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

Local number portability (LNP) is a key factor in the promotion of local ca ll competition in telecommunications. By allowing a consumer to retain thei r number when moving between local telephone providers, LNP reduces custome rs' switching costs and makes it easier for new providers to compete for cu stomers. But regulators face a number of important choices when implementin g LNP - what technology should be chosen, what are the costs of implementin g LNP and who should pay? This paper considers how the regulator can implem ent LNP when there is asymmetric information about the optimal timing, choi ce and cost of technology and about the value of LNP to individual customer s. We show that. requiring each carrier to bear their own costs and creatin g transferable ownership of telephone numbers may allow the regulator to ov ercome the problems created bq. asymmetric information. (C) 2001 Elsevier S cience B.V. All rights reserved.