Numbers to the people: regulation, ownership and local number portability

Local number portability (LNP) is a key factor in the promotion of local call competition in telecommunications. By allowing a consumer to retain their number when moving between local telephone providers, LNP reduces customers’ switching costs and makes it easier for new providers to compete for customers. But regulators face a number of important choices when implementing LNP – what technology should be chosen, what are the costs of implementing LNP and who should pay? This paper considers how the regulator can implement LNP when there is asymmetric information about the optimal timing, choice and cost of technology and about the value of LNP to individual customers. We show that requiring each carrier to bear their own costs and creating transferable ownership of telephone numbers may allow the regulator to overcome the problems created by asymmetric information. Journal of Economic Literature Classification Numbers: D4, L13, L51.