Come Nov. 24, the U.S. cell phone industry will lose the one thing that insulated it from true competition.

In what could be the biggest event in the industry's 20-year history, a new rule will let consumers keep their cell phone numbers if they switch carriers. (More info: Areas where you can switch carrier, keep number)

For 154 million U.S. cell phone customers, that will end the pain of changing phone numbers on business cards, in ads or in address books of family, friends and co-workers. Consumers say losing a familiar cell phone number is a major reason they stick with a provider, even through poor service.

"They've got me, because they have my phone number," says graphics designer Karen Hawkins, of Louisville. She's been a customer of Cingular and its predecessor for seven years and uses her cell phone for her business, When Elephants Fly Graphics.

The change could spur price cuts and better service as carriers compete to steal and keep customers. Big companies, such as UBS Investment Bank, are counting on big savings. It expects to cut U.S. cell phone costs 20% to 40% over the next 18 months by negotiating better cell phone deals for about 1,500 U.S. employees.

About 24 million customers are expected to switch by June 2005, estimates the Management Network, a consulting firm. If so, 16% of the cell phone market could change hands sinking some carriers while lifting others. That's a conservative estimate. Some Wall Street analysts expect customer "churn" when a customer dumps one carrier for another to jump 20% to 30% during the next year.

There could be some reasons customers don't switch quickly. Some might be locked into one- or two-year contracts that cost as much as $200 to break. Others might be satisfied or will wait to see what kinds of offers arise. Others may not want to get a new phone, which may be required.

Carriers with lower churn should fare best. No. 1 Verizon Wireless (news - web sites)'s reputation for having the best coverage, and Nextel's unique walkie-talkie service, will help them do well.

But everyone could take a near-term hit. If Verizon's churn rises 30%, earnings per share next year for parent Verizon Communications could drop 7%, Merrill Lynch says. If churn doubles an "Armageddon" scenario, 2004 earnings per share could drop almost 30%, Merrill says. "From an operational view ... this is the biggest thing that has hit the industry maybe ever," says John Comisky, vice president of operations for Verizon Wireless.

After years of fighting the so-called number portability rule, put forth by the Federal Communications Commission (news - web sites), most carriers are readying for it with new ads, discounts, promotions, free minutes and cheap cutting-edge phones.

Daniel Reiss of Gaithersburg, Md., has already benefited. The student and waiter needed to replace his broken AT&T Wireless phone in September. He couldn't wait until Nov. 24. But AT&T Wireless, eager to keep him, gave him a free color phone, a $50 value, and a free month of service, a $30 value. Business users are also shopping.

"For us ... it's got to be one of the most important things happening," says Harry Patel, head of telecom sourcing for UBS. If a CEO or an investor couldn't reach a UBS employee because of a phone number change, "It would ... be a disaster," Patel says. Without portability, "Moving our users to a new provider would be difficult."

Expect problems, experts say

Not every cell phone user will be affected Nov. 24. And a smooth transition isn't certain. Issues:

Availability. Number portability will only be available on Nov. 24 in more than 100 top metro areas. The FCC (news - web sites) requires carriers to extend it nationwide by May. Macon, Ga., for instance, won't be one of the first markets. But Atlanta, 80 miles away, will be. Learning if your area is covered could "be a point of confusion," says Dahna Hull, director of marketing for Cingular Wireless.

To find out if they qualify for number portability, consumers should probably ask the carrier they want to begin using, experts say.

Then, too, carriers have their own rollouts. No. 6 carrier T-Mobile will offer portability in every market it serves, regardless of size. Others won't go beyond what's required.

Timing. Carriers aim to make number switches in 2� hours. The FCC wants them to hit that mark, but there are no established penalties if they don't. Depending on the carrier, "It can take anything from several hours to several days," says Jonathan Tinter, vice president of marketing strategies for AT&T Wireless, the No. 3 carrier. Expect snags, says Debbie Stipe of consulting firm Cap Gemini Ernst & Young. "It's been a real learning curve" for carriers, she says.

Verification. The USA's six major carriers will handle the bulk of the switching because they have 75% of customers. But roughly 175 carriers exist. They will need agreements with one another on how to verify that a customer has requested a switch, says Tom Wheeler, CEO of the Cellular Telecommunications and Internet Association. To do so, carriers may require as many as 16 pieces of information. No. 2 Cingular wants to use the basics, such as name, ZIP code and Social Security number. Others could be different.

One mix-up such as one carrier's use of the word "Street" on a form vs. another's use of "St." could muck up the process. "If one computer can't recognize ... the system the other carrier uses, you're dead meat," Wheeler says. "The process freezes."

Landline transfers. The FCC also requires phone companies to switch some traditional home and business numbers called landlines because they use wires to cell phones.

The FCC hasn't released specifics on how this would work. In general, it says the landline carriers have to make the switch if the customer's number and the equipment of the cellular carrier are within the same geographic area. For example, regular phone companies already must allow customers to keep numbers when they move from, say, an apartment to a nearby house. If they move to a nearby town, however, they often cannot keep the number.

The cellular association, CTIA, estimates thatbecause of the way wireless networks are set up, only 13% of wireless customers will be eligible for this. Still, it could boost the cell phone sector by letting more people cut their phone cords. About 7 million people, or 5% of wireless customers, don't have a landline, the CTIA says. Some carriers already go beyond what is required when it's to their benefit. Verizon Communications, the No. 1 local phone company, will switch landline numbers to a Verizon Wireless cell phone anywhere both provide service. Sprint and Sprint PCS have a similar deal in certain states.

Carriers reach out with perks

The good news is that the change is expected to result in good deals for discerning shoppers.

Randy Mysliviec, president of wireless solutions at billing services provider Convergys, suggests to consumers: "Call your current carrier and say ... 'What can you do for me?' "

Carriers are already reaching out with perks, especially to heavy users.

AT&T Wireless is offering bonus minutes, equipment upgrades and discounts on high-end equipment, says Tinter, the director of marketing strategy. He says the incentives are normal retention efforts, but consumers say the offers are getting better.

Sprint PCS will alter calling plans, for customers who incur a lot of roaming charges or offer them more minutes if they often bust their limits. Customers might get higher phone discounts or rebates for signing a two-year deal, says Sprint President Len Lauer.

Deals are expected to get even better when the rules take hold, telecom analysts say. Savvy companies could cut cell phone costs 30% to 40%, says Nick Wray, a vice president of Teldata Control, which helps companies cut communications costs. But, "No business should think about switching in the first six months," he says. Wrinkles need to be ironed out.

Small-business owners, such as Louis Ashy and Brenda Scarbrough-Ashy, can also benefit.

Their Pillar to Post home inspection franchise in Lumberton, Texas, relies heavily on a Verizon Wireless cell phone.

Brenda, 44, estimates they've spent $3,000 to $5,000 on stationery, business cards, brochures and refrigerator magnets featuring that cell phone number and an additional $8,000 on other advertising. Having gone through what she describes as constant billing disputes with Verizon, she says she'll consider a change in carriers.

"We were held hostage, but it's going to be a whole new ballgame," she says.

Source: Yahoo