Nearly 10 percent of current wireline customers surveyed by Standard & Poor'
s Equity Research Services said they would take their wireline numbers to
wireless carriers based on the recently implemented local number portability
mandate, which S&P noted could intensify wireless substitution efforts next
year and lead to greater access line losses for wireline operators.
S&P telecommunications services equity analyst Todd Rosenbluth added that
the survey results found no evidence that the youth market is more prone to
cut the cord, although he did admit the prepaid market, which traditionally
targets the youth market, is just emerging.

While wireless carriers are expected to see an influx of former wireline
customers beginning next year, Rosenbluth noted he does expect a sizable
increase in customer churn from one wireless carrier to another as a result
of LNP, with 4 percent of current wireless customers suggesting they would
switch carriers regardless of when their current contracts expire and an
additional 16 percent of those surveyed planning to switch once their
contracts are up.

For those carriers looking to attract those potential customers, S&P's
survey found a majority of respondents believe price and quality of service
are the most important factors when choosing wireless operators, suggesting
aggressive minute packages and wireless capital spending should increase
next year.

The survey also questioned the ability of aggressive bundling of data
services with traditional services to increase customer loyalty, though S&P
said telecommunications providers could find success with bundled calling
minute offerings spread between wireline and wireless services.

"We expect all carriers to develop aggressive bundling strategies,
particularly wireline and wireless services under one plan, as they try to
reduce customer churn, and we believe bundling should be catered toward
sharing minutes between wireline and wireless services," Rosenbluth said.
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