-wireline ports
within four business days, or less.
Second, there are some instances when a port request is
scheduled to occur, but for one reason or another, the request
cannot be completed, because of an operational issue, or an
issue related to the customer. When a port request cannot be
completed before 5 p.m. on the day of the scheduled port, some
incumbent providers will simply terminate service to the
subscriber, rather than wait for the port to be completed
successfully at a later time, resulting in the customer's dial
tone being interrupted for one or more days. Thus, all
providers should adopt a policy of not terminating numbers from
their switch for at least 48 hours after the scheduled port
request is completed, to ensure that customers do not lose
service, access to 911, or access to their telephone number, in
the event that a port cannot be completed on the scheduled
date.
Finally, in addition to the practices described above,
several carriers continue to attempt to impose carrier-to-
carrier charges, fees, or add-ons to such charges for
completing customer requests to port a number from the
carrier's network to Charter's network. Although the FCC has
repeatedly ruled that carriers must cover the cost of a number,
of number portability via tariffed end-user charges, several
incumbent carriers continue to ignore those rules, and act in
blatant disregard of the FCC's directive. Some providers
attempt to mask these charges, claiming that they're associated
with the recovery of administrative costs related to porting.
Accordingly, another principle essential to continuing the
competitive benefits of efficient number porting, is the notion
that incumbent LECs may not recover any costs associated with
porting, via any charge, fee or add-ons to interconnection
charges to other providers.
In conclusion, implementation of these principles would
further the establishment of fair and efficient number porting
processes for competitive providers, resulting in increased
consumer choice, and competitive voice alternatives.
Thank you, Mr. Chairman, for the opportunity to appear
before you today, I'll be happy to answer any questions you or
the other Committee members may have. Thank you.
[The prepared statement of Mr. Schremp follows:]
Prepared Statement of Ted Schremp, Senior Vice President and General
Manager, Telephone, Charter Communications, Inc.
Introduction
Good morning, Chairman Inouye, Vice Chairman Stevens, and members
of the Committee. My name is Ted Schremp and I am Senior Vice President
and General Manager of Telephone at Charter Communications, Inc.
(``Charter''). From the company's headquarters in St. Louis, Missouri,
I direct and oversee all operational and business matters concerning
Charter's provision of residential and commercial voice services.
Thank you for the opportunity to appear before you to testify on an
issue of real importance to millions of consumers and businesses across
the United States, and one which is central to the continued viability
of competition in the local voice services market. As explained in
greater detail below, Charter believes that clear and consistent, as
well as improved, number porting policies are essential to ensuring
greater competition among providers of local voice services. For that
reason, Charter greatly appreciates the Committee's efforts to review
these issues in this hearing, and its ongoing efforts to enhance
competition in the marketplace.
Background on Charter and Its Voice Service Offerings
Charter is a broadband communications company with over sixteen
thousand (16,000) employees and approximately 5.7 million customers in
twenty-nine (29) states. Our broadband network passes 11.7 million
homes, to which we offer a full range of advanced broadband services,
including digital cable programming, broadband Internet access,
advanced broadband cable services and telephone service. Charter
Telephone' is delivered via Charter's subsidiary, Charter
Fiberlink, primarily utilizing an Internet Protocol-enabled platform
run over the cable company's privately managed hybrid fiber coax
network.
As of our last public filing, Charter Telephone' served
nearly six hundred thousand (600,000) primarily residential customers
in eighteen (18) states, including nine (9) before this committee:
California, Massachusetts, Minnesota, Missouri, Nevada, South Carolina,
Oregon, Texas, and Washington. Charter will continue to roll out our
competitive voice service in additional markets this year. Expanding
the reach and scope of our voice offerings throughout our service area
is one of our highest priorities, and we have invested hundreds of
millions of dollars to date. As a result, Charter Telephone'
is currently available to over 7.3 million homes within our service
territory, and we expect that number to continue to increase over the
next 18 months.
Our customers are different than those of most of the other major
cable operators, but as Senators on this Committee, you know them well.
They are predominantly located in less densely populated regions of the
country, including many suburban, exurban, and rural areas.
Accordingly, many of the largest markets for Charter's voice services
are what some people in the industry classify as ``Tier II'' and ``Tier
III'' markets, for example: Worcester Massachusetts, Kennewick
Washington, St. Cloud and Mankato Minnesota, Greenville/Spartanburg
South Carolina, and Slidell Louisiana. Charter also offers service in
eastern Missouri, including the greater St. Louis metropolitan area,
the location of our corporate headquarters.
In these markets, we are aggressively rolling out voice services in
competition with the incumbent local exchange carriers; often providing
the first real facilities-based competitive alternative to many
residential consumers. And, because many of these markets are in less
densely populated regions, Charter is often the only competitive
alternative.
Across all of our markets, the response to our offerings has been
very positive, as consumers are attracted to Charter by the innovative
product offering, cost savings, and the convenience of obtaining all of
their communications services from a single provider. Our research
indicates that we save the average consumer 20 percent or more on their
monthly telephone bill. New customers can sign up for Charter's
unlimited nationwide service for as low as $29.99 per month, which
provides substantial savings to our customers as compared to most
traditional telephone service providers. In addition, Charter provides
meaningful value added services such as call waiting, caller ID, call
forwarding, etc. And, of course, Charter's service has always provided
full E-911 calling functionality. The savings and value of our service
can be further enhanced by bundling with Charter's digital cable and
broadband Internet services, for as low as $99.97 per month.
Because Charter is aggressively deploying its voice communications
service to tens of thousands of potential new customers in new markets
it relies heavily on the number porting process to compete with the
incumbent providers in those markets. In fact, Charter engages in
approximately thirteen thousand (13,000) number porting transactions
every week. Unfortunately, in the course of those porting transactions
Charter experiences a fall out rate of over fifteen percent (15
percent). This rate translates to over 150 rejected orders every day
where the customer is at risk of losing dial tone when a port cannot be
canceled or rescheduled as a result of lack of carrier cooperation. As
such, Charter is acutely aware of the value of efficient and effective
porting procedures, and the very real costs incurred (including
operational costs, loss of revenue, and particularly customer
frustration and dissatisfaction) when porting procedures are undermined
or disregarded by other providers.
In addition, when ports take an unreasonably long time to complete,
it is extremely difficult for Charter to compete in those carriers'
service territories because a subscriber wishing to move to Charter's
service, and port its numbers to Charter, must sometimes wait for as
long as 2 weeks before they can switch providers. When faced with the
response that ``it will take 2 weeks before we can begin to provide you
service using the same phone number'' many subscribers simply decline
to continue the process and remain with the incumbent provider.
Even despite these hurdles, our experience demonstrates that
consumers are craving voice competition. Market research bears this
out. For example, one recent study by Microeconomic Consulting and
Research Associates, Inc. (``MICRA'') estimates that 23.7 million
households will subscribe to cable digital phone services by the year
2011. In addition, the MICRA study demonstrates that based on the
competitive rates offered by many cable-telephony providers, the
provision of competitive cable-provided voice services could result in
annual benefits to the economy of $1.3 billion in 2007, climbing to
$3.2 billion in 2011. The sum of these potential benefits, according to
the MICRA study, for the 5-year period is $11.2 billion.\1\ And
according to a 2006 J.D. Power report, cable voice customers are saving
over $10 a month on their bills.\2\ In short, cable-provided voice
services are fulfilling Congress' original vision of a robust and
competitive residential voice services market. It is no surprise, then,
that the cable industry trade association, the NCTA, estimates that as
of the first quarter of 2007 the cable industry is providing digital
phone service to 10.8 million customers.
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\1\ See http://www.micradc.com/news/publications/pdfs/
MiCRA_Report_on_Consumer_
Benefits_from_Cable.pdf.
\2\ Press Release, J.D. Power and Associates Reports: Cable
Companies Dominate Customer Satisfaction Rankings for Local and Long
Distance Telephone Service (July 12, 2006).
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Number Portability is Vital to the Continued Expansion of Competitive
Voice Service Offerings
But as our daily experience demonstrates, this progress could be so
much better. Indeed, the emergence of a truly competitive market for
local voice services is conditioned, in large part, on the continued
development and implementation of a national number porting policy that
is clear, effective, and applied consistently to all covered providers.
This is, of course, a well established fact that Congress has long
recognized. But the devil is in the implementation details. Indeed,
during its work leading up to enactment of the pro-competitive
Telecommunications Act of 1996, Congress noted that the inability of
consumers to retain their telephone numbers when changing local service
providers undermines the development of local competition. Thus, by
specifically imposing the statutory obligation on all local exchange
carriers to ``provide . . . number portability in accordance with
requirements prescribed by the Commission'' \3\ in the 1996 Act,
Congress has already recognized the critical importance of establishing
a fundamental number porting duty on all LECs, both incumbents and new
entrants.
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\3\ 47 U.S.C. 251(b)(2).
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As a result, Congress removed a significant barrier to competition
by ensuring that consumers can change carriers without having to give
up their existing telephone numbers. That simple function--the ability
to retain your telephone number when moving from one provider to
another--is a key feature for most consumers and an essential tool to
any competitive provider. The FCC itself has noted that the absence of
number portability functionality ``likely would deter entry by
competitive providers of local service because of the value customers
place on retaining their telephone numbers.'' \4\ In implementing its
rules to effectuate Congress' mandate of uniform number porting
obligations, the FCC specifically cited evidence that customers would
be reluctant to switch carriers if they were required to change
telephone numbers. Specifically, the FCC found that to the extent that
customers are reluctant to change service providers due to the absence
of number portability, demand for services provided by new entrants
will be depressed. That, in turn, would discourage entry by new
competitive providers and thereby frustrate the pro-competitive goals
of the 1996 Act.\5\
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\4\ In re Telephone Number Portability, First Report and Order &
Further Notice of Proposed Rulemaking, 11 FCC Rcd. 8352, 8367-68
(1996).
\5\ Id.
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These findings illustrate the fact that effective number porting is
critical because the ability to retain telephone numbers gives
customers greater flexibility in evaluating the quality, price, and
variety of services they choose to purchase. As a result, customers are
empowered to respond to competitive price and service changes without
having to change their telephone numbers.
Porting Principles That Will Enhance Competition and Further Benefit
Consumers
While the policies established by Congress and the FCC to date have
been beneficial, the implementation of additional principles would
further enhance the competitive landscape, and ultimately benefit
consumers. These principles revolve around the goal of ensuring timely
and efficient porting processes for all providers. Specifically,
Charter believes that implementation of the following principles would
be critical steps to achieve that goal: (1) ensure that number porting
occurs as quickly and efficiently as possible, based upon the delivery
of only that information which is absolutely necessary to complete a
porting request; (2) require all wireline providers to continue
providing dial tone service if a port request is not, or cannot be,
completed at the scheduled time; and (3) reaffirm that wireline
providers may not recover any number portability costs via
interconnection charges, administrative service order fees, port fees,
or other ``add-ons'' to interconnection charges to other providers.
Based upon the practical experience Charter has gained by competing
in multiple residential voice services markets, we are confident that
these principles, if implemented, would further Congress' goal of
reducing barriers to entry and accelerating competitive entry to the
business and residential voice marketplaces. For that reason, Charter
has already filed comments with the FCC urging the Commission to take
actions necessary to implement these principles.
First, incumbent telephone companies often require requesting
providers, including Charter, to complete complicated service ``order
forms'' that require numerous data points, many having little--if
anything--to do with the processes necessary to port a telephone
number. This creates barriers to efficient porting and, by extension,
obstructs facilities-based competition by entities like Charter. By
requiring competitors to provide data that is often unrelated to
porting, the incumbents have created a process which leads to an
increase in the number of port requests that are rejected, not
completed, or that require rescheduling. There is no reasonable
explanation or justification for requiring all of the information in
these order forms. Accordingly, when incumbent providers request such
information it raises the question of whether they are simply using the
porting process to delay, or deny, port requests by competitors in
order to delay market entry by competitors like Charter. If so, such
activity raises competitor and consumer costs, creating real barriers
to effective facilities-based competition. For these reasons Charter
believes that port requests must be validated, and completed, after the
competitive provider supplies the minimum necessary information to
complete the port, generally the name, address, and phone number of the
subscriber.
In addition, although the FCC has established that all wireline
providers must complete port requests within four business days, many
providers do not. Those providers that are unable or unwilling to
complete the porting interval within that window are often CLECs, non-
RBOC incumbents, or CLECs associated with ILECs that operate in less
densely populated areas of the country. Many carriers in this group
take well over 4 days to return a firm order commitment date resulting
in a time-line of anywhere between five and twelve business days to
complete a port request. Therefore, another important principle that
could benefit competitors and consumers is that all wireline carriers,
no matter their size or position in the market, must complete wireline-
to-wireline ports within four business days, when requested by another
provider, consistent with existing FCC rules.
Second, there are some instances when a port request is scheduled
to occur, but for one reason or another the request can not be
completed because of an operational or customer issue. When a port
request can not be completed before 5 p.m. on the day of the scheduled
port, some providers will simply terminate service to the subscriber
rather than wait for the port to be completed at a later time. When
this happens Charter is able to provide service on an emergency basis
to make sure that the subscriber will continue to have access to voice
services while the port is completed; however, a new number must be
assigned to that customer and dial tone is typically interrupted for
one or more days. This policy of simply terminating service upon the
scheduled port date, regardless of whether the number has actually been
ported, and even with an emergency installation of service using an
alternate phone number, creates significant problems for the affected
subscribers. This entire process leaves the customer with the
impression that Charter (rather than the incumbent who caused the
issue) is to blame for a loss of service, and unnecessarily puts the
subscriber in harms way by denying consumers access to basic local
voice services for a period of time. Thus, all providers should adopt a
policy of not terminating numbers from their switch for at least forty-
eight (48) hours after the scheduled port request is completed. This
would ensure that customers do not lose service, or access to their
telephone number, in the event that a port can not be completed on the
scheduled date.
Finally, in addition to the practices described above, several
carriers continue to attempt to impose carrier-to-carrier charges,
fees, or ``add-ons'' to such charges, for completing customer requests
to port a number from the carrier's network to Charter's network.
Although the FCC has repeatedly ruled that carriers must recover the
costs of number portability via tariffed end-user charges, rather than
via charges on competing carriers, several incumbent carriers continue
to ignore those rulings and act in blatant disregard of the FCC's
directives. Some providers attempt to mask these charges, and claim
that they are associated with the recovery of ``administrative costs''
related to porting, despite the fact that these actions clearly cover
costs associated with completing port requests. Accordingly, another
principle essential to continuing the competitive benefits of efficient
number porting is the notion that incumbent LECs may not recover any
costs associated with porting via any charge, fee, or add-ons to
interconnection charges to other providers.
In conclusion, implementation of these principles would further the
establishment of fair and efficient number porting processes for
competitive providers. Such processes are necessary because there are
essentially no market forces in place to provide incentives to
incumbent providers to develop efficient porting practices. Because
incumbent providers are currently losing far more customers than they
are gaining, they have no market-based incentive to implement efficient
processes to port numbers to competitive providers such as Charter.
Implementation of these principles will further enable competitive
providers like Charter to increase existing efforts to provide
competitive voice services in many smaller, and more rural markets, to
the benefit of both consumers and businesses in such markets.
Thank you, Mr. Chairman for the opportunity to appear before you
today. I will be happy to answer any questions you or the other
committee members may have.
The Chairman [presiding]. I thank you very much, I'm sorry
I'm late.
Our next witness is Mr. Jonathon Banks. Mr. Banks?
STATEMENT OF JONATHAN BANKS, SENIOR VICE PRESIDENT, LAW AND
POLICY, USTELECOM ASSOCIATION
Mr. Banks. Thank you, Chairman Inouye, and Vice Chairman
Stevens. I'm pleased to be here to discuss USTelecom's
perspective on the Same Number Act of 2007.
Number porting is hard in today's landscape of competition
for consumers and the voice services they are looking for.
Porting requirements began in the wireline world, and were
extended in 2003 to wireless carriers. Since that time, there
have been over 57 million ports, according to FCC statistics.
Just over half of those ports have been between wireline
carriers and under 3 percent have involved customers taking
their number from a wireline carrier, to a wireless carrier.
The processes for porting have steadily improved over time,
and this is certainly true for intermodal ports. One of our
member companies reports that for all of 2006, the number of
complaints they received, concerning intermodal ports, was
nine, and that's out of 900,000 intermodal ports that that
company performed.
USTelecom and its members have been very instrumental in
bringing number portability to American consumers, and we've
done this in a number of ways. One way, beginning in January of
2003, was getting together with CTIA, and putting together a
group of technical experts, to look at some of the current--the
problems in 2003--that were occurring in intermodal porting,
and to work out solutions to those problems. That group worked
well, there was a backlog for various reasons, it was
eliminated due to the, kind of, inter-industry cooperation to
improve the process.
The other area where our member companies and USTelecom has
been very active, is with the industry standards bodies that
are reviewing the porting process, and the ordering process.
The leading group in this area is the North American Numbering
Council, it's often referred to as NANC. NANC is a Federal
Advisory Committee made up of representatives from carriers
from across the industry, from trade associations, and consumer
advocates and representatives of state public service
commissions.
The other key industry group is the Ordering and Billing
Forum, which looks at the ordering forms involved in this
process, and in ordering other services from our companies.
Those two groups have worked long and hard on the number
porting process, to develop the right ordering forms, and the
right processes and procedures.
In fact, in 2003, the FCC asked NANC to review the
intermodal porting process, and come up with suggestions. NANC
appointed a working group that spent thousands of hours looking
at the processes, and understanding them from the wireline
side, and the wireless side, to come up with a range of
potential solutions. NANC did that, and attached some cost
estimates to solutions. Some of the solutions are extremely
expensive and, according to NANC, would cost a billion dollars
or more to implement.
Our members believe that the continued streamlining and
improvements in porting processes are important. The
efficiencies save them money. But we believe the best place for
improvements to occur is in these industry standards bodies,
where all the affected carriers can get together and work out
solutions that serve consumers, and are implementable.
I'd like to make just a couple of quick points, about
allegations that the process of porting is too complicated.
First, as both competitive carriers on the wireline side, and
incumbent wireline carriers have made clear, and as NANC has
found, the wireline network is a complicated network, and it's
different from the wireless network, and the two can't be
treated the same.
In fact, on the wireline side, there's also a large number
of smaller and rural carriers that do not have automated
processes for porting numbers, and this can require flexibility
on the part of carriers that have to deal with these smaller
companies.
Second, the complexity of ordering ports has been
substantially overstated. Although some wireless carriers have
pointed to a generic ordering form that contains over 100
fields, they haven't been very forthright at clarifying that
only about 25 of those fields have to be filled out to order a
port.
Now, that form was developed by the Ordering and Billing
Forum, as a generic form so that carriers could use it to order
a broad range of services. Not all of those fields have to be
filled out on any particular order, and as I said, roughly 25
need to be filled out to order a port. But a number of those
fields can be automatically populated by the carrier ordering
the port--fields that ask for the company's name and contact
information at the company, in case something goes wrong.
Finally, allegations that 30 percent of requests for
intermodal ports are canceled, appear to us to have no basis in
fact. Some of our largest members operate both wireless and
wireline networks, and have not noted a problem of that
magnitude with cancellations. Some of our smaller members have
tracked data on cancellations, and their data shows that the
cancellation rate is about 5 percent, which is the same as it
is among wireless carriers.
Mr. Chairman, we also appreciate the opportunity to comment
on the Same Number Act of 2007. As I indicated in my written
statement, there are two issues on which we would like to
continue to work with the Committee, but our members do endorse
the goal of this legislation, which is to further streamline
the process of porting.
Thank you, again, for the opportunity to appear, and I look
forward to working with the Committee on this issue.
[The prepared statement of Mr. Banks follows:]
Prepared Statement of Jonathan Banks, Senior Vice President,
Law and Policy, USTelecom Association
Chairman Inouye, Vice Chairman Stevens, members of the Committee:
Thank you for this opportunity to appear before you today. I am
Jonathan Banks, Senior Vice President for Law and Policy for the
USTelecom Association. I am pleased to appear before this committee to
discuss USTelecom's perspective on telephone number porting, as well as
the provisions of the proposed ``Same Number Act of 2007.''
USTelecom represents innovative companies ranging from the smallest
rural telecoms in the Nation to some of the largest corporations in the
U.S. economy. Our member companies offer a wide range of services
across the communications landscape, including voice, video and data
over local exchange, long distance, Internet, and cable networks.
USTelecom is the Nation's most established--and largest--association
representing rural telecom providers.
USTelecom and its member companies have been instrumental in
bringing number portability to American consumers and have made
significant contributions toward making portability more efficient. For
over a decade, our members have seen number portability become an
increasingly important facet of a competitive telecommunications
service marketplace. However, the introduction of communications
platforms different from traditional wireline--including cable systems,
fixed wireless, and mobile wireless--has made the process more complex.
Our members have a strong interest in improving the efficiency of the
number porting process, and we agree that inter-modal porting could be
further streamlined.
To put number portability in perspective, since November 2003 when
portability was extended to wireless carriers, there have been
approximately 57 million ports. Fewer than 3 percent of these ports
have involved customers moving from wireline to wireless. In addition,
the Federal Communications Commission has been active on porting
issues, and it is not an area over which the Federal Communications
Commission lacks statutory authority. The Commission has the requisite
authority, and has exercised it accordingly. Since 1997, the wireline
local exchange carrier community has worked tirelessly--and with a high
level of efficiency--to implement Federal mandates addressing local
number portability. In 2003, the FCC issued an order mandating both
wireless number portability and portability between wireline and
wireless networks. Despite technical challenges, local exchange
carriers have cooperated and contributed significant energy to support
inter-modal number portability.
In January 2003, USTelecom and CTIA formed a joint working group to
solve the early technical and implementation problems inherent in
inter-modal porting. Experts from member companies worked together to
investigate the cause of inter-modal porting failures and to come up
with solutions to alleviate the backlog of consumer porting requests.
The working group discovered that the clearinghouses used by the
wireless carriers were not equipped to handle port request validation
queries, so many requests were simply dropped without either side
knowing why. The combined USTelecom-CTIA team determined the
appropriate technical requirements for clearinghouses to meet. The
group also decided that until the clearinghouses could automate inter-
modal porting, protocols for manual porting should be implemented.
These changes have resulted in substantial improvement. For example,
one of our member companies reports that for all of 2006, the company
received a total of nine porting complaints out of approximately
900,000 number ports.
On November 10, 2003, the FCC asked the North American Numbering
Council (NANC) to offer suggestions for improving inter-modal porting.
The NANC is a Federal Advisory Committee comprised of representatives
from carriers, trade associations such as CTIA, USTelecom and NCTA,
cable operators, VoIP providers, and consumer advocates. The committee
advises the FCC and makes recommendations based on committee consensus.
The Commission has identified the NANC's tasks and objectives in
multiple Commission proceedings, and number portability is one of those
tasks.
A NANC working group consisting of both USTelecom member companies
and wireless carriers generated two proposals, and on May 3, 2004, the
NANC sent William Maher, Chief of the FCC's Wireline Competition
Bureau, a formal report. The ``Report & Recommendation on Intermodal
Porting Intervals'' recommended a porting procedure that would shorten
porting times and also identified additional issues that need to be
addressed by industry and regulatory bodies.
USTelecom's members believe that porting is best addressed by the
Commission, working in conjunction with the North American Numbering
Council. Currently, the NANC and the Ordering and Billing Forum (OBF)
have ongoing efforts to resolve issues of inter-modal porting. We
believe that these two industry organizations are well-suited to
address the streamlining of the porting process, and they will do so
with consumer well-being in mind. Already, their ongoing evaluation of
porting practices is geared toward reducing inter-modal porting
intervals and making the porting process more satisfactory to
consumers.
USTelecom encourages the continuation of joint government-industry
working groups like the NANC, and its Local Number Portability Working
Group sub-group. This working group has successfully resolved issue
after issue and will continue to do so. At the end of my statement I
have affixed a table summarizing the working group's results to date.
We feel that these groups should remain the primary source for
technical solutions. The communications industry has shown repeatedly
that it can solve technical issues through innovation and market-driven
solutions, and USTelecom supports the continuation of entrepreneurial
problem-solving with respect to local number portability.
Mr. Chairman, we also appreciate the opportunity to comment on the
``Same Number Act of 2007.'' Our members endorse the ostensible goal of
this proposed legislation, which is to further streamline the number
portability process. Furthermore, we agree with the content of Section
715(a) in the proposed bill, which establishes a duty of all voice
service providers to provide number portability.
However, as the Committee continues to perfect this bill, let me
offer two thoughts. First, while section 715(b) requires in paragraph
(1) the establishment of ``reciprocal number portability standards,''
subparagraphs (B) and (b)(2) permit discriminatory treatment of
providers given the Commission's authority to ``establish more flexible
standards or delayed deadlines for different classes of providers.''
USTelecom members are invariably on the receiving end of these more
onerous requirements.
Second, Section 715(c) would require voice service providers to
report to the Commission on their porting activities for the 12 months
preceding the date of issuance of Section 715(b) required porting
rules. This is an overly onerous requirement. As I mentioned earlier,
there have been more than 57 million ports since November of 2003. To
report on this activity and explain why any given port fails would be
an overwhelmingly burdensome undertaking.
Mr. Chairman, thank you again for the opportunity to appear today.
USTelecom member companies have always cooperated in numerous industry
fora for the improvement of telecommunications services, and we will
continue to do so. USTelecom and its member companies look forward to
our continued work with the Committee and will continue to work through
the Commission and NANC to streamline the porting process.
North American Numbering Council--April 10, 2007
Local Number Portability Administration Working Group Status of Open
Industry Issues and Issues Submitted and/or Resolved Since May 2004
------------------------------------------------------------------------
------------------------------------------------------------------------
Issues Submitted: 122
Issues Resolved: 96
Issues Remaining Open or Unresolved: 26
Percentage of Issues 79%
Resolved:
------------------------------------------------------------------------
The Chairman. Thank you very much, Mr. Banks.
And, may I now recognize Mr. Chris Guttman-McCabe, Vice
President, Regulatory Affairs, CTIA--The Wireless Association.
STATEMENT OF CHRISTOPHER GUTTMAN-McCABE,
VICE PRESIDENT, REGULATORY AFFAIRS,
CTIA--THE WIRELESS ASSOCIATION
Mr. Guttman-McCabe. Thank you. Good morning, Chairman
Inouye and Vice Chairman Stevens. Thank you for the opportunity
to appear before you today, to discuss the importance of
streamlining the number porting process.
On behalf of CTIA--The Wireless Association, I am
Christopher Guttman-McCabe, Vice President of Regulatory
Affairs. I am here to testify that the wireless industry has
developed an efficient and simple porting process that should
be the model for all porting. We believe that reform consistent
with this model is necessary to ensure that consumers can take
full advantage of the choices provided by emerging, intermodal
competition.
In 1996, with the leadership of this Committee, Congress
added section 251(b)(2) to the Communications Act, requiring
all local exchange carriers to offer number portability. The
Federal Communications Commission later extended that
requirement to the wireless industry.
Wireless carriers responded to the porting requirement by
adopting a limited, but standardized, set of criteria necessary
to complete a simple porting request. This process has been
further streamlined to include just a few elements--lowering
the average time to complete a customer porting request to just
two and a half hours.
During the second quarter of 2006, the most recent data
available, wireless carriers successfully implemented 2.4
million intramodal ports, wireless-to-wireless, allowing
wireless consumers to change carriers easily and efficiently,
while keeping their telephone numbers.
CTIA member companies seek to grow, not just by taking
customers from one another, but also by marketing their
services as a replacement for traditional landline service.
Unfortunately, the unnecessary complexity of wireline-to-
wireless porting, often forces consumers to abandon their
landline numbers, or give up on the process entirely. Neither
outcome should be acceptable to policymakers.
In the Wireless Porting Order, the Commission unambiguously
determined that consumers must be able to change carriers,
while keeping their telephone numbers, as easily as they may
change carriers without taking their numbers. The Commission
also stated that carriers need only share basic contact and
technical information sufficient to perform the port.
Unfortunately, despite clear direction from both Congress
and the Commission, the benefits of speedy, efficient, and
simple porting are not yet available to all consumers. Many
local exchange carriers unnecessarily complicate the porting
process, and frustrate consumers by requiring the porting-in
carrier to provide information well beyond what is needed to
effectuate a successful port.
While the Commission has allowed market forces to dictate
specific procedures to be used for number portability, it must
recognize that the incumbent local exchange carriers generally
lack both the incentive to allow customers to switch seamlessly
to a competitor, as well as the interest in remedying the
situation expeditiously.
In fact, a number of local exchange carriers have urged the
Commission to defer to the NANC, or the ATIS Ordering and
Billing Formum, to resolve these measures. Unfortunately, the
issue has been before these groups since July, 2004, and they
have been unable to reach the consensus required to resolve
these porting validation issues. It is time for the Commission
to intervene.
The T-Mobile/Sprint petition filed last December provides
the Commission with the timely opportunity for such
intervention. Two facts from the petition suggest that action
is warranted.
First, the inefficiency of the LEC process is starkly
highlighted when it is compared to the intramodal wireless
porting mechanism in use today. For simple wireless-to-wireless
ports, numbers are usually ported in a matter of hours, whereas
those involving the LECs often take days, or weeks.
In wireless-to-wireless ports, consumers are generally
unable to detect any difference between changing carriers with
porting, and changing carriers without porting.
Second, the difference in the amount of information
required to finalize the two different types of ports also is
stark. Wireless carriers initially required nine data fields to
port a customer, then cut it to four, and now--at times--three.
In contrast, Sprint and T-Mobile attached to their filing a
sample form with multiple data fields, including fields
requiring additional engineering, additional forms, additional
labor, and account regrade. It is difficult to understand how
this much information could be required to effectuate a simple
port from one carrier to another, especially when T-Mobile and
Sprint have limited the application of their requests solely to
simple ports.
In wireless-to-wireless ports, a large number of ports are
completed, less information is exchanged, yet the port takes
less time, and is more successful. T-Mobile, Sprint, and others
within CTIA's membership are not alone in recognizing the need
for reform of the intermodal porting process.
A number of cable operators, public utility commissions,
and NARUC have recognized the importance of pro-consumer reform
in this area. Commission action on this matter is timely, as
the Commission itself has repeatedly cited expectations of
increased intermodal competition in approving recent mergers.
Streamlining the simple porting process is critical to making
robust intermodal competition a reality.
Before closing, let me note that CTIA appreciates the
interest the Committee and its members--especially you, Mr.
Chairman, and Vice Chairman Stevens--that you have shown in
this issue. While CTIA believes the FCC has the authority it
needs to streamline the simple porting process, Congressional
action to facilitate a pro-competitive, pro-consumer,
intermodal porting process may be necessary if the Commission
fails to act in a timely manner. Should that be the case, we
would look forward to working with the Committee to achieve
those goals.
Thank you, and I look forward to any questions you may
have.
[The prepared statement of Mr. Guttman-McCabe follows:]
Prepared Statement of Christopher Guttman-McCabe, Vice President,
Regulatory Affairs, CTIA--The Wireless Association
Chairman Inouye, Vice Chairman Stevens, and members of the
Committee, thank you for the opportunity to appear before you today to
discuss the importance of streamlining the number porting process. On
behalf of CTIA--The Wireless Association', I am here to tell
you that the wireless industry has developed an efficient simple
porting process that should be a model for the entire industry. At
CTIA, we view reform consistent with the wireless model as necessary to
ensure that consumers can take full advantage of the choices provided
by emerging intermodal competition.
In 1996, with the leadership of this Committee, Congress added
section 251(b)(2) to the Communications Act. That section requires all
local exchange carriers to offer number portability. The Federal
Communications Commission later determined that the public interest
would be served by extending the number portability requirement to
wireless carriers as well.
Wireless carriers responded to the Commission's call for wireless
number portability by adopting a limited but standardized set of
criteria necessary to complete a simple porting request. Over time,
this process has evolved to include just a few elements, and with
implementation of this streamlined process, the industry has lowered
the average time to complete a customer porting request to just two and
a half hours. During the second quarter of 2006 (the most recent
quarter for which data is available), wireless carriers successfully
implemented 2.4 million intramodal ports. This process enables wireless
consumers to change carriers easily and efficiently while keeping their
telephone numbers, thus empowering consumers to choose the carrier,
pricing plan, and features that best serve their individual needs.
CTIA's member companies seek to grow not just by taking customers
from one another, but also by marketing their services as a replacement
for traditional landline service. Unfortunately, the unnecessary
complexity of wireline to wireless porting often forces consumers to
abandon their landline numbers or give up on the process entirely.
Neither outcome should be acceptable to policymakers.
In the Wireless Porting Order, the Commission unambiguously
determined that ``consumers must be able to change carriers while
keeping their telephone number as easily as they may change carriers
without taking their number with them.'' The Commission also stated
that carriers may not impose ``restrictions on porting beyond necessary
customer validation procedures'' and that ``carriers need only share
basic contact and technical information sufficient to perform the
port.'' Unfortunately, despite clear direction from both the Congress
and the Commission, the benefits of speedy, efficient, and simple
porting are not yet available to all consumers. Many local exchange
carriers unnecessarily complicate the porting process and frustrate
consumers by requiring the porting-in carrier to provide information
well beyond what is needed to effectuate a successful port.
While the Commission has allowed market forces to dictate the
specific procedures to be used for number portability, it must
recognize that the incumbent local exchange carriers generally lack
both any incentive to allow customers to switch seamlessly off their
networks to wireless competitors, as well as an interest in remedying
this situation expeditiously. In fact, in comments to the Commission a
number of local exchange carriers have urged the Commission to defer to
the North American Numbering Council (``NANC'') or the Alliance for
Telecommunications Industry Solutions (``ATIS'') Ordering and Billing
Forum to resolve these matters. Unfortunately, these industry groups
have been unable to reach the consensus required to resolve these
porting validation issues. The issue has been before the NANC and ATIS
since July 2004, and the Ordering and Billing Forum (``OBF'') is in the
process of formally closing the matter. Given that these entities have
been struggling with these issues for 3 years without resolution, it is
time for the Commission to intervene.
The T-Mobile/Sprint petition filed last December provides the
Commission with a timely opportunity for such intervention. Two
undisputed facts from the T-Mobile/Sprint petition suggest some action
is warranted with respect to intermodal porting procedures. First, the
inefficiency of the incumbent LEC validation process is starkly
highlighted when it is compared to the intramodal wireless porting
mechanism in use today. For simple wireless-to-wireless ports, numbers
are usually ported in a matter of hours with a nominal amount of
information exchanged by the carriers. In such ports, wireless
consumers are generally unable to detect any difference between
changing carriers with porting and changing carriers without porting.
Second, wireless carriers initially required nine data fields to port a
customer, then--basically because that made the process less efficient
and the additional fields were not needed to protect customers'
choices--cut it to four, then three, data fields. This is clear
evidence that a less burdensome and uniform process can work quickly to
protect consumers and competition in a commercial environment.
Sprint and T-Mobile attached to their filing a sample form with
more than 100 data fields, including fields requiring input of
``additional engineering,'' ``additional forms,'' ``additional labor,''
and ``account regrade.'' It is difficult to understand how this much
information could be required to port a customer from one carrier to
another--especially since T-Mobile and Sprint have recognized that
additional information is often necessary for validation when
undertaking ``complex'' porting, and have limited the application of
their recommended four validation fields solely to simple ports. Simple
ports are those that: (i) do not involve unbundled network elements;
(ii) involve an account only for a single line; (iii) do not include
complex switch translations (e.g., Centrex, ISDN, AIN services, remote
call forwarding, or multiple services on the loop); and (iv) do not
include a reseller.
T-Mobile, Sprint, and others within CTIA's membership are not alone
in recognizing the need for reform of the intermodal porting process. A
number of cable operators that are now offering telephony generally
share our views, and public utility commissions from states as diverse
as California and Iowa also have recognized the importance of pro-
consumer reform in this area. In fact, in a resolution adopted this
past February, NARUC endorsed the adoption of a ``simple and uniform
industry porting process.'' Even parties which oppose the T-Mobile/
Sprint petition, like Embarq and AT&T, acknowledge that reform intended
to eliminate obstruction or delay is ``reasonable'' (Embarq comments,
at 1) and that ``streamlining of the [porting process] may be useful
and desirable'' (AT&T comments, at 3).
Commission action on this matter is timely, as the Commission
itself has repeatedly cited expectations of increased intermodal
competition in approving several recent mergers. Streamlining the
simple porting process is critical to making robust intermodal
competition a reality, and the Commission now must rise to the
challenge before it in a way that advances intermodal competition and,
most importantly, the interests of consumers.
Before closing, let me note that CTIA appreciates the interest the
Committee and its members, especially Senator Stevens, have shown in
this issue. While CTIA believes that the FCC has the authority it needs
to streamline the simple porting process, Congressional action to
facilitate a pro-competitive, pro-consumer intermodal porting process
may be necessary if the Commission fails to act in a timely manner.
Should that be the case, we would look forward to working with the
Committee to achieve those goals.
Thank you, and I look forward to any questions you may have.
The Chairman. Thank you very much.
Our next witness is Mr. Tony Clark, Commissioner of North
Dakota Public Service Commission, and Chairman of the
Telecommunications Committee of the National Association of
Regulatory Utility Commissioners. Long title.
STATEMENT OF HON. TONY CLARK, COMMISSIONER,
NORTH DAKOTA PUBLIC SERVICE COMMISSION;
CHAIRMAN, TELECOMMUNICATIONS COMMITTEE,
NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS
(NARUC)
Mr. Clark. It is. That's why we say NARUC, usually.
Mr. Chairman, and Mr. Vice Chairman, thank you for the
invitation to speak before you today on behalf of Utility
Commissioners across the country. Thank you for the opportunity
to present, again, our Association's views before this
Committee.
Mr. Chairman, I would simply note that NARUC has been an
early and persistent advocate for number portability. Over the
years, we've filed numerous pleadings, agreeing with the FCC's
assessment that the competition resulting from portability
should foster lower local telephone prices, and consequently,
stimulate demand for telecommunications services, and increase
economic growth.
As this hearing suggests, there are some outstanding issues
that need resolution. Most recently, in January of this year,
the FCC noticed a comment on a December 2006 T-Mobile and
Sprint/Nextel petition for declaratory ruling, asking the FCC
to end an ongoing controversy regarding the Commission's
requirement that only ``necessary'' validation procedures be
utilized in the porting process.
The petitioners, citing unwarranted delays in the process,
seek a ruling that all carriers be obligated to provide number
portability, may not obstruct or delay the porting process by
demanding from the porting-in carrier information in excess of
the minimum information needed to validate the requesting
customer.
While portability has generally worked well to stave off
exhaust, and to promote competition, some concerns raised by
that petition highlight some problems with the current process
and seem particularly relevant to the draft legislation we
understand may be introduced on this issue.
In February of this year, our Association responded to the
notice by passing a resolution addressing the Sprint/T-Mobile
proceeding that specifically endorses a porting process that is
uniform throughout the industry, and relatively simple to
implement. A copy of that resolution is submitted with my
testimony.
The ability of any carrier to effectively port in a
customer is directly tied to the practices of the carrier that
will be porting out the customer. Sprint and T-Mobile have told
the FCC that some carriers have adopted practices that
complicate and prolong the porting out process, and thus hinder
the effectiveness of competition. They point out that these
practices, in fact, delay a competitor's ability to activate
the number--often for weeks or months--resulting in, in their
words, a frustrating customer experience, and unnecessarily
high port cancellation rate, and ultimately a barrier to
competition.
The current statistics that are cited in that particular
docket seem to bear out that there is some sort of problem.
While the consumer cancellation rate for intramodal--that is to
say, wireline-to-wireline ports--is about 5 percent, the
cancellation rate for intermodal ports--that is wireless-to-
wireline--is approximately 30 percent. They also argue that
onerous and non-standard ILEC validation procedures are the
root cause for the disparity in those rates.
NARUC has taken the position that, at a minimum, the FCC
must investigate to see if a more streamlined process like that
that works so well in the wireless-to-wireless environment, can
work in the intermodal ports.
NARUC has urged the FCC to immediately act to prohibit
onerous and non-standard porting practices as anti-competitive
and anti-consumer. The statistics on porting cited in this open
docket suggest both the Commission's, and Congress's primary
purpose in establishing portability obligations is being
frustrated. Something, we believe, must be causing almost a
third of customers to cancel their wireline-to-wireless ports.
We may not know what it is, but something must be happening.
We have urged the Commission to--at a minimum--clarify its
2003 ruling that carriers may not impose restrictions on
porting, the unnecessary validation procedures. And while we
took no specific stance on the specific T-Mobile/Sprint
proposal, we also urged the FCC to establish a uniform industry
porting process, to assure that all service providers comply
with uniform industry porting guidelines, and work
cooperatively with other carriers in resolving disputes.
We hope that Congress's interest in this issue will--at a
minimum--provide additional information and incentives for FCC
action.
That concludes my testimony, I'd be happy to answer any
questions you might have.
[The prepared statement of Mr. Clark follows:]
Prepared Statement of Hon. Tony Clark, Commissioner, North Dakota
Public Service Commission; Chairman, Telecommunications Committee,
National Association of Regulatory Utility Commissioners (NARUC)
Introduction
Chairman Inouye, Vice Chairman Stevens and members of the
Committee, as always, we are extremely grateful to each of you for the
opportunity to testify today on Number Portability.
I am Tony Clark, commissioner with the North Dakota Public Service
Commission and a member of the National Association of Regulatory
Utility Commissioners (NARUC). I serve as chairman of NARUC's Committee
on Telecommunications. NARUC represents State utility commissioners in
each of your States and the U.S. territories that have oversight
responsibilities over telecommunications, energy, water and other
utilities.
State Commissions Share Your Concerns and are a Valuable Source of
non-biased Expert Advice on the Impact of Any Policy Choices on
Constituents in your Respective States.
Some State commissioners, like me, stand for election as each of
you do. Others are appointed by our Governors. But every single State
Commissioner, as a leader in each of your States, is, like you,
ultimately accountable to the voters. Your State commissioners share
your commitment to assuring that each of your constituents receives the
benefits of broadband convergence, new wireless technologies and
competitive markets. In almost all cases, the Commissioners on your
State commission will have an intense and almost complete identity of
interest with you on policy goals for your respective States. Perhaps
of more significant to each of you, they will have a firm grasp on the
markets in your State and informed and non-biased expert opinions on
how your policy choices may impact constituents in your State. Many of
you know your State commissioners and all of us have worked hard, not
just at our day jobs, but to be honest brokers on how national policies
impact each of our States.
I know it is difficult to sort through the myriad of policy
questions Congress routinely faces, but I would respectfully suggest
that a continuing partnership with State-level colleagues that share
your interests is key. And it's a key that both Congress and various
Federal agencies have employed repeatedly and successfully in the past
to address difficult policy issues.\1\ Certainly seeking the opinions
of similarly situated, non-biased experts from your respective States
can only assist you in addressing these problems. That's only one of
the reasons why we commend you and the committee for holding this
hearing on number portability--which ultimately protects competition
and area codes from premature exhaust--both goals States share with
Congress and the Federal Communications Commission. We particularly
appreciate your setting aside time to hear from your ``beyond the
Beltway'' colleagues.
An Efficient Porting Process is Critical to Competition
An efficient Number Portability process is critical to both efforts
to enhance intermodal and intramodal competition and also NARUC's State
member efforts to constrain State-specific area code exhaust. There is
at least one open and pending Federal Communications Commission
proceeding on this issue.
Even if Congress is unable to move legislation on this issue, we
recognize that this hearing alone will undoubtedly provide additional
impetus for FCC action in that and any related dockets.
NARUC has been an Early and Persistent Advocate for Portability
In 1996, Congress added 47 U.S.C. 251(b)(2) to the Communications
Act. That section requires all local exchange carriers (``LECs'') to
offer number portability in compliance with FCC rules. That same year,
the Commission determined that the public interest would be served by
extending the portability requirement to wireless carriers as well as
the incumbent LECs.\2\ NARUC strongly supported this FCC initiative. We
filed numerous pleadings agreeing with the FCC's assessment that the
competition resulting from portability ``should foster lower local
telephone prices and, consequently, stimulate demand for
telecommunications services and increase economic growth.'' \3\
Some Porting Issues Require Immediate Attention
As this hearing suggests, there are some outstanding issues that
need resolution. Most recently, on January 9, 2007, the FCC noticed for
comment a December 20, 2006, T-Mobile USA, Inc. (``T-Mobile''), and
Sprint Nextel Corporation (``Sprint'') Petition for Declaratory Ruling
asking the FCC to end an ongoing controversy regarding the Commission's
requirement that only ``necessary'' validation procedures be utilized
in the porting process. The Petitioners, citing unwarranted delays in
the process, seek a ruling ``. . . that all carriers obligated to
provide number portability may not obstruct or delay the porting
process by demanding from the porting-in carrier information in excess
of the minimum information needed to validate the requesting
customer.''
While portability generally has worked well to stave off exhaust
and promote competition, some concerns raised by that petition
highlight some problems with the current process and seem particularly
relevant to the draft legislation we understand may be introduced on
this issue.
NARUC Endorses Uniform Simple Porting Process
On February 21, 2007, NARUC responded to the notice by passing a
resolution addressing the Sprint-T-Mobile proceeding that specifically
endorses a porting process that is uniform throughout the industry and
relatively simple to implement. A copy of that resolution is submitted
with my testimony. Several individual NARUC members, including the
California, Nebraska, and Iowa commissions also filed comments
encouraging the FCC to establish ``. . . a simple and uniform porting
process.''
The Time Frame for Porting
The ability of any carrier to effectively ``port in'' a customer is
directly tied to the practices of the carrier that will be ``porting
out'' the customer. Sprint and T-Mobile have told the FCC that some
carriers have adopted practices which complicate and prolong the
``porting out'' process, thus hindering the effectiveness of
competition. They point out that these practices, in fact, delay a
competitor's ability to activate the number often for weeks or months
``. . . resulting in a frustrating customer experience, an
unnecessarily high port cancellation rate, and ultimately, a barrier to
competition.''
Two undisputed facts from the T-Mobile-Sprint petition suggest some
immediate action is warranted with respect to at least LEC porting
procedures.
First, T-Mobile-Sprint argue that the inefficiency of the incumbent
LEC validation process is starkly highlighted when it is compared to
the intramodal wireless porting mechanism in use today. For simple
wireless-to-wireless ports, according to these carriers, numbers are
usually ported in a matter of hours with a nominal amount of
information exchanged by the carriers. In such ports, wireless
consumers are generally unable to detect any difference between
changing providers with porting and changing carriers without porting.
The Need for a Uniform Process
The second, pointed out later in the petition, is the fact that
wireless carriers initially required nine data fields to port a
customer, then, because that made the process less efficient and the
additional fields were not needed to protect customers' choices, cut it
to four, then three, data fields.
This is clear evidence that a less burdensome and uniform process
can work quickly to protect consumers and competition in a commercial
environment.
T-Mobile and Sprint also told the FCC that some LECs are insisting
on ``outdated and unnecessarily arduous procedures, such as completion
of port request forms with more than 100 data fields.'' To back the
allegation, they attached to their filing a sample form with more than
100 data fields, including fields requiring input of ``additional
engineering,'' ``additional forms,'' ``additional labor,'' and
``account regrade.''
It is difficult to understand how this much information could be
required to port a customer from one carrier to another. If these
allegations are true, they certainly support their argument that some
LECs are imposing onerous and burdensome porting requirements simply to
slow their churn rates by rendering the porting process complicated and
time-consuming.
The churn statistics cited in that proceeding seem to bear this
out. They point out that while the consumer cancellation rate for
intramodal (i.e., wireless-to-wireless) ports is about 5 percent, the
cancellation rate for intermodal ports is approximately 30 percent.
They also argue that onerous non-standard ILEC validation procedures
are the root cause for the disparity in rates.
NARUC has taken the position that, at a minimum, the FCC must
investigate to see if a more streamlined process, like the one that
works in the wireless-to-wireless environment can work in intermodel
ports.
The petition before the FCC also presents a simple solution for the
Commission's consideration and suggests no new rules are needed.
According to the T-Mobile- Sprint Petition, the FCC ``. . . need only
further clarify that porting-out carriers may not demand information
from requesting providers beyond that required to validate the customer
request and accomplish the port.'' The Petition suggests, based on the
practices of the wireless industry, that LECs, should validate ports
using no more than four customer validation fields, limiting the
validation to those fields ``necessary'' to the process.
Conclusion
NARUC has urged the FCC to immediately act to prohibit onerous and
non-standard porting practices as anti-competitive and anti-consumer.
The statistics on porting cited in this open docket suggest both the
Commission's and Congress's primary purpose in establishing portability
obligations is being frustrated. Something must be causing almost a
third of customers to cancel their wireline-to-wireless ports. We have
urged the Commission to, at a minimum, clarify its 2003 ruling that
carriers may not impose ``restrictions on porting beyond necessary
validation procedures'' and, while we took no specific stance on the T-
Mobile-Sprint specific proposal, we also urged the FCC to establish a
uniform industry porting process to assure that ALL service providers
comply with uniform industry porting guidelines and work cooperatively
with other carriers in resolving disputes. We hope Congress' interest
in this issue will, at a minimum, provide additional information and
incentives for FCC action.
Thanks again for the opportunity to testify. I look forward to your
questions.
Endnotes
\1\ Indeed, Congress has frequently recognized in legislation the
importance of Federal Agencies working in tandem with NARUC member
commissions. See 47 U.S.C. 410(c) (1971) (NARUC nominates members to
FCC Joint Federal-State Boards which consider universal service,
separations, and related concerns and provide formal recommendations
that the FCC must act upon); Cf. 47 U.S.C. 254 (1996) (describing
functions of the Joint Federal-State Board on Universal Service). Cf.
NARUC, et al. v. ICC, 41 F.3d 721 (D.C. Cir 1994) (where the Court
explains ``. . . Carriers, to get the cards, applied to . . . (NARUC),
an interstate umbrella organization that, as envisioned by Congress,
played a role in drafting the regulations that the ICC issued to create
the ``bingo card'' system.) There are also numerous examples of
successful collaborations between the Federal Communications Commission
(FCC) and NARUC's members on slamming, truth-in-billing, operator
service requirements, telemarketing, customer privacy/Caller ID issues,
and related consumer protection issues. Most reveal the same key
elements. NARUC's July 2005 Resolution Supporting FCC Slamming Rules
provides a perfect case study illustrating the practical benefits of
leveraged/more effective enforcement and reduced consumer confusion
inherent in this cooperative approach. That CC Docket No. 97-129
proceeding was premised on specific authority in 47 U.S.C. 258
(1996). In its First Order on Reconsideration (FCC 00-135), the FCC
recognized States should have the ability, if they choose, to mediate
slamming complaints received from consumers within that State. It also
acknowledged individual States have unique processes, procedures and
rules regarding slamming complaints. Pursuant to the revised rules,
States are now able to ``opt-in'' to become the primary forums for
administering the slamming liability rules and resolving consumer's
slamming complaints. Although Congress limited the FCC's flexibility
somewhat, the agency did not take a ``cookie cutter'' approach to
slamming regulations. Rather the FCC has provided needed flexibility to
the States to address unique fraudulent activities by establishing the
regulatory floor and allowing the States to establish more stringent
rules or the regulatory ceiling--particularly in the area of enhanced
penalties. Thirty-seven States opted-in to the FCC's approach. There is
no question oversight of slamming issues has been enhanced through
collaborative federalism as evidenced by: (i) more extensive
information sharing on market practices and trends, (ii) decreases in
complaints, (iii) better coordinated enforcement efforts, and (iv) the
creation of a ``common front'' in opposition to abusive practices
affecting consumers of telecommunications services established via the
FCC's actions. Any other framework effectively removes cops from the
beat.
\2\ See Telephone Number Portability, First Report and Order and
Further Notice of Proposed Rulemaking, 11 FCC Rcd 8352 153 (1996)
(``First Porting Order'').
\3\ First Porting Order 30.
\4\ ``Pleading Cycle Established for Comments on T-Mobile USA, Inc.
and Sprint Nextel Corporation's Petition for Declaratory Ruling
Regarding Number Portability'', DA 07-39, (Jan. 9, 2007) Available
online at: http://hraunfoss.fcc.gov/edocs_
public/attachmatch/DA-07-39A1.doc.
Appendix
February 21, 2007 Resolution Concerning Local Number Portability
WHEREAS, The National Association of Regulatory Utility
Commissioners (``NARUC'') has strongly supported the implementation of
Local Number Portability (LNP) as an important vehicle for consumer
choice; and
WHEREAS, LNP provides the opportunity for consumers to easily move
service between LNP-capable providers while retaining their telephone
number; and
WHEREAS, Competition in all voice services has increased the need
for LNP to realize customer choice between service providers; and
therefore porting of telephone numbers used by all carriers, including
LECs, CLECs, wireless carriers and VoIP service providers should comply
with uniform industry porting guidelines; and
WHEREAS, NARUC supports policies which encourage the continued
advancement of competition in telecommunications markets and the
ability of consumers to take their telephone number with them when they
opt for a new or different provider's products and services regardless
of the type of service; and
WHEREAS, A simpler and more convenient process of porting numbers
should be considered for adoption as the uniform industry porting
process in order to accommodate further consumer ease, increase the
rate of successful port completions and facilitate the further
advancement of competition; and
WHEREAS, Various technical industry groups and bodies responsible
for the setting of industry standards, such as the Alliance for
Telecommunications Industry Solutions (ATIS), have been unable to
resolve diverse order processing formats between providers for number
porting; and
WHEREAS, The North American Numbering Council (NANC) has examined
the wireless number portability issues on several occasions over the
past 8 years, most recently, in response to a request from the FCC,
including forming an Intermodal Porting Issue Management Group (IMG)
that produced a report and recommendation in May 2004 setting forth a
streamlined confirmation and activation process; however, its effective
implementation has been hindered by the requirement to submit an
``error-free'' port request; and
WHEREAS, The ATIS Ordering and Billing Forum (OBF) has been unable
to develop a more efficient and uniform process for porting between
wireline and wireless providers through their approval process since
assignment of the issue in July of 2005; and
WHEREAS, The challenges regarding number portability for VoIP
service providers have become increasingly common recently and have
been raised before a number of bodies including State commissions, both
for the porting in of a number to a VoIP provider and the porting out
of a number from a VoIP provider; and
WHEREAS, The adoption of a simple and uniform industry porting
process will facilitate consumer choice by improving customers' ability
to switch carriers when desired, as well as creating a uniform
understanding, by all parties, of the steps required to port numbers;
and
WHEREAS, There is pending before the Federal Communications
Commission (``FCC''), in Docket CC 95-116, a Petition for Declaratory
Ruling regarding LNP seeking clarification that carriers obligated to
provide number portability may not obstruct or delay the porting
process by demanding information from requesting carriers beyond that
required to validate the customer request and accomplish the port
(``Portability Petition''); now, therefore, be it
RESOLVED, That the Board of Directors of the National Association
of Regulatory Utility Commissioners convened in its 2007 Winter
Meetings in Washington, D.C. expresses its support for the adoption of
a simple and uniform industry porting process; and be it further
RESOLVED, That NARUC staff shall file comments with the FCC in CC
95-116, consistent with this resolution, encouraging the FCC to
establish a uniform industry porting process; and be it further
RESOLVED, That NARUC also conveys its concerns to the FCC in the
Number Portability Docket regarding the challenges created by having
different types of service providers porting numbers to each other, and
the need for all service providers to comply with uniform industry
porting guidelines and to work cooperatively with other carriers in
resolving disputes.
_______________________________________________________________________
Sponsored by the Committees on Telecommunications and Consumer Affairs.
Adopted by the NARUC Board of Directors, February 21, 2007.
STATEMENT OF HON. DANIEL K. INOUYE,
U.S. SENATOR FROM HAWAII
The Chairman. All right, thank you very much, Mr. Clark.
Without objection, my opening statement will be made part of
the record.
[The prepared statement of Senator Inouye follows:]
Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii
More than a decade ago, Congress sought to open our communications
markets to competition. By removing barriers that impaired the ability
of new entrants to compete, we sought to usher in a new era of pro-
consumer telecommunications competition.
Number portability was one of these barriers. Without it, consumers
would have been required to switch their telephone number whenever they
switched their service provider.
To avoid this complication, Congress required the Federal
Communications Commission (FCC) to implement number portability. As a
result, consumers can take their phone number with them without the
hassle, loss of identity, and cost that would otherwise come with
changing numbers when changing providers.
New forms of competition like wireless and Voice-over-IP services
have predictably led to new portability challenges. These services
raise important, and sometimes technically difficult questions about
how we might streamline the porting process and provide consumers with
a swift and glitch-free transition between service providers.
Today's hearing allows us to explore these issues and to get some
answers. It also allows us to discuss legislation recently introduced
by Vice Chairman Stevens and myself that takes a small, yet important,
step in directing the Commission to establish porting performance
standards that will promote competition and make it easier for
consumers to switch services.
I look forward to working on this issue and to hearing from today's
witnesses.
The Chairman. Mr. Vice Chairman?
Senator Stevens. Thank you very much, Mr. Chairman.
I want to know, Mr. Schremp, how many of these port orders
would be normal to come per day in an organization such as
yours?
Mr. Schremp. About three-quarters of our new customers
bring their phone number with them. So, the vast majority of
our transactions are port-based orders, so that we go through
the porting process. So, on a daily basis, it's two or three
thousand, and certainly growing as we expand our business.
Senator Stevens. Now, there's an assumption here in the
industry that the cost should be absorbed by the entity that's
losing the customer, is that right?
Mr. Schremp. Well, my understanding of the basis is that it
actually be borne by the end-user consumer, and that it be part
of the tariff charges that many consumers have incurred for 10
years now, so when number portability first came about in the,
sort of, mid- to late nineties, that a lot of those costs were
borne by the consumer, and continue to be.
Senator Stevens. That's the consumers of the entity that's
losing the customer, right?
Mr. Schremp. That would be the case in terms of the
majority of the customer base that continues to be with the
incumbent telephone, that's true.
In our case, we certainly do port-out transactions as well,
and we assess no fees to other parties.
Senator Stevens. Well, let me ask all of you, if the
customers are moving to a new entity, and the income is going
to go with that customer, what's the rationale for leaving the
costs of this porting system on the backs of the losing
carrier?
Anyone want to comment on that? It seems to me, there's a
disincentive here to the losing carrier to move as fast as the
customer wants, because they're going to have to pay the cost.
The faster you move--I assume--the greater the cost. Am I
wrong?
Mr. Schremp. From my perspective, the greater issue is that
there are no market incentives, regardless of the
administrative costs of completing the port. There are--in the
wireline-to-wireline world, there are no market incentives for
the incumbent providers to act in an efficient mode. The
incumbent carriers--pretty much across the board--have been
losing 6 to 7 percent of their wireline customers on an annual
basis.
Senator Stevens. Does the acquiring carrier have any costs
at all to portability?
Mr. Schremp. Sure we do, we absolutely do.
Senator Stevens. What is that?
Mr. Schremp. So, those costs are the administrative costs
of populating these forms, the administrative costs of having--
you know, in our case--you know, literally dozens of people
that do nothing but port transactions.
Senator Stevens. Any different than taking on a new
customer?
Mr. Schremp. Certainly more expensive for us to take on a
new customer where they port their number. And, the difference
is----
Senator Stevens. But, I mean, is it--suppose it's just a
brand-new customer. Someone moves into the country, they want a
telephone service. Now, is that going to cost you more or less
than having a current customer from another entity ask you to
come to your service.
Mr. Schremp. Absolutely costs us less. So, in the case that
we're porting the customer's phone number, our costs are
certainly $20, $30, $40 higher to complete the port
transaction. That's sort of the hard cost associated with the
head count, the human resources required to----
Senator Stevens. Gentlemen, can any of you tell us, what's
the relative cost between the entity that's losing the
customer, and the entity that's gaining the customer?
Mr. Guttman-McCabe. I can't answer that now, but I could
get you some information for the record on that, on what it
costs us to port.
Senator Stevens. Well, our bill is trying to make it fair,
but make it customer-friendly, consumer-friendly, and saying it
must be done as quickly as possible. Now, can that be achieved?
And, do we need this bill to achieve it?
Mr. Banks. Well, I think you're right, Senator, to raise
the issue of the, sort of, a cost-benefit analysis. That there
are costs to number porting, and there are benefits. The
benefits are--we don't understand the benefits of moving it
from 4 days, which is the current deadline, to 3 days or 2
days.
But, when NANC spent a lot of time on this, they attached
some cost estimates, to different solutions to speeding up
wireline porting, and none of the solutions would move us all
the way to the wireless intervals. Some would move us closer,
but could cost billions of dollars, and I think you raise a
very good point that, those billions of dollars will have to be
paid by somebody.
Senator Stevens. Mr. Clark, you're, I understand, the
Chairman of the Telecommunications Committee. Has that
Committee analyzed this problem, in terms of balance of cost of
this porting transaction?
Mr. Clark. Mr. Vice Chairman, I'm not aware that our
Committee has done that, most of that would rest with either
the NANC, or the ATIS industry board.
However, I think your question raises a valid point, which
is, when LNP was first set up, recall that the ILECs were
allowed, for 5 years, to recover the cost of implementing the
setup of that program. So, I think there was a recognition that
there is a cost to initially set it up.
I think it's very worthy of study to decide, if there are
ongoing administrative costs that need to be recovered, and I
think NARUC's position would be, if that's a root cause, if
that's one of the barriers to getting effective porting taken
care of, then we ought to find some way to knock down that
barrier.
Senator Stevens. But if I leave that entity, and ask to
move my number to a new wireless service--if I leave a wire
service to go to a wireless service, I understand it takes two
and a half hours to go to the wireline service, it takes 4 days
on the wireline service. Now, why is that?
Mr. Clark. And that's what we're hearing, as well, and
that's what was really the impetus for our resolution, which is
that--we don't know what it is, yet, but there clearly is
something wrong. I mean, if wireless-to-wireless ports can
happen so quickly, we ask, why cannot wireline-to-wireless
ports happen with the same type of speed? And I don't think we
have the answer to that today. But----
Senator Stevens. Is there uniformity within the industry of
how it's done?
Mr. Guttman-McCabe. On the wireless side there is, Senator.
And that is part of our concern. We recognize and understand
that there is going to be a cost that will be a portion of, or
go along with streamlining the wireline-to-wireless process.
And as Commissioner Clark suggested, there was a cost-recovery
mechanism in place for the local exchange carriers when this
requirement was initially put in, by the Committee, and by
Congress.
But what we question is why can a wireless-to-wireless port
happen in two and a half hours, using three or four fields,
when a wireline-to-wireless happens in a less effective manner,
taking up to 4 days or beyond, involving, at times, 20, 30, 50
or more fields.
Senator Stevens. Mr. Schremp, Mr. Banks--I think, we want
to be fair in what we're mandating, but it appears to me that
as--wireless is the new game in town--there are going to be
more consumers migrating from wireline service to wireless,
than there is from wireless-to-wireless, or from wireless back
to the wireline. Why should the customers that remain on the
telephone system, the wireline system, bear the cost of
portability to the wireless system?
Mr. Banks. I think that's a reasonable question. And, I
would also add that there are--when we compare the 2 hours, to
the 4 days it takes on the wireline side, that is exactly what
NANC spent thousands of hours understanding and making
recommendations about. And it's hard to sum up very quickly why
it takes longer on the wireline side, but it's a function of
the fact that wireline networks are different, and incumbents
have said this, and competitive carriers say this--we both say
this--it's different, we have loops we have to keep track of,
we have a number of things we have to keep track of, we have
networks that have been in place for a long time.
And, finally, I think all our companies would prefer
faster, and faster is good, but getting it right is better. And
if we mess up for a wireline customer that has one line at
their house, and the port is done incorrectly, so the wrong
person loses service, that's a very bad thing. And, it's very
important to avoid that.
Senator Stevens. Can this be automated between wireline to
wireless? It looks like it is automated wireless-to-wireless.
Can it be automated, wireline to wireless?
Mr. Banks. In fact, the processes are automated on the
wireline side at the larger companies, their semi-automated at
some of the medium-sized companies, and at the smaller
companies, they tend to be completely manual.
Senator Stevens. So, by definition, the smaller the
company, the greater the cost if you're going to lose a
customer?
Mr. Banks. More or less.
Senator Stevens. Mr. Chairman, I'm a little worried about
what we're doing in terms--is our bill really, in the opinion
of the four of you, is it necessary in order to bring about
action from the FCC? Mr. Schremp? Let's just go by--I'm going
to have to give up here in a minute.
Mr. Schremp. From my perspective, I think one of the key
points for Charter, is not so much that we need any new
technology or any new infrastructure that doesn't exist. What
we're really looking for is, sort of, reinforcement and
validation of the 4-day rule.
We have 260 porting partners, we call them, folks that we
work with to either port numbers in or port numbers out. Fully
half of which, their published procedures are in violation of
the 4-days.
We can make 4 days work. We're not asking for any
significant new investment or infrastructure, at least at this
point in time. We think we can make 4 days work, but in many,
many cases today it doesn't. Including with very large telcos.
There are folks like Century Tel, and TDS and Citizens, who--
their published processes, be they either manual or automated--
are in violation of the four-day rule.
We're a fairly small telco. You know, we have 600,000
customers, so in the grand scheme of telecommunications
companies for phone, we're fairly small. We're not automated.
And we abide by the 4-day rule without any problem whatsoever.
And the port----
Senator Stevens. Can you do it shorter than 4 days?
Mr. Schremp. We absolutely can. The port-out process for
us----
Senator Stevens. Does it increase your cost?
Mr. Schremp. To a degree it does, to deal with, sort of,
peaks and valleys in terms of, of volume, perhaps. You know,
any time you compress a process. But it takes us 2 to 3
minutes.
Senator Stevens. I've got to keep going.
Mr. Banks?
Mr. Banks. I think that this bill, and the discussion we're
having about the porting process are helpful for the FCC, for
NANC, for the industry to renew their focus on this issue, and
to work together in NANC in the Ordering and Billing Forum to
improve the processes.
Senator Stevens. Mr. Clark, the FCC has had it before the
Commission for 3 years, as I understand it, and has not acted.
Do you think we have to have this bill?
Mr. Clark. Mr. Vice Chairman, I think in our opinion it
would be necessary, to the extent necessary to get the FCC to
act, well, they've got the authority they need. Does this
hearing and the bill, perhaps, speed up a process that,
perhaps, has been too slow at the FCC? I think we would agree
with that.
Senator Stevens. What do you think, Mr. Guttman-McCabe?
Mr. Guttman-McCabe. Senator, I would say, I hope that this
legislation is not necessary. The Commission has before it a
recent filing by Sprint and T-Mobile of December of 2006, and
we hope that they will act quickly on that. We are concerned by
some of the suggestions by Mr. Banks and others that this is
properly housed in the NANC or in the ATIS Ordering and Billing
Forum, because it's been there since 2004, and that's 3 years.
So, hopefully it's not necessary.
Senator Stevens. OK, last question for this time--the
current legislation doesn't cover Internet voice services in
the port area. Do you think we need this bill so it will be
covered?
Any of you?
Mr. Schremp. I believe there's value in clarifying that
VoIP providers are, in fact, mandated to support number
portability, as we put in some of our filings with the FCC.
Vonage ports have taken as long as 3 weeks in many cases, and
it has been a fairly common experience.
Senator Stevens. Mr. Chairman, I'm sorry to take so long,
I'll yield the floor. But, I do think there must be cost
differences in the way this is done, and I think we should have
from you all, what are the differences, and what are the--how
do they vary in terms of wireless-to-wireless, wireless-to-
wireline, and wireline-to-wireless, in terms of the cost
differences. Could you give us that information?
Thank you very much, Mr. Chairman.
The Chairman. I thank you, your questions were very
important, so you could have continued if you wanted it.
Senator Klobuchar?
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator Klobuchar. Thank you, Mr. Chairman.
Thank you to our witnesses. I was listening to this
remembering back to when I worked in this area as a private
lawyer representing MCI and other companies back in the
nineties, and this was right when the Telecom Act passed, and I
remembered we had hearings about area codes, and very heated
discussions about whether people would remember new area codes
and that they wanted to have the same one as their neighbors,
and I remember the discussion would always say, ``But in the
future, we're going to have number portability, and it won't
matter.'' And, so here we are.
And I do believe that for consumers to fully benefit from
the competitive promises of the 1996 Telecom Act, we need to
ensure that the telecom industry is operating under an
efficient and fair number portability system. After all, the
promise of that landmark legislation can only be realized if
consumers are able to take advantage of the competitive options
that are available to them.
So, I just had a few questions along those lines to follow
up on some of the questions that Senator Stevens was asking.
And I guess the first question is for you, Mr. Banks, is you
talked about--and there was a line of questioning about how,
that you've received very few consumer complaints, I think in
your prepared testimony you said 9 porting complaints out of
approximately 900,000. Yet, I think that where we were going
here, was that for some of the companies, it's much more
difficult to do that. And, could you talk about where the
complaints are, and where the problems are, and is it solely
based on the size of the company?
Mr. Banks. So, I think that there's no simple answer to
your question, in that there is a lot of performance data
that's submitted to state commissions from the larger companies
that look at, sort of, various aspects of ordering and porting.
So there are monthly reports to state commissions for the
larger carriers.
The smaller carriers--from the data we have gotten, which
is, certainly doesn't cover all of them--shows that, for the
most part they work their processes correctly, and get very few
complaints.
So, I think there are some ships passing in the night about
exactly how many complaints are there, and how many intervals
are missed, and who's doing it.
Senator Klobuchar. Mr. Clark, do you have anything along
this line that you'd like to add? Just as we've discussed,
there's such a difference between the portability between
wireless-to-wireless, and wireline-to-wireless.
Mr. Clark. Sure, and Senator, let me say, it's an honor to
testify before you. My old legislative district in Fargo
bordered the Red River, so we in eastern North Dakota sort of
adopted most of northwest Minnesota as honorary North Dakotans.
Senator Klobuchar. And we, too.
[Laughter.]
Mr. Clark. Let me say that, I think that your state
commissions would have better information, as Mr. Banks
suggested, for those larger carriers. And a good part of the
reason is because the 271 process, most States, as part of that
approval process, tracked the manner in which new customers, or
ports are taken. Things like that. So, I think you, probably
are able to get pretty good information on most of the former
Bell companies.
It would be more difficult for everyone but the RBOCs,
because I don't know that that information would be as readily
available. I know in talking with the smaller carriers in our
State, they had a great deal of concern about implementing
local number portability, because of the cost-benefit that
they, perhaps, saw. And most of them have indicated that they
have yet to process any local number portability cases,
although they indicate they have the capability to do so.
Senator Klobuchar. How does the demand differ from, though,
rural areas to metropolitan areas across the country for the
intermodal number porting?
Mr. Clark. Senator, I think the answer is probably that
you're going to see most of it in the urban areas, and the
reason is because as you get into more rural areas--although
it's not universally true--certainly wireless coverage tends to
be a little bit more spotty. So that, the reason----
Senator Klobuchar. I guess I just noticed that on my trip
home.
[Laughter.]
Mr. Clark. So, folks in rural areas oftentimes, the
rationale behind getting a wireless phone is often for the
mobility aspect, being able to have some safety on the highways
when they travel long distances, things like that, whereas
actually cutting the cord may not be as realistic an option for
them, because, perhaps, their in-home wireless penetration
isn't as good as you might have in more urban areas. I think
that's probably a lot of what's driving the reason that the
impetus for wireline-to-wireless ports seems to be in the more
urban areas, where there just is much heavier wireless
coverage. And they tend to be covered by the RBOCs.
Senator Klobuchar. Mr. Schremp, I know your company has
business in Minnesota, and employees in Minnesota, and I just
wondered from your perspective, how long do you believe that
potential customers have to wait for your service, before
they're transferred?
Mr. Schremp. Our average order to install interval is in
the range of 10 to 12 days for a ported number, which is
significantly longer than our install interval for other types
of services. And one of the things that becomes particularly
challenging for us is that--as you probably see in advertising
and so forth across the cable industry--you know, the real push
is around the ``bundle'' of services. So, video programming,
high-speed Internet access, and telephone.
And, there are certainly many scenarios where, because of
delays in the porting process, we're forced to go out, and the
consumer is forced to endure, two separate installations; go
out and install video service and high-speed Internet service,
and then wait for number porting to occur to come back and
install the telephone service. So, it creates, sort of, an
additional layer of complexity for us, above and beyond other
issues that may occur, solely within the phone product.
Senator Klobuchar. And how about the number of people that
cancel their service, because it just takes too long to
transfer? And, do you have Minnesota-specific numbers on that?
Mr. Schremp. I don't have Minnesota-specific numbers, I
could certainly obtain them for you and share them.
The real challenge that we have, is when an order is
rejected by what we call, the donor telco, the portee, I guess
is the way to look at it--and that rejection rate is about 15
percent, so 150 to 300 per day. The challenge in almost every
case, once an order is rejected, is that our original install
date that we've negotiated with the customer, and arranged with
the customer, is no longer valid. So, we have to get back in
touch with that customer--they may or may not have to re-plan
their schedule, and so forth.
And so, the cancellation rate is particularly high within
those 15 percent that have an order rejected in the initial go-
round. And, it becomes a snowball effect of negotiating a new
installation date, and communicating with the customer.
Senator Klobuchar. OK. Thank you very much.
The Chairman. I thank you very much.
All of you have mentioned NANC, the North American
Numbering Council. It was set up to advise the FCC on matters
that we are now discussing. I gather that NANC has not been
submitting any important recommendations on matters that we're
discussing now.
Mr. Banks, you suggested another group, made up of
consumers and wireless and wireline people. Are you suggesting
we wipe out NANC?
Mr. Banks. No, I'm certainly not. I think NANC has been a
leader in this area, and in particular, they formulated a
working group, a subcommittee composed of consumer
representatives, and carriers, to work on intermodal porting.
And they submitted a pretty detailed report to the FCC in 2004,
and since then a sub-group at NANC has continued to work on
solving piece-parts of the intermodal porting problems, and to
make those better.
So, a big chunk of their work and report was done in 2004,
and they've continued working on this problem since then.
The Chairman. Are you suggesting that legislation is not
necessary because NANC is operating?
Mr. Banks. No. I think that this bill, and discussion--as I
said before--are very good to motivate people to look more at
this issue, and to go back to the FCC and NANC, and work more
on it.
The Chairman. I was interested in your responses to Senator
Stevens' questions. I was impressed by The Wall Street Journal
article on the recent mad rush to push this iPhone, Apple
iPhone, and then the problem that followed that. Is there any
way we can resolve that? This congestion problem?
Mr. Banks. Well, I think the fact that whatever--500,000 of
them were sold over the course of a weekend is probably
difficult for any industry to deal with. It seemed to me the
problems were relatively small, and I think it's very difficult
to know. I mean, I would assume that a great majority of the
issues are on wireless-to-wireless porting, because wireline-
to-wireless porting is about 3 percent of total ports. So, I'm
sure there are some issues with wireline-to-wireless, but I'm
sure there were many issues with wireless-to-wireless ports as
well.
The Chairman. I would like to ask the panel, do you believe
that this Committee should proceed in acting upon this bill?
I'll ask each one of you. Do you think we should continue? Or
just stop it at this point? Mr. Schremp?
Mr. Schremp. I think the Committee should continue on two
bases. One is relative to your earlier point about NANC. You
know, from our perspective, in the wireline-to-wireline world,
there are no market forces that are going to drive efficiency.
It's a documented fact that the incumbent providers are losing
6 to 7 percent market share every year. And other alternatives,
both wireless and competitive wireline included, are picking up
that market share.
So, regardless of cost allocations and those sorts of
things, the incumbent telcos are in a net-loss position for
wireline services, period. And, whether it's through FCC
action, or through this Committee, we believe that the market
forces, again, are not sufficient, and that further action is
required. Again, either through FCC action or through this
Committee, and legislation associated.
The Chairman. Mr. Banks?
Mr. Banks. Well, I think again, the Committee's interest in
this issue, and the discussion we're having here, can only help
the entire industry sit down and work through these issues. But
they are very complicated, and some of them are very costly.
The Chairman. Mr. Clark?
Mr. Clark. Mr. Chairman, I'm always bound by Association
policy and resolution that's been adopted, and I have to say
that we haven't taken a specific position on this piece of
legislation.
However, from my own perspective, I think at the very
minimum it makes sense to keep the legislation alive, to keep
the pressure up. We believe that the FCC can address this, has
the authority to address it, but to the extent that it
continues to not be acted upon, we believe that hearings such
as this, and potential legislation are worthwhile.
The Chairman. Mr. Guttman-McCabe?
Mr. Guttman-McCabe. Mr. Chairman, I would agree, I think,
with my colleagues on the panel that, at the least, it makes
sense for the Committee to continue to watch over what is
happening at the Commission. We are concerned by the concept of
leaving this with the NANC or the ATIS Forum, because those are
consensus-driven bodies, and at least half of the membership of
those consensus-driven bodies don't have the incentive to reach
consensus. So, there is an active proceeding at the Commission,
it's alive, it's recent, and hopefully the Commission will act
appropriately and timely on that. If not, then I think it, you
know, it makes sense to revisit the fact, or the need for
legislation. But, in the interim, watching over the process,
and making sure that something happens, makes complete sense.
The Chairman. Thank you very much.
Senator Stevens?
Senator Stevens. Was there an increase in hoarding, after
the FCC acted?
Mr. Guttman-McCabe. In its original?
Senator Stevens. Yes.
Mr. Guttman-McCabe. Yes, absolutely. And, initially, in the
wireless-to-wireless space, Mr. Vice Chairman, there was a
large number of ports, that I think has toned down a little
bit, but it's been relatively consistent in the wireless-to-
wireless space. The wireline-to-wireless space we're seeing, as
Mr. Schremp had said, we're seeing a quarter-to-quarter drop in
the number of people who have LEC lines, and in turn, a
significant percentage of those are people who are trying, when
they cut the cord, to bring their numbers with them, so----
Senator Stevens. To the whole panel--what's the single-
greatest cost involved in porting? I assume it differs from
smaller to medium to larger-sized telephone companies, but
what's the greatest cost involved in this? Is it manual? Does
it involve sending a guy out in a truck? What is the cost here,
in terms of that shifting? Basic costs.
Mr. Clark. Mr. Chairman, I personally haven't been through
one of the LNP cost-benefit cases in my own State of North
Dakota--a number of state commissions have, and I think that we
could probably provide you with some of that information in a
follow up response form.
I think what you'll probably find is it, it really depends
on the size of the company, and when you talk about smaller
LECs, they just simply don't--at least up to this point--get a
lot of porting requests, and so the per-port cost would be
quite high.
Senator Stevens. Let me be the, just the devil's advocate
here. Could I just decide I want to keep my wireline, and I
want to add wireless to it? Can I have two providers on the
same number?
Mr. Guttman-McCabe. I don't think that technology exists
right now, Mr. Vice Chairman. I think that----
Senator Stevens. So, if I have an IP phone, by definition--
have to leave the wireline if I want to use it?
Mr. Guttman-McCabe. I think that is the case, with the
technology today.
Senator Stevens. Is it coming? Why shouldn't I be able to
say, by just a little switch on my phone at home, that's wired,
I'm going off on the wireless now, I want to use this as I ride
my motorcycle.
Mr. Clark. Chairman Stevens, I believe that, that
technology isn't far from what is soon going to be rolled out
by T-Mobile, a lot of folks have keyed in on that where, the
technology, when you're out on your motorcycle rides over the
wireless network, traditional cellular network, when you get
near your home, it actually hits a WiFi spot, and at the point
that it picks up that WiFi signal, the call goes over a
traditional, sort of, broadband-type network. And the device
itself, recognizes when it's close to one of those spots, where
it can hit the broadband network, versus----
Senator Stevens. I hope someone does--I prefer using my
speakerphone at home, I can work, and turn it on. I can't do
that with the iPhone, but I can't have it when I'm out, away
from the house. It does seem to me that some of this problem
could go away if we just say, look, you can use another
mechanism if you want to, you don't have to switch services in
order to do it.
Senator Thune?
Pardon me, Mr. Chairman, your----
The Chairman. Senator Thune?
STATEMENT OF HON. JOHN THUNE,
U.S. SENATOR FROM SOUTH DAKOTA
Senator Thune. Thank you, Mr. Chairman, and I appreciate
you holding the hearing. I think that it's pretty clear that
giving customers the ability to keep their telephone numbers as
they change service providers is one of the smarter things that
the Congress has done in recent years, in terms of
telecommunications policy, and I would argue that it's been--by
and large--a success. The barriers to changing voice service
providers have dropped significantly with the advent of number
portability, and that means more competition. So, I think we
can expect that voice service providers won't simply rely on
their customer's desire to keep their phone number as a reason
to keep their service with their current provider.
I do have a couple of questions, with regard to making that
process work more smoothly, and regarding any additional action
that ought to be taken, either by Congress or the FCC. And the
first has to do with whether or not the witnesses believe that
the FCC currently has the authority to act on this issue.
Mr. Clark. Yes.
Mr. Guttman-McCabe. Yes.
Senator Thune. Everybody is in agreement on that point?
Then, can you tell us why Congress ought to be intervening,
and is there anything that the legislation that's before us
does that the FCC couldn't do on their own?
Mr. Clark. I think the rationale for Congress intervening
would be is, if the sense of Congress is that it just simply is
taking too long at the FCC to act on some of the petitions, and
concerns, and questions that have been raised about the length
of time, and the differential, really, between wireline-to-
wireline porting, and wireline-to-wireless porting, Senator.
Senator Thune. Anybody else care to comment on that?
Mr. Guttman-McCabe. I think I would agree with that
statement, that if Congress can provide a measure of oversight
over the Commission process, and if it, if it extends too long,
or an outcome comes out that doesn't make sense, then
Congressional action likely would make sense in that case. But,
the most recent filing by Sprint and T-Mobile was in December,
and that docket has been fully submitted, and hopefully we'll
have a decision from the Commission in the short-term on that.
Mr. Schremp. And from Charter's perspective, we've
overcome, you know, a whole host of hurdles to become
successful in the facilities-based wireline market, you know,
including certainly inter-connection agreements, inter-
connection rights, you know, economic issues about making
facilities-based competition work.
But, given that three-quarters of our customers port their
numbers when they come to us, we have--on a daily basis--what
we view as, you know, a barrier to competition. Certainly for
those cases where, you know, where we've got folks that aren't
abiding by the current 4-day rule. So, any mechanism to enforce
that current 4-day rule is something that enables us to
continue to be successful, and to drive additional investment
in launching new markets.
Senator Thune. Are we seeing any differences in number
portability between large and small voice service providers?
Mr. Banks. Yes, I mean, from the USTelecom perspective, the
difference we see is that smaller carriers tend to be more
manual in how they deal with these requests, larger carriers
tend to have more complex operating systems that can automate
some of the process. But there's very clearly a difference
between how smaller carriers can afford to approach this
problem, how larger carriers can.
Senator Thune. And, do you think we need different
deadlines for portability, for, based on the size of the
carrier?
Mr. Clark. Senator Thune, one of the things that I would
just comment on, is probably one of the state commissions that
has a very well-developed record on this particular topic is
your home state of South Dakota. I'm very familiar with a
number of the folks down there, and they had very extensive
hearings on the cost to implement local number portability,
specifically for those carriers defined under the Act as rural.
Senator Thune. Anybody else care to comment if we ought to
have some distinction between--?
Mr. Guttman-McCabe. Sure, I think, I think if a distinction
comes out of the process, and it's sort of a fully vetted
process at the Commission, and it makes sense, that's one
thing. Our concern is that the process has completely stalled
in front of the NANC and the ATIS Ordering and Billing Forum,
and it's been in this same state since 2004. And, as I said
earlier, those are both consensus-driven bodies, and when a
significant portion of the membership of those bodies has no
incentive to reach a consensus, it makes logical sense that the
process is going to stall.
What we've done as T-Mobile and Sprint, and then as an
industry association is put a recommendation on the table,
saying that this can be done with four fields, and can be done
quickly, and we have to believe that if a carrier only has to
monitor less fields, in some areas, it has to cost less. It
just seems, seems just eminently logical. And, our ports are
working--a larger number of ports, quicker time, less fields,
with less failures. And I think that's kind of like a grand
slam in the sense that, if all four of those things are true,
we see a need to sort of export that into the wireline-to-
wireless port space. And, hopefully, that's where the
Commission comes out, is reducing the amount of time, and
reducing the amount of fields that are needed to be filled in
before a port becomes successful.
Senator Thune. Mr. Chairman, thank you and thank our panel
for your testimony, and your answering questions. Thanks.
The Chairman. Thank you very much.
Based upon your testimony, and your suggestions, and I'll
have to confirm with the Vice Chairman, I wish to announce that
this bill will be subject to an Executive Session, or mark-up,
a week from today. So, may I suggest that, if you have any
recommendations as to amendments, additions, or what have you,
will you please advise us as soon as you can?
With that, the hearing is adjourned.
[Whereupon, at 11:10 a.m., the hearing was adjourned.]