A momentous occasion is upon mobile Americans -- local number portability rules for wireless service providers are mandated by the Federal Communications Commission (FCC) to go into effect on November 24th. Barring any last minute legal challenges -- which have stalled enactment of the policy for years already -- consumers will be able to dump their current wireless service provider and start up new service while keeping their telephone number.

Wireless number portability (WNP) is designed to remove the hook that has supposedly kept millions of Americans in substandard wireless service.

With this new level of ease offered to consumers to switch service providers, the big question on everyone's mind is -- who wins? One answer, of course, is the great American consumer -- maybe. Porting a number may not be as easy or beneficial as many think. But among investors, the question turns toward market competitiveness and how the new regulatory environment impacts individual investments. Any new regulatory policy offers challenge and opportunity -- and of course, we're looking for the latter. But while consumer advocates welcome this new wireless mandate, investors may have less to cheer about.

All carriers stand to lose
As we've already pointed out, extreme competition haunts the nation's largest wireless services providers -- Verizon Communications (NYSE:VZ), Cingular (a joint venture between SBC (NYSE:SBC) and Bellsouth (NYSE:BLS)), AT&T Wireless (NYSE:AWE), Sprint PCS (NYSE:PCS), Nextel Communications (NASDAQ:NXTL), and T-Mobile (a subsidiary of Deutsche Telekom AG (NYSE:DT)) -- and now the FCC has turned the heat up a notch. The major carriers in the U.S. have spent months whining to the FCC about the burden of the upcoming number portability environment. Now that it's going into effect, though, the carriers are switching their tune, publishing press releases praising the decision and harping about how wonderful they feel about providing this service to their beloved customers.

Give me a break.

Any way you look at it, number portability is an added cost for the carriers and they'd rather be forced to eat boxes of deep-fried Twinkies than implement WNP. First, they stand to see their rate of churn go up dramatically. Churn is an oft-reported measure of the percentage of customers that leave -- voluntarily or otherwise -- a carrier's service. The customer may just end service, or be terminated Schwarzenegger-style by the carrier due to poor payment practice or discontinued services. But the largest component of churn is made up of consumers dropping one service provider in favor of another.

In order to prevent an onslaught of churning subscribers, the carriers are sweetening deals to their current base of subscribers -- especially those no longer under contract. As a month-to-monther myself, I've already received letters from my provider with some pretty nice incentives to start a new contract. Guess what date they gave me to respond by? November 24th....hmmm.

Another cost hitting the carriers is in beefing up their call centers. Verizon and others announced adding hundreds of employees in preparation for consumers wanting to switch carriers. In the best case, this boosts the cost outlay to add a subscriber (which is captured in the CPGA, or cost per gross addition metric). In the worst case, the carrier hires extra staff to help customers unsubscribe and join a competitor (Ouch!).

No doubt, number portability will add cost across the board to carrier balance sheets. Added incentives, increased staffing, and even equipment upgrade costs all hit different areas of the balance sheet, but ultimately come down to measures of EBITDA and net profit. No carrier is immune to this sting -- it will hit them all somehow.

But shouldn't the high-quality service providers stand to win more customers than they lose, thereby making it a net-positive effect? It stands to reason that consumers will gravitate to the best networks with top-notch customer care. Unfortunately, all the carriers have sore spots either regionally or nationally, so determining the outright best is convoluted. The nature of wireless services makes them inherently lower quality than landline services, so even the top-tier wireless service providers stand to lose customers looking elsewhere for greener grass.

This past Monday, the FCC ruled unanimously to permit users to port their landline telephone number to a wireless service -- so your home phone can now be your mobile phone. Some analysts expect a large base of U.S. telephone customers to "cut the cord" and go wireless. This factor should benefit wireless carriers (they lobbied heavily for this provision), but it's hard to make a case for customer additions outstripping the subscriber loss and added costs. Many U.S. carriers have both landline and wireless operations as well. So they may just see customers leaving one division of the company to join another -- again at an added cost.

For investors looking to rank the effect of WNP among carriers, the best measure I choose to follow is the net effect of all the carrier's customer-pleasing efforts -- their churn rate. I expect carriers with the lowest annual churn rates -- such as Nextel and Verizon -- to be the least affected under the new WNP rules. Regional carriers such as US Cellular (AMEX:USM) and Alltel (NYSE:AT) may be harder hit, though some have a reprieve from the impact of the ruling until next year (only the top 100 markets are affected in November). But I wouldn't go so far as to call any carrier a winner under the new paradigm. Investors should consider reducing exposure to high-churn carriers and expect volatility across the sector.

Equipment sales go up
Investors looking to benefit from the implementation of WNP should look elsewhere -- for the collateral damage caused by the ruling. Since number porting serves to increase customer churn, equipment providers will tend to see a positive effect. With the U.S. supporting multiple wireless technologies across networks, various carriers have equipment that is mutually exclusive from their competition. Consumers leaving one provider for another will almost always need to buy a new phone.

The boost in equipment sales is a happy tune for the major handset providers -- mostly Nokia (NYSE:NOK), Samsung, and Motorola (NYSE:MOT). Not only are consumers forced to pick up a new handset, but the change will also have a positive impact on the adoption of new data services such as picture messaging. Carriers and vendors alike have been trying to kick-start wireless data services in the U.S., and WNP will help expose consumers using old dinosaur phones to newer data-capable models.

But while the boost in equipment sales will be positive for Nokia and its ilk in the near term, it's still a drop in the bucket compared to their normal sales volumes on a global scale. Still, there's no downside in stocks of these companies specifically from WNP.

Investment potential -- negligible
At this point, investing in wireless companies based on WNP regulations is more of a crapshoot than anything else. With mostly negative effects on the service providers, it's hard to distinguish how any of them could consider the new rules a boon to business. Equipment providers have more to cheer about, but don't expect income levels to soar based solely on WNP. In all, the risks presented under the new regulations negate the benefits when stacked against other factors driving the industry.

For more on wireless number portability's impact on any of the companies mentioned in this article, join the conversation on the discussion boards listed at the top right-hand corner of this page.

Dave Mock still makes calls using tin cans and string, though number portability may finally encourage him to upgrade. He owns shares of Nextel and Motorola. Dave is co-author of Tapping into Wireless and can be reached at dave@davemock.com.