III. Discussion

In D.99-09-067, we stated that the public interest demanded an accounting of what numbers are actually in use before we set a date to split the 310 area code. Now, with that accounting completed, we have undertaken a rigorous scrutiny of existing number utilization, and instituted the numerous telephone number conservation measures discussed above to ensure more efficient utilization of telephone numbers. These actions have spared customers the risk and inconvenience of being prematurely forced to undergo an area code change.

We remain cognizant of our obligation to provide for adequate telephone numbers in each area code so that the public may have a competitive choice in selecting a local carrier. At the same time, we are acutely aware of our responsibility to California consumers to ensure that California's telephone number inventory is efficiently managed to the extent we can under FCC rules, and to implement all possible number conservation measures before imposing the burden of an area code split or overlay on consumers. Toward that end, we believe it is important to carefully scrutinize carriers' claims of impending number exhaust, and to analyze the remaining numbers in the 310 area code in the context of the rate that carriers are withdrawing those numbers from the number pool, and our options for managing those remaining numbers.

A. Forecast versus Actual Demand for Telephone Numbers

The decision of whether or not to split or overlay an existing area code is based on analysis of whether adequate telephone numbers exist to meet the projected demand. Currently, five unassigned 10,000-number blocks remain available in the 310 area code for allotment through the semi-monthly lottery process, and three 10,000-number blocks remain available as a set-aside for replenishing the 310 area code number pool. In other words, there are 8 whole prefixes, or 80 one-thousand number blocks available in 310. In addition, there are almost 400 unused one-thousand number blocks already assigned to various rate centers and currently available to be used by carriers within the 310 number pool, and over 2.4 million unused numbers in telephone companies' inventories.

Efficient management of the remaining 310 telephone numbers will be critical going forward. As the ALJ noted in a March 30, 2001 ruling, the experience with the 310 number pool indicates that some of the 10,000-number blocks previously reserved for pooling were able to be reassigned to extend the monthly lottery without jeopardizing carriers' access to numbers through the pool. Reallocating the remaining unused 10,000-number blocks between the pool and the lottery gives us additional flexibility to extend the life of the 310 area code.

A group of joint commenters¹⁵ responded to the ALJ ruling, opposing the idea of transferring 10,000-number blocks from the pool into the lottery, arguing that any reduction in the 310 number pool inventory below its current level at that time would be inconsistent with FCC rules that require a six-month inventory of numbers in the pooling inventory. The joint commenters pointed to the 310 Pooling Administrator's inventory data account indicating that only approximately six months of inventory remained in the pool. The joint commenters therefore claimed that there are no excess codes in the number pool that were available to be transferred to the lottery in order to extend the life of the lottery.

We disagree with the claim that transferring 10,000-number blocks from the pool to the lottery violates FCC rules. Commenters' claim is based on the premise that the 10,000-number blocks remaining in the inventory will last no longer than six-months. Yet, comparisons of actual demand for thousand blocks versus forecasted demand since the inception of the 310 number pool indicate that carriers have consistently overestimated their actual demand for number blocks by several orders of magnitude. For example, for the year 2000, carriers forecasted 883 thousand-number blocks would be needed to meet demand. In reality, however, only 161 thousand-number blocks were actually used by carriers participating in the 310 area code number pool, representing less than 20% of forecast demand. Likewise, in 2001, carriers forecasted that 581 thousand-number blocks would be required from the 310 area code number pool to meet demand. By contrast, only 20 blocks were actually assigned during the same period. Thus, only 3.4% of the forecast block demand was actually needed during 2001. For 2002, carriers forecast a need for 626 blocks, but actually took only 227 blocks. The relative increase in carrier "withdrawals" from the number pool in 2002 over 2001 was due to the effects of wireless carriers entering the number pool, and leaving the lottery system from which they had previously obtained numbers.

For the time period August 2002 through March 2003, carriers requested and were assigned 1,000-number blocks from the 310 number pool at an average rate of 35 blocks per month. This average reflects a significant jump in thousand-block codes from the number pool in November and December 2002. We believe that this short-term increase in carrier requests for telephone numbers from the 310 number pool in November correlates with the wireless carriers' entry into the 310 number pool in November 2002. Beginning in November 2002, the 310 number pool was the only way for wireless carriers to acquire new telephone numbers or to build up their respective six-month inventories in the 310 area code, and as a result, carrier draws from the pool spiked accordingly. As the NANPA data indicates, this November/December spike significantly skews the average amount of numbers taken from the pool. Without the influence of the November/December spike, the carriers' average monthly draw from the 310 number pool was less than ten 1,000-number blocks.

Month Thousand-block codes assigned
from 310 number pool

August 2

September 3

October 4

November 188

December 46

January 8

February 11

March 21

We believe it is unreasonable to base our forecast of future assignments from the 310 number pool using the November/December 2002 data. The significant draw on the 310 pool resources was precipitated by the wireless carriers' joining the pool for the first time in November 2002. It is more prudent to base our estimate on the average draw from the pool excluding those months, or approximately 10 thousand-blocks per month. Considering the 500 thousand-blocks currently in the pool, and the 80 additional thousand-blocks that could be added to the pool, a draw of 10 thousand-number blocks per month leads us to conclude that adequate unassigned telephone numbers remain in the 310 area code to meet carrier and customer needs, and that splitting the 310 area code is not warranted at this time. In their comments to the draft alternate decision, the Joint Wireless Carriers and Verizon Wireless argue that this analysis underestimates demand for telephone numbers because it ignores the "pent-up demand" of the wireless carriers in November and December 2002, and represents a time frame during which wireline demand is relatively low (Joint Wireless Carriers at p. 9, Verizon Wireless at p. 10). Verizon Wireless notes that this pent-up demand was "created by the stringent rationing of the 310 NPA for years." We disagree. As we have noted above, the "pent-up demand" that drove the relatively high demand for telephone numbers out of the 310 number pool in November and December 2002 was driven by the wireless carriers' entry for the first time into the number pool. We believe that the demand was not, in fact, "pent-up...by the stringent rationing of the 310 NPA for years;" rather, the large spike in demand was in fact a product of the wireless industry's own recalcitrance to participating in the number pool until three years after it was established. We direct our TD staff to monitor carefully the remaining telephone numbers in the 310 area code. We will reconsider this conclusion if the draw from the number pool increases significantly from our forecast discussed above.

In view of the consistent pattern of carriers' significant overforecasting of demand for thousand blocks, carriers' forecasts of blocks required to meet six-month inventory needs are also likely to be overstated.

We conclude that flexibility exists to reallocate unused 10,000-number blocks between the pool inventory and the lottery allotments as deemed necessary to best provide for carriers' number resource needs. We direct TD staff to continue to monitor the remaining telephone numbers in both the number pool and the lottery, and to make any necessary reallocations in order to provide carriers with necessary telephone numbers.

B. Pending FCC Actions Could Extend the Life of the 310 Area Code

We expect two other measures to help increase the effectiveness of California's area code number pools and prolong the life of the existing 310 area code. First, we believe that the wireless carriers' implementation of local number portability technology will be another important number conservation tool for the 310 area code, as well as for California's other area codes. Using LNP technology, consumers can "port", or carry with them their existing phone numbers when they switch telephone providers. As discussed above, while wireline local telephone companies have already deployed this technology, the FCC has granted wireless carriers repeated exemptions. Finally, under current FCC rules, wireless carriers must implement LNP technology by November 24, 2003.

We believe that wireless local number portability will help to decrease the demand for new telephone numbers in the 310 and other area codes, as customers exercise the option to keep their existing telephone number(s) if they switch carriers. Currently, any wireless customer who wishes to switch to a different wireless carrier must weigh the benefits of that switch against the time, cost and inconvenience of accepting a new seven-digit telephone number from the new carrier. Once wireless LNP is implemented this fall, consumers will have the option to keep, or port, their telephone number(s) from wireless carrier to wireless carrier, or between wireless and land-line carriers. This new option will impose fewer burdens on consumers, and will help to minimize the demand by carriers to assign new telephone numbers.

Wireless LNP could also expand the industry's participation in other number conservation measures that would allow carriers to receive numbers in even smaller "blocks" from an area code number pool, such as individual telephone number pooling (ITN) and unassigned number porting (UNP). Both of these measures require use of full LNP capability, and their effectiveness is limited until the wireless industry deploys the necessary supporting technology, LNP. We intend to work with the FCC to pursue these further conservation measures after the wireless industry achieves this milestone later this year.

Second, the Commission filed on October 7, 2003 a petition for FCC authorization to implement a technology-specific overlay. We believe this option should be more fully explored as a means of prolonging the life of the 310 are code before taking action to impose a split or overlay on it businesses and families.

All of these considerations and further options for additional number conservation lead us to conclude that it is premature to order implementation of the 310 split plan.

C. Continued Requirements for Effective Number Conservation

In its August 2, 2000 motion, CCAC requests that the Commission discontinue rationing of 10,000-number blocks. At the time that the CCAC motion was filed, wireless carriers were still participating in the lottery and were not subject to number pooling. Since that time, wireless carriers (except for paging companies) have begun to participate in the 310 area code number pool, and thus no longer obtain telephone numbers through the 310 lottery. Thus, the request of CCAC to discontinue lottery rationing is moot to the extent its focus is on the telephone number requirements of non-paging wireless carriers.

The 10,000-number block lottery for the 310 area code currently continues in effect only for paging companies because they are not currently subject to number pooling or porting requirements. We note, however, that since non-paging wireless carriers have become the sole participants in the 310 area code number pool, no requests for 10,000-number blocks through the 310 area code lottery have been received. During this period, paging carriers have been able to meet their demand for numbers in the 310 area code without drawing additional codes from the 310 lottery. Nonetheless, in the interests of number conservation and preserving a supply of 10,000-number blocks, if needed, for paging carriers, we decline to discontinue 10,000-number block rationing in the 310 area code.

The existing thousand-block number pool for the 310 area code shall continue in operation. Continued operation of the 310 area code number pool will help assure that the positive efficiency gains that have been achieved in the 310 area code will continue. Pursuant to the FCC's awarding the national pooling contract, NeuStar, Inc. will continue to act as Pooling Administrator for the 310 area code number pool. Now that federal number pooling has taken effect, the state-mandated 310 pool will operate pursuant to federal program rules.

As noted above, we ordered an independent staff audit to be conducted of number reporting of carriers in the 310 area code prior to implementing a schedule for the geographic split to proceed. We ordered the independent audit because otherwise, we had no independent verification of the representations made by carriers concerning number resource utilization. We note that a similar concern exists not just with the 310 area code, but is generic to all of the California area codes for which area code split plans are under consideration. Therefore, in recognition of this generic concern, it is in consumers' best interests that an independent staff verification of carrier-reported number utilization be made prior to our considering adopting a back-up plan for an area code split or overlay.