II. Background

The traditional system for assigning numbers was a legacy from an era in which one incumbent telephone company provided all customers with local service in a given area code. Under the traditional system, a carrier wishing to serve only a few customers in an area was allocated telephone numbers in blocks of 10,000 for each rate center in that area. That system worked reasonably well as long as only one incumbent local exchange carrier required telephone numbers. Yet, with the opening of the local exchange market to competition, together with the growth in the competitive market for wireless and advanced technological telecommunications services, the traditional number assignment system could no longer keep up with the growing demand for numbers from multiple carriers serving the same customer base. The traditional system did not lend itself to efficient distribution of numbers in a competitive market where numbers are assigned to multiple carriers to serve customers in each rate center.

From 1947 to January 1997, the number of area codes in California increased gradually from 3 to 13. During the next three years, however, the number of area codes in California nearly doubled. By the end of 1999, California had 25 area codes statewide, and because of inefficient management of telephone numbers, the industry projected we would need 17 more area codes by the end of 2002. Today, because of aggressive and successful conservation efforts in California, we have not split a single area code since 1999.

The FCC has exclusive jurisdiction over numbering in the United States. Only by the FCC's delegation of authority to the states can the states implement number conservation policies. Recognizing the substantial social and economic burdens associated with constant area code changes, in April 1999 the Commission petitioned the FCC for the delegated authority to implement specific telephone number conservation measures in California in order to slow down unnecessary area code proliferation. The FCC granted the Commission's request in September 1999.¹ As a condition of that delegated authority, the FCC has required that the Commission must take steps to provide additional telephone numbers through an area code split or overlay if telephone numbers are in imminent danger of being exhausted.

A. History of Procedural Actions Taken to Split the 909 Area Code

The 909 area code includes cities and communities in parts of the counties of Los Angeles, Riverside, and San Bernardino, and currently serves a portion of Local Access and Transport Area 730.

In March 1998, the NANPA² first declared a "jeopardy" situation³ in the 909 area code. Beginning in April 1998, the Commission initiated a monthly rationing system, or "lottery," for distributing 10,000-number blocks of telephone numbers in the 909 are code. The industry then proceeded through the prescribed process required to implement a new area code in response to the forecast at the time that the 909 area code was about to run out of telephone numbers.⁴ An initial round of public meetings were held by the industry team in August 1998 in response to the initial notification of NANPA of impending number exhaust in the 909 area code in conformance with Pub. Util. Code § 7930. By letter to the assigned Administrative Law Judge (ALJ) dated December 7, 1998, the NANPA presented two alternative plans for creating more numbers in the geographic area covered by the 909 area code.

By Decision (D.) 99-09-059, dated March 18, 1999, the Commission determined that a new area code was required to relieve code exhaust in the 909 area code and approved an industry plan that entailed a two-phase geographic split of the 909 area code followed by an overlay. Implementation of the 909 area code relief plan was suspended, however, pursuant to Commission decision D.99-12-051, as part of a broader statewide Commission initiative under our delegated authority to undertake a comprehensive menu of measures to assure that numbering resources were being utilized as efficiently as possible before imposing any further area code changes on Californians.

In view of the passage of time since the initial, 1998 meetings and the subsequent issuance of updated relief plan proposals for the 909 area code submitted by the industry in the summer of 2002, the Commission scheduled a new round of public and local jurisdiction meetings in July 2003.

Although these latter meetings were not required by statute, they provided the public and local jurisdiction officials an opportunity to express their views concerning the more recent proposed area code change plans for the 909 area code filed in June 2002.

As part of the 909 area code outreach efforts, Assigned Commissioner Loretta Lynch sent letters to some 320 public agencies and elected officials notifying them of the public and local jurisdiction meetings, asking them to attend, and enclosing informational materials regarding the potential area code changes. Letters were sent to city council members, mayors, city managers, fire chiefs, police chiefs, Riverside and San Bernardino County Boards of Supervisors, California State assembly members and senators, and U.S. congresspersons and senators associated with regions covered by the 909 area code.

Two local jurisdiction meetings were held, one each in Riverside and San Bernardino Counties, on July 11, 2003 to review potential area code split and overlay alternatives for the 909 area code. In addition to these local jurisdiction meetings, the Commission held five meetings to present the proposed alternatives to the general public and hear their views. These meetings were held in Riverside City on July 12, San Bernardino on July 15, Murrieta and Moreno Valley on July 16, and Ontario on July 17, 2003.

We welcome the opportunity to receive comment the from public and local officials in considering options for area code planning that are in the public interest.

B. California's Innovative Number Conservation Measures Have Extended the Life of the 909 Area Code

Working with the NANPA, the Commission immediately took steps to implement its delegated authority to conserve telephone numbers in 2000. Beginning in March 2000, the Commission adopted various number reporting and conservation measures which collectively have slowed significantly the pace of area code splits in California.

In exercising its delegated authority from the FCC, the Commission has found that industry claims of impending telephone number exhaustion were based merely upon carriers' forecasts of future telephone number usage within each area code, not their respective historical or actual use of telephone numbers. In essence, marketing predictions, not actual number use, formed the basis of each carrier's forecast number requirements - and the national numbering policy. No independent analysis had been provided, however, concerning the reliability of such forecasts or carriers' actual utilization of telephone numbers.

First, California now considers new area codes based on actual need for new numbers, not carriers' unaudited forecast demand. Beginning in March 2000, the Commission initiated the first-ever utilization study of actual number use in California, in the 310 area code - where we found three million unused telephone numbers in an area code that was allegedly entirely out of available telephone numbers. The Commission completed its audit of the 909 area code in November 2000, finding 3.9 million unused numbers. By the end of 2001, the Commission had completed a utilization study for each of the state's other 24 area codes. In every case, we found that each area code actually contained between 40-80% of the available numbers classified by the carriers as unused.

Second, under its delegated authority, the Commission distributes new telephone numbers to carriers more efficiently. By far the most effective number conservation tool is number pooling. Number pooling allows telephone companies to receive numbers in smaller blocks than the traditional 10,000 numbers, enabling multiple providers to share a 10,000-number block and therefore use this limited resource much more efficiently. In March 2000, California began the state's first number "pool," in the 310 area code. Number pooling in the 909 area code followed in December 2000. Today, every area code in California has implemented number pooling, operated by a neutral third-party Pooling Administrator.⁵ By allowing the state to distribute numbers in smaller blocks of 1,000, we can better match the numbering needs of new, smaller companies without stranding the remaining numbers in the 10,000-number block.

The technology that enables the network to support the assignment of smaller blocks is referred to as Local Number Portability, or LNP. LNP was originally mandated in 1996 by the FCC as a means to enable customers to retain their telephone numbers when they switch telephone service to another local telephone company. This same technology is utilized for number pooling. The FCC required all wireline⁶ carriers to become LNP-capable by the end of 1998 in the top 100 Metropolitan Statistical Areas (MSAs) in the country.⁷ Without LNP, a customer is inhibited from changing carriers because he or she must change both the equipment and the telephone number.

Though LNP technology has existed for several years and the wireline carriers became LNP-capable by 1998, the FCC has subsequently granted cellular and PCS companies three separate extensions of time, until November 2003, to become LNP-capable.⁸ The FCC further gave paging companies a permanent exemption from the LNP requirement. Until November 2002, only wireline carriers could participate in number pooling, and those carriers received telephone numbers solely through the number pool; wireless carriers received numbers in 10,000-number blocks through the Commission-administered monthly rationing system, or lottery, and through emergency requests to the Commission. Now, although wireless carriers have not yet made local number portability available to their customers, they have implemented enough of the technology to enable their participation in number pooling beginning in November 2002. Currently, therefore, both wireline and wireless carriers in California receive numbers through the state's number pools. Only paging companies, which are still exempt from LNP requirements, now receive numbers through the monthly lottery system.

Third, in addition to more efficiently managing number distribution, California is also requiring companies to more efficiently manage the numbers they already have. These new requirements include requiring companies to return any 10,000-number block that the telephone company has held for more than six months without using it; requiring telephone companies to show they will be out of telephone numbers within six months before the Commission grants requests for additional numbers; and requiring telephone companies to show they have used at least 75% of the numbers they hold before they can request additional numbers (known as the "fill rate requirement"). Companies must assign numbers in thousand-block sequence (called "sequential numbering"), moving to the next thousand-block only after using 75% of their numbers.

Fourth, as an additional measure to extend the life of the 909 area code, the Commission filed a petition with the FCC on September 5, 2002,⁹ seeking a waiver from the FCC "contamination" or number use, threshold requirement. Specifically, the Commission requested that the FCC grant California the authority to increase the existing 10% "contamination" rate. Under FCC rules, carriers must donate to each area code's common number pool all thousand-blocks of telephone numbers that contain less than 10% "contaminated," or used, numbers. An increased level of allowable contamination or usage rates for poolable thousand-number blocks (from current 10% to 25%) increases the number of thousand-blocks that are available to all carriers through each area code's number pool. By increasing the number of available thousand-blocks in this manner, the life of the 909 area code can be extended.

The FCC acted upon this Petition by its Order adopted August 5, 2003 and released August 11, 2003. While the FCC declined to grant a statewide waiver of the 10% contamination rate, it did find good cause to justify raising the contamination level in the 310 and 909 area codes. The Commission directed carriers to comply with the new contamination rate in the 310 and 909 area codes by ruling dated August 21, 2003.

These policies have resulted in more numbers available in number pooling, to be allocated through the monthly lottery for each area code, or to be otherwise used by other companies. Indeed, since the CPUC extended the 75% use requirement in all California area codes, the demand for 10,000-number blocks in each area code's monthly lottery has declined.

C. Utilization Study and Audit of 909 Telephone Numbers

On November 28, 2000, the Commission's Telecommunications Division (TD) issued its "Report on the 909 NPA" (Report) presenting findings on how efficiently telephone numbers remaining in the 909 area code were actually being utilized by carriers. Parties were permitted to file responses to the Report. As reported by TD, approximately 3.9 million unused numbers existed in the 909 area code as of November 28, 2000. The TD Report provided corroboration of the Commission's earlier caution in questioning whether prior carrier claims of number exhaustion were supportable. The number conservation measures that we have adopted, including requirements in D.99-11-027 for carriers to return unused codes, fill rate and sequential numbering rules in D.00-03-054, and thousand block number pooling for local number portability-capable carriers, help insure that the unused numbers in the 909 area code identified in the TD Report are allocated as efficiently as possible.

The TD Report also recognized that, even considering the large amount of unused numbers in 909, there are various constraints on the ability of carriers to make use of these unassigned numbers in meeting current customer service needs. For example, under FCC rules, a certain quantity of unused numbers must remain reserved for carriers' inventory needs. Also, in certain cases, carriers may need numbers in a particular rate center.¹⁰ Even if there are unused numbers in other rate centers, a carrier may be unable to use those numbers to serve customers in a rate center where there is a shortage of 10,000-number blocks.¹¹ Of the 3.9 million unused numbers as of November 28, 2000, 486,000 were identified in the Staff Report as belonging to wireless carriers.

The Commission further deferred taking any action to split or overlay the 909 area code pending independent confirmation that carrier-reported utilization data underlying telephone number exhaust forecasts for the 909 area code were accurate and reliable. Considerable effort went into preparing the TD Report on number utilization in the 909 area code, but the results of the Report reflected only the representations of carriers. In order to rely on the findings underlying the TD Report, therefore, we required independent confirmation that representations made by carriers were valid and that they properly conformed with the state and federal rules adopted for reporting purposes. Thus, by ALJ Ruling dated June 14, 2001, we directed TD staff to conduct an independent audit of the number utilization data underlying the TD Report on the 909 area code. The audit report findings were released on December 21, 2001.

Based on the published audit findings, TD reached three overall conclusions. First, carriers did not deliberately misreport telephone number utilization data for the November 28, 2000 Report on the 909 area code. Second, the audit authenticates the utilization data that carriers submitted for the November 28, 2000 Report, except for certain recommended adjustments as noted in the audit report. Third, the TD staff concluded that the numbering needs of all carriers, including cellular carriers, in the 909 area code could probably be met through approximately 2003 from the 985 blocks then in the 909 number pool assuming cellular carriers were to begin number pooling in November 2002. At the time of the Audit Report, there were 13 prefixes available for the 909 lottery and 23 prefixes identified as reserved for the number pool.

Since the publishing of the Audit Report, additional codes have been assigned through the lottery. Moreover, additional codes have been opened to provide inventory for the 909 area code number pool, and since the pool's inception carriers have donated or returned over 1,200 thousand-number blocks to the 909 area code pool. The TD audit report indicates that number pooling has been overwhelmingly successful in meeting the needs of pooling participants through better utilization of each area code's existing telephone numbers.