by Jon Surmacz

By the Numbers: Switching Cell Phone Carriers Comes with Costs

Feb 15, 20043 mins
MobileSmall and Medium Business

Beware: Switching Carriers Comes with Costs

According to Federal Communications Commission rule changes that went into effect Nov. 24, 2003, cell phone users may switch from one local carrier to another while maintaining their old phone numbers. For businesses, which compose 35 percent of the cell phone market in the United States, the rule change represents an opportunity to bring all users under one carrier to take advantage of volume discounts and streamlined processes that could save up to 35 percent in wireless costs, according to Gartner. But there are hidden costs that may not make switching carriers worthwhile.

Based on a Gartner model of 1,000 users, here’s what you can expect:

Here’s Where You’ll Spend
Capital costs $235,000
Operations $50,933
Administration $15,789
Training $15,110
Total spent $316,832
Here’s Where You’llSave
Switching discounts $31,200
Lower costs per minute $216,000
Management consolidation $12,000
Total saved $259,200
Here’s How It Adds Up (Or Doesn’t)
Total spending -Total savings = $57,632
So, switching leaves you more than $50,000 in the red in the first year.

Gartner estimates that there will be 14 million to 15 million new cell phone subscribers in 2004, raising the total U.S. wireless subscriber base to 172 million.

Best Practices

Assess costs and benefits. Be prepared to move to another carrier, but be sure to assess dollar and time costs for switching. Will you be sacrificing coverage to save money? Is it worth the effort? Savings will vary, depending on the size of the deal. Also be aware of your contracts and the penalties for early termination.

Be patient. Unless you’re in a hurry, it’s best to wait this out. It may take several months for carriers to work out the kinks in their switching processes. Plan to consolidate in the second quarter of 2004 at the earliest.

Evaluate your contracts. Companies that currently use multiple carriers may have an easier time porting numbers from one carrier to another, as opposed to companies with one carrier looking to move all of their users to a new carrier.

Talk to your carrier. Tell your existing carrier that you’re planning to take your business elsewhere. There could be last-ditch deals to be had.

Ask for service-level agreements. Don’t switch without an SLA in place. Make sure it covers the time period for switching, accuracy, costs and penalties for not meeting deadlines.

Claim your numbers. Install a clause in the contract that the phone number is the property of the company?not the individual or the carrier.

Let the carrier do the switching. Don’t get involved with the details. Leave the hassle to the operators.

Ask for progress reports. Keep an eye on all carriers involved in the switching process by demanding daily progress reports from each.