Many of the recommendations in Chapter Two resulted directly from the analysis of the utilization data, and addressed actions that the CPUC should undertake to make additional numbers available for pooling or regular monthly lotteries. The recommendations contained in this chapter suggest additional conservation measures as required by Public Utilities Code Section 7935(a). The CPUC should adopt the following conservation measures in the 831 area code and statewide: LNP-related actions, Unassigned Number Porting, Rate Center Consolidation, and prefix sharing. When applied, these conservation measures will increase the lives of prefixes, minimize customer confusion, and cause companies to use numbers more efficiently throughout California.
E. NUMBER POOLING
Number pooling is an excellent method of number conservation. The CPUC worked aggressively to bring number pooling to California and the results have been dramatic. Pooling is underway in fourteen area codes while two additional pools are scheduled to begin in early 2002. Number pooling prevents the need to open new prefixes so it extends the life of area codes. Prior to pooling, 534 prefixes would have been opened in fourteen area codes now in pooling.52 In addition, pooling satisfies the numbering needs of all companies participating in the number pool almost entirely with donated blocks.53 Pooling benefits not only the public but the companies as well by reducing the time necessary to acquire numbering resources. Without pooling, activating new numbers takes at least 66 days.54 With number pooling, activating new numbers can be accomplished in three weeks.
So far in California, number pooling has worked well because companies have met their numbering needs using the excess numbers that other companies donate to the number pool. The CPUC has set aside prefixes in each area code that will be used to replenish the pools if and when donations are no longer sufficient. There are a limited number of prefixes set aside so it is crucial that these prefixes be opened only when there is truly a need. If donated numbers are insufficient to meet the companies' forecasts then a new prefix may need to be opened. Industry guidelines suggest replenishing a pool at least 66 days in advance when the forecast shows a company will need more numbers than the pool has on hand. This presents a problem because companies in California have been, on average, forecasting over six times more numbers than they will take from the pool. Had the pool administrator opened prefixes based on that forecast, the prefixes would lie unused in the rate center.
Thus far, the CPUC has prevented prefixes from being unnecessarily opened by ordering the Pooling Administrator (PA) to consult with TD prior to opening any prefix. However, the CPUC believes this issue should be addressed for the long term. Industry guidelines encourage companies to over-forecast because a company can only be assured numbers for which it forecasts.55 In essence, a company could be penalized for under-forecasting. Since there is no penalty for over-forecasting, it is in the companies' interests to err on the side of over-forecasting. TD recommends that the CPUC develop specific rules guiding company forecasting of demand for telephone numbers. TD also recommends that the PA take historical usage into account when determining when to open a fresh prefix of 10,000 numbers.
Recommendations for Number Pooling
· The CPUC should work with industry groups and the Pooling Administrator to develop specific rules for companies pertaining to forecasting a six-month inventory when a number pool is authorized in a particular area code.
F. LACK OF LOCAL NUMBER PORTABILITY STANDS AS A KEY BARRIER TO POOLING
Full LNP deployment in the 831 area code is critical to effective number conservation. As described in Chapter 1, LNP enables customers to keep their telephone numbers when they switch companies. Since the number remains with the customer and can be transferred to different companies, there is no need to distribute duplicate numbering resources to both companies. Also, LNP is the technology platform that makes number pooling possible.
In an order released in 1997, the FCC ordered all wireline carriers in the top 100 MSAs to become LNP capable by December 1998.56 Just one rate center in the 831 area code falls within one of the top 100 MSAs. On July 26, 2001, the CPUC gave non-compliant carriers an incentive to implement LNP technology by allowing them to receive numbering resources only through the number pool, once a number pool has been established in the area code.57
Wireless carriers requested and received from the FCC a time extension, until November 2002, to become LNP capable.58 The CPUC filed comments with the FCC arguing that wireless carriers should be required to participate in pooling immediately upon becoming LNP capable. 59 In the second NRO Order, the FCC agreed with the CPUC and will require wireless carriers to participate in pooling immediately upon becoming LNP capable. Wireless carriers hold 165 prefixes in the 831 area code, of which 292 blocks could be made available for pooling if they were required to participate in the pool.
As noted earlier, federal LNP requirements are directed at companies in the country's top 100 MSAs. But roughly half of the area codes in California fall partially or completely outside of these MSAs. These area codes are facing similar numbering crises, and LNP is not ordered. Without full activation of LNP technology throughout California, the CPUC is effectively barred from operating number pools in half of the area codes in the state. California has a pending petition at the FCC to extend LNP deployment statewide. The CPUC should urge the FCC to act on the petition for authority to order LNP capability statewide.
Recommendations for LNP
· The CPUC should continue to work with the FCC to enforce LNP capability mandates for all wireline carriers in the top 100 MSAs.
G. UNASSIGNED NUMBER PORTING
Unassigned Number Porting (UNP) is the term used to describe the transfer of unused numbers from one company to another. Like number pooling and the porting of assigned numbers from company to company, UNP is made possible by deployment of LNP. The primary benefit of UNP is increased access to unused numbers stranded in inventories. UNP would also strengthen competitively neutral access to public numbering resources by enabling companies with smaller inventories to access the inventories of companies with larger number holdings. UNP would allow companies to transfer small increments of numbers between themselves. Various proposals have suggested limiting the increments to 25 or 100 numbers.60 Two efficiencies would be gained: 1) companies with smaller scale needs would be able to receive numbers in appropriate increments, and 2) unused numbers stranded in inventories would be transferred to companies where they could be put to use.
Currently, companies receive unused numbers from the NANPA or the PA in increments of 10,000 numbers (prefixes) or 1,000 numbers (blocks). In areas without number pooling, prefixes held in company inventories that are not put to use within six months must be returned, but only if uncontaminated. If just one number has been used, the remaining 9,999 are stranded in the company inventory. In areas with number pooling, blocks are eligible for return only if 10% or less contaminated. For example, if a company receives 1000 numbers and only has need for 100 numbers, the remaining 900 numbers are eligible for return. However, if a company received 1000 numbers and only has need for 101 numbers, the remaining 899 numbers are ineligible for return and are stranded in the company inventory.
Therefore, UNP is one way to address the problem of stranded numbers. The FCC has contemplated UNP but has so far declined to act.61 The FCC has not ruled out UNP as a conservation measure.62 In the absence of a voluntary company agreement to implement UNP, however, the CPUC could only implement UNP with FCC approval. Given the number conservation benefits to be had, the CPUC should petition the FCC for authority to undertake a UNP trial.
Recommendations for UNP
· The CPUC should petition the FCC for authority to implement UNP statewide.
· The CPUC should solicit comments in order to develop rules and practices necessary to implement UNP.
H. CONSOLIDATION OF RATE CENTERS TO MAXIMIZE NUMBER USE
Rate Center Consolidation (RCC) allows companies to use numbers over a larger geographic area, thus slowing the rate at which prefixes are used. Rate center locations dictate both the scope of a customer's local calling area and the charges assessed per toll call. In California, each rate center governs a relatively small, uniform local calling area, measured from the rate center of each exchange. Because the local calling areas in California are small compared to those in many other states, it is virtually impossible to migrate to larger calling areas via consolidation of rate centers without eliminating at least some toll call routes.
Eliminating toll routes would have the residual effect of reducing revenues for toll service providers, which include both local exchange carriers and inter-exchange carriers. The two major ILECs in California, Pacific Bell and Verizon (formerly GTE California), have expressed at industry meetings their belief that they should be "made whole" for any loss of toll revenues that would likely result from consolidating rate centers. An industry task force which the CPUC charged with developing a proposal for rate center consolidation reported to the CPUC in March 1999 that it would offer no such plan until the CPUC addresses revenue and consumer impact issues. However, it is difficult, if not impossible for the CPUC to address consumer and revenue impacts if the CPUC has no plan for consolidating rate centers, which would provide the context and details for assessing such impacts.
California has roughly 750 rate centers, each of which is the approximate center of a 12-mile local calling area. With no input from the industry, the CPUC cannot begin to guess which approach would be most appropriate. For example, California could consolidate from 750 rate centers to 400, or to 200. Each of those possibilities would present different rate "impacts" for both companies and customers. Alternatively, rather than attempting to consolidate rate centers on a statewide basis, the CPUC could consider consolidating rate centers on an area code-by-area code basis. All rate centers in one area code, for example, could be consolidated into one rate center. This would eliminate both the uniform statewide local calling area of 12 miles and uniform statewide rates for each company thus, generating some amount of customer confusion as individuals travel throughout the state for business or social purposes, or relocate their home or business. Further, because companies would lose toll revenues when rate centers are consolidated and local calling areas expanded, the CPUC would need to address the question of which, if any, companies should be allowed to recover those lost revenues, and if so, how.63
Finally, rate center consolidation will mean direct, substantial, and permanent basic rate increases for many customers, unless the ILECs forgo their claim that RCC should be revenue neutral. Economics and Technology, a Boston consulting group, has projected that "rate center consolidation in California could result in a per-access-line increase of $5.56 in basic monthly rates for California ILEC customers."64This may not be an acceptable option, even though California presently has among the lowest local exchange rates in the country. And, if the ILECs continue to press for revenue neutrality, the very process of determining the amount of those revenues, as well as how those monies should be recovered and from what class (es) of customers, would constitute a rate-design proceeding of significant scale and scope. Such a proceeding could consume a tremendous amount of CPUC, industry, and consumer representative resources, and take one to two years.65Nonetheless, because RCC offers the potential for conserving significant quantities of numbers in California, TD recommends that the CPUC renew its efforts to determine how RCC could be implemented in California. The industry should be directed to posit several different scenarios, if they cannot agree on one proposal.
Recommendations for Rate Center Consolidation
· The CPUC should undertake further investigation by ordering the telecommunications industry to develop a plan, within 180 days, for rate center consolidation.
I. SHARING PREFIXES MAY YIELD MORE EFFICIENT NUMBER USE
In analyzing previous utilization data in the 310 area code, TD became aware that two non-affiliated companies were sharing prefixes under an informal arrangement. Using LNP technology, a company with excess numbers had transferred whole thousand blocks of numbers to the other company for use. TD believes this sharing arrangement promotes efficient number use among companies. Some companies reporting utilization data in the 831 area code are affiliated through mergers, acquisitions or other business relationships. Despite these affiliations, each company separately requests numbers from the NANPA.66 TD notes that the benefits of sharing prefixes may be different in area codes in which number pooling has already been implemented versus those that number pooling has not been implemented. Sharing prefixes between companies appears worthy of further investigation by the CPUC as a mechanism to promote more efficient use of numbers.
Recommendations for Sharing of Prefixes
· The CPUC should further explore sharing of prefixes as a means to more efficiently utilize numbers in all area codes
64 "Where Have All the Numbers Gone?" (Second Edition), The Ad Hoc Telecommunications Users Committee, prepared by Economics and Technology, Inc., June 2000. The estimate of $5.56 may be conservative.65 The last major rate design proceeding undertaken for Pacific Bell and Verizon, then GTEC, was the Implementation and Rate Design (IRD) phase of the New Regulatory Framework proceeding, I.87-ll-033. The IRD phase took three years to complete. 66 Prior to the opening of the number pool, all companies requesting telephone numbers got prefixes from the NANPA. Currently, only non-LNP capable carriers receive prefixes from the NANPA, while LNP capable carriers receive thousand-number blocks from the pooling administrator.