updated 3/11/2005 8:22:04 PM ET 2005-03-12T01:22:04

A federal court on Friday upheld the bulk of Federal Communications Commission rules that allow consumers to keep their phone numbers when they switch providers.

However, the U.S. Court of Appeals for the District of Columbia ruled that smaller traditional phone companies didn't have to honor customer requests to transfer a landline number to a cell phone.

The court said the agency needed to study further the impact of the new rules on small companies before the guidelines could go back into effect in those cases. The companies, which serve mainly rural areas, can still voluntarily switch home numbers to a cell phone.

One consumer group said the decision might affect companies that serve as much as 10 percent of the U.S. population, or more than 29 million people.

"We hope the FCC will go back and fill in the record and help consumers in small, rural markets have the flexibility to take their numbers to the provider of their choice," said Gene Kimmelman, senior policy director at Consumers Union, the publisher of Consumer Reports magazine.

FCC Chairman Michael Powell said he was confident the agency would respond quickly to the court's request.

The ruling was one of two decisions from the appeals court Friday involving the FCC's number-switching rules. The court upheld the remainder of those rules.

Powell, who is leaving the agency this month, praised the decisions overall as "a big win for competition and wireless consumers."

"One more potential hurdle has been removed on the road to an even more robustly competitive marketplace," he said.

According to the FCC, roughly 10 million cell customers have transferred their numbers to new providers since the rules went into effect in November 2003. Another 800,000 have switched their landline numbers to cell phones, and about 9,000 have done the reverse.

Consumer advocates predicted the changes would lead to lower prices, better service and more options for phone customers. Many customers had been reluctant to switch service because it required changing numbers they had given to relatives, friends and business associates.

The court did not force small-company customers who have already switched from landlines to cell phones to switch their numbers back.

The small companies generally have fewer than 1,500 employees, serving mainly rural areas, said the U.S. Telecom Association, an industry group and a plaintiff in one of the cases.

The FCC failed to consider how small and rural carriers would be affected by "costly and unnecessary" number-switching requirements, said association president Walter McCormick. "It is unfortunate that the rules were not stayed for all carriers."

Phone companies had to upgrade equipment and infrastructure in order for the phone network to recognize if an old landline number was being used for a cell phone. In smaller markets, the deadline to upgrade was last May.

"But it's more expensive to serve rural areas than metro areas because you don't have the customer base to pass those costs over," said Annmarie Sartor, spokeswoman for CenturyTel, Inc., a Monroe, La.-based phone company that serves mainly rural areas in 22 states. CenturyTel sued the government along with the telecom association.

In rural areas, customer phone bills have risen between $1 and $9 a month to cover the cost of the upgrades, the telecom association said.

Landline customers in rural areas may be less likely to switch to a wireless phone because cell phone service often isn't as reliable, Sartor said.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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