III. Pacific's Requested Modifications

A. Months-to-Exhaust

In D.00-07-052, the Commission adopted statewide "imminent exhaust criteria" requiring carriers to show that exhaust was imminent within three months in order to be eligible to receive additional numbering resources. The federal rules, however, apply a standard of six-months-to-exhaust, rather than three months-to-exhaust, in determining carrier eligibility for numbering resources. Pacific requests that the Commission's previously adopted rules imposing the three-months-to-exhaust criteria therefore be conformed to the FCC standard.

Discussion

Just a few days after Pacific's petition was filed, the modification sought by Pacific were accomplished by ruling issued on April 30, 2001, making the change effective on a prospective basis beginning on and after May 8, 2001 to recognize the effects of the FCC Second Report and Order on NRO. That ruling acknowledged that state commissions must conform their number pooling rules to the FCC's rules after a three-month transition period. Commission rules, therefore, were brought into conformance with the federally adopted standard of six-months-to-exhaust effective on May 8, 2001.

B. Fill Rate Requirement

D.00-07-052 requires carriers to satisfy a 75% fill rate criterion before obtaining growth NXX codes. The FCC's Second Report and Order subsequently adopted an initial 60% fill rate (or utilization threshold), which would increase by 5% annually to a maximum of 75%. Pacific concedes that the FCC allowed state commissions to continue using a utilization threshold up to 75% if they had been using that threshold pursuant to delegated authority, but argues that the FCC did not require states to continue using a 75% utilization threshold. Pacific claims there is a drastic difference between the ways this Commission and the FCC calculate utilization, and that the impact on the industry in California could be detrimental if service providers must apply 75% utilization threshold coupled with the FCC's utilization methodology. Pacific requests, therefore, that the Commission modify the Decision to allow service providers to initially use a 60% utilization threshold instead of the current 75% threshold for obtaining growth resources.

In its First Report and Order, the FCC established six reporting categories (i.e., administrative, aging, assigned, available, intermediate, and reserved) for telephone numbers. This Commission adopted a 75% fill rate in D.00-07-052 along with a methodology for calculating fill rates. The methodology adopted took the sum of the assigned, aging, administrative and reserved numbers (up to the six-month limit) and divided that sum by the total quantity of telephone numbers held in that rate center. The quotient equaled the fill rate. The FCC's methodology for measuring the fill rate, by contrast, simply divides the quantity of assigned numbers by the sum of the numbers in five FCC categories (administrative, aging, assigned, available, and reserved, but excludes intermediate numbers from the equation).² Further, Pacific claims that by not including administrative, aging, intermediate, and reserved categories in calculating the fill rate, as does this Commission, the FCC's methodology would make it unreasonably difficult to immediately achieve a 75% fill rate.

Responses by Other Parties

ORA and TURN oppose the revision of the fill rate as Pacific proposes. They argue that Pacific's request to lower the utilization threshold from 75% to 60% is neither required by the FCC nor supported by evidence and that granting the request could impair the Commission's ability to effectively manage efficient use of numbering resources and would thus jeopardize its sound public policy goals. While ORA and TURN do not object to an examination of the desirability of conforming the Commission's policies on sequential number assignment to those of the FCC, they contend Pacific has not demonstrated that such a change is needed.

A response to Pacific's motion was also filed by Verizon. Verizon limited its remarks to the issue of whether the current 75% fill rate should be reduced to 60%. Verizon joins in support of Pacific's request to reduce the fill rate to 60%. Verizon argues that a carrier that previously would have met the 75% rate by comparing the total of its assigned, administrative, aging, intermediate, and reserved numbers against the total number of held numbers, now must meet California's higher 75% rate by comparing only actual assigned numbers against total numbers held. While this would likely not be a problem for Verizon using the 60% rate recommended by the FCC, Verizon believes there will likely be situations where a 75% fill rate cannot be met even though the need for numbering resources is extreme and legitimate. Since the Commission must conform to the FCC's definition of assigned numbers, therefore, Verizon argues that it will be more difficult for carriers to meet the 75% fill rate. Verizon believes the Commission should initially follow the 60% federal standard to give carriers needed flexibility. Telecommunications carriers could then make adjustments over time, as provided for by the FCC Second Report and Order, after carriers have had the opportunity to achieve greater efficiencies.

Discussion

By ruling dated April 30, 2001, the previously adopted Commission formula for calculating utilization or fill rates was conformed to the FCC methodology. The FCC formula treats administrative, reserved, aging and intermediate numbers³ as numbers that are NOT assigned. Therefore, the ALJ Ruling directed that these numbers be removed from the numerator in computing utilization rates in order to conform to the FCC method.

We decline, however, to grant Pacific's request to modify the Commission's adopted fill rate standard from 75% to 60%. The FCC Order permits state commissions to continue using a higher fill rate up to 75% even though the federal targeted rate is 60%. It is not clear that dropping the required rate to the 60% minimum will produce the proper balance between the goals of promoting efficient number utilization and ensuring that carriers have sufficient numbers to meet customer needs. We are concerned that reducing the fill rate down to 60% could unduly accelerate exhaustion of scarce numbering resources and burden customers with premature area code changes.

Pacific has not presented quantitative evidence documenting the extent to which the new utilization formula will reduce the effective fill rate compared with that computed under the formula previously adopted in D.00-07-052. Moreover, Pacific erroneously claims that the FCC includes intermediate numbers in the denominator in calculating the fill rate quotient. In fact, to the extent that intermediate numbers are not included in the denominator in calculating fill rates under the FCC formula, it would be easier for carriers to satisfy the 75% fill rate criterion than is presumed by Pacific. In its comments on the draft decision, Pacific cites the FCC's NRO Second Report and Order to support its claim that intermediate numbers are in fact included in the denominator in computing fill rate quotients. Pacific specifically cites the Second Report and Order, ¶ 30, which states in relevant part:

"We determined in the First Report and Order that utilization for a given geographic area (rate center or NPA) must be calculated by dividing all assigned numbers by the total numbering resources assigned to the carrier in that geographic area and multiplying the result by 100. . . . there is no need to alter the definition of utilization or to include administrative, aging, intermediate or reserved numbers in the numerator."

Because the excerpt quoted does not expressly state that intermediate numbers are excluded from the denominator of the fill rate formula, Pacific infers that intermediate numbers are to be included in the definition of "total numbering resources" in the denominator. We note, however, that the FCC has provided a more specific discussion concerning its intent in the treatment of intermediate numbers in the NRO Order, dated March 17, 2000. In the NRO Order, § 21, the FCC states with regard to intermediate numbers:

"We agree with commenters who opine that such number should not be categorized as assigned numbers because they have not been assigned to an end user. We also find that such numbers should not be counted in the code or block holder's inventory because the code or block holder does not control the provision of these numbers to end users. We therefore conclude that numbers that are made available for use by another carrier or non-carrier entity for the purpose of providing telecommunications service to an end user or customer should be categorized as intermediate numbers."

Accordingly, we find that the above-quoted except from § 21 of the FCC's NRO Order provides clarification that it was not the FCC's intent to include intermediate numbers as "assigned numbers" as an input to the denominator in computing fill rates. Since intermediate numbers are not counted as part of a carrier's inventory, those numbers cannot reasonably be considered part of the carrier's "total numbering resources." Accordingly, we are unpersuaded by Pacific's contentions regarding the treatment of intermediate numbers. Moreover, Pacific fails to provide any documentary evidence that carriers are in fact actually including intermediate numbers in their fill rate calculations that are actually reported to the NANPA and used to determine eligibility for numbering resources. Accordingly, for purposes of measuring carrier's fill rate under the 75% criterion established by the Commission, we find no basis to presume that intermediate numbers are included in the denominator of the fill rate formula.

In the absence of further documentary evidence regarding the specific impacts of using the revised FCC formula on carriers' ability to obtain needed numbering resources to serve customers, we decline to lower our adopted 75% fill rate standard at this time.

To the extent that carriers cannot meet the fill rate requirement to qualify for lottery participation, carriers may still continue to seek authority from the Commission to obtain NXX codes outside of the lottery. Carriers that have been able to document and demonstrate an imminent need for numbering resources outside of the lottery in the past have been able to obtain needed resources through this alternative. We have not however, observed any marked increase in requests for codes outside the lottery since the FCC formula took effect. We request our Telecommunications Division to monitor the number of requests for NXX codes outside of the lottery, and to advise the Assigned Commissioner and ALJ regarding any significant increases in the frequency or volume of such requests. To the extent that we detect that the change in the fill rate formula causes a significant increase in the frequency or volume of NXX requests outside of the lottery, we shall at that time reconsider the need to develop a further record on the need for fill rate revisions.

C. Sequential Number Assignment

D.00-07-052 also required carriers to assign numbers within California in thousand number block sequence, moving to the next block only once a 75% fill rate was attained in the prior block, except where pooling trials were in operation. Pacific argues, however, that the Commission had been delegated authority to apply sequential numbering requirements only until January 1, 2001, and that the FCC required state commissions to conform their existing sequential number assignment requirements by January 1, 2001.⁴

In its Second Report and Order, the FCC held that all service providers must assign numbers in accordance with the sequential numbering rules the FCC established in the First Report and Order.⁵ In its First Report and Order, the FCC adopted a flexible requirement that carriers first assign all available telephone numbers within an opened thousands-block before opening another thousands-block, unless the available numbers in the opened thousands-block are not sufficient to meet a customer request.⁶ A carrier is not required to meet a strict utilization threshold (75% or otherwise) prior to moving to a new thousand-block, if the carrier can demonstrate: 1) a genuine request from a customer detailing the specific need for telephone numbers, and 2) the inability on the part of the carrier to meet the specific customer request for telephone numbers from the surplus of numbers within the carrier's currently activated thousands-block. Pacific argues that the Decision should be modified to include the FCC's standard.

Response of ORA and TURN

ORA and TURN do not object to a "considered discussion and examination" of the desirability of making a change, in sequential numbering rules, but do object to granting the request absent evidence in support of Pacific's proposal change to the rules. ORA and TURN are not convinced that such a change is needed, since the Commission entertains requests to obtain numbers outside of the lottery process, which provides a safety valve for these situations. Additionally, a service provider could always seek authority to deviate from the sequential assignment requirements for good cause, and obtain such authority if it can demonstrate and document a need to do so. ORA and TURN express concern that granting Pacific's request would create a substantial loophole in the sequential assignment rules and the purpose for which they were promulgated, namely to ensure optimal use of scarce and valuable numbering resources. ORA and TURN therefore recommend that this request be denied. If the Commission wishes to explore the need for changing these requirements, ORA and TURN propose that comments be taken on this specific topic, accompanied by evidence in support of changes.

Discussion

The FCC rules governing sequential numbering supersede any conflicting state rules effective January 1, 2001. The FCC's NRO Order requires that state commissions conform their existing delegations of sequential numbering authority to the FCC's adopted provisions. ORA and TURN argue that the Commission should not revise its sequential numbering rules to conform to the FCC absent a further evidentiary showing by Pacific. We conclude, however, that conformance with FCC rules for sequential numbering is not subject to factual evidentiary inquiry, but is mandatory as a matter of law.

ORA and TURN fail to explain how we can deny Pacific's request that we conform to FCC rules without discretionary authority to continue to apply sequential numbering rules that differ from FCC rules. Since our delegated authority to apply different sequential numbering rules has been superseded by the FCC order, we must conform to the FCC's sequential numbering rules as a matter of law irrespective of arguments that further evidentiary analysis must be conducted first to study the matter. Accordingly, we shall grant Pacific's request to conform to the FCC's sequential numbering rules. We provide the appropriate conforming language in Ordering Paragraph 1 below.