Yes - it is necessary to do. Lower prices? Not really, will ultimately drive costs up. Improve service? No - other factors will influence service improvements.
Where do I start? I'm with a telecommunications company, and I have been responsible for implementing this project since it was originally mandated by the FCC in 1996. We finished number portability for land-lines a few years back, and turned our attention to cell phone portability. November 24, 2003 has been stuck in my brain for many years now.
The FCC order in 1996 was intended to open up competition between telecom carriers. Nearly every aspect of that order has been fought over by the carriers, new entrants, and lawyers. There has been billions of dollars spend on fighting and implementing that order.
The fundamentals of the order allow you to go from one telecom carrier to another and take your phone number with you. It has been phased in over a 7 year+ period.
In order for a start up company to compete, yes, you MUST allow number portability. What customer would wish to change their phone numbers just to go to another carrier promising to save them $5 a month? If you are a business customer, think of cost to change out the phone numbers on your business cards, web pages, advertising, stationary, etc, just to go to a new carrier.
The real question is whether competition has legitimately taken hold. The majority of the start up competitive companies have gone bankrupt or merged into bigger companies. There is a fear that these bigger companies are going to form a monopoly, counter to what the FCC intended to do with the order in the first place. There is some legitimate competition out there, but not as originally planned. There have been billions of dollars spent getting to this point, within an industry facing major employee layoffs due to hard economic conditions. Competition is not really driving new invention or better service, economic issues and the need to retain customers and grow new business is. I say YES, this is necessary, but have mixed opinions on how they went about mandating this.
Now the disclaimer: My views do not represent the opinions of my company.