The Price of Portability

If you woke up this morning to the sound of unearthly chatter, it was probably just wireless service providers chewing their nails. Yes, Nov. 24 has arrived, and with it, mobile number portability. Hate your cell phone service -- or rates -- but stuck around just because everyone had your wireless number on speed dial? Your prayers have been answered.

Southwest Airlines (NYSE: LUV  ) may have cornered the market on the potential marketing slogans like "You are now free to move around the country" or "Wanna get away," but it's clear that wireless providers will feel the pinch initially, no matter how they spin this.

The cellular emancipation couldn't come at a worse time for the companies. Shares of AT&T Wireless (NYSE: AWE  ) , Sprint PCS (NYSE: PCS  ) , and Nextel (Nasdaq: NXTL  ) are all trading at fractions of their all-time highs and the road ahead doesn't get any easier.

While you are sure to hear horror stories in the coming days about folks going days without wireless service during the transition or that there is really no service provider out there with an immaculate record, the sector will be tested.

The saving grace for these companies is that the very dynamics of portability might be beneficial in the long run. Contract terminations fees are likely to rise. Those great deals on Nokia (NYSE: NOK  ) handsets that you get for signing up with a company are bound to go away -- or simply shackled to longer contracts.

The providers will learn to profit from the churn. If not, there will be a shakeout and those left behind will be in a better position with larger chunks of market share and more leeway to dictate pricing.

Cellular service providers aren't fading away. Verizon Wireless -- a joint venture between Verizon (NYSE: VZ  ) and Vodafone (NYSE: VOD  ) -- posted an 18% jump in revenue on the way to adding 1.3 million new accounts this past quarter. The problem hasn't been attracting subscriber as much as profiting from them.

Wireless number portability won't be painless, but it just may just be the eye-opener the industry needs to evolve into a sector that will fundamentally connect with its consumers -- and its investors, too.

Think that portability will be a great way to lower your costs by switching to a more attractive pricing plan? Want to learn about even more ways to shave some of your overhead while spending less than you earn? All this and more in theLiving Below Your Means discussion board. Only on Fool.com.