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 an 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 efficiently manage California's telephone numbers, 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 909 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.

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, six unassigned 10,000-number blocks remain available in the 909 area code for allotment through the semi-monthly lottery process, and two 10,000-number blocks remain available as a set-aside for replenishing the 909 area code number pool. In other words, there are eight whole prefixes, or 80 one-thousand number blocks available in 909. In addition, there are 712,000 unused one-thousand number blocks already assigned to various rate centers and currently available to be used by carriers within the 909 number pool.

Efficient management of the remaining 909 telephone numbers will be critical going forward. As the ALJ noted in a March 30, 2001 ruling regarding the 310 area code, the experience with California's number pools indicates that some of the 10,000-number blocks previously reserved for pooling are 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 909 area code.

A group of joint commenters12 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 a given area code number 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 909 number pool indicate that carriers have consistently overestimated their actual demand for number blocks several times over. For example, for the year 2000, carriers forecasted 143 thousand-number blocks would be needed to meet demand. In reality, however, only 51 thousand-number blocks were actually used by carriers participating in the 909 area code number pool, representing less than one third of forecast demand. Likewise, in 2001, carriers forecasted that 426 thousand-number blocks would be required from the 909 area code number pool to meet demand. By contrast, only 128 blocks were actually assigned during the same period. Thus, only 30% of the forecast block demand was actually needed during 2001. For 2002, carriers forecast a need for 790 blocks, but actually took only 325 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 August 2003, carriers requested and were assigned 1,000-number blocks from the 909 number pool at an average rate of 55 blocks per month. This average reflects a significant jump in thousand-block codes from the number pool in November 2002 and May 2003. We believe that the increase in carrier requests for 231 thousand-blocks of telephone numbers from the 909 number pool in November 2002 correlates with the wireless carriers' entry into the 909 number pool in November 2002. Beginning in November 2002, the 909 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 909 area code, and as a result, carrier draws from the pool spiked accordingly.

Further, the May 2003 spike of 231 thousand-number blocks requests correlates to the Commission's May 6, 2003 release of the draft decision to split the 310 area code. We fear that carriers were motivated by the draft decision on the 310 area code to emphasize the relative alleged scarcity of numbers in both the 310 and 909 area codes,13 and that the May 2003 draws from the pool do not reflect the true market use. Indeed, after further investigation by Commission staff, one carrier subsequently returned 80 thousand-blocks back to the 909 number pool, and immediately after May 2003 carrier draws from the 909 number pool have returned to more average levels.

As the NANPA data indicates, these November 2002 and May 2003 spikes significantly skew the average amount of numbers taken from the pool. Without the influence of the November 2002 and May 2003 spikes, the carriers' average monthly draw from the 909 number pool was 23 thousand-number blocks.

We believe it is unreasonable to base our forecast of future assignments from the 909 number pool using the November 2002 and May 2003 data. For the reasons explained more fully above, those months do not reflect normal carrier draws of telephone numbers from the 909 number pool. It is more prudent to base our estimate on the average monthly draw from the pool over a year's time excluding those months, or approximately 23 thousand-blocks per month. Considering the 712 thousand-blocks currently in the pool, and the 80 additional thousand-blocks that could be added to the pool, an average draw of 23 thousand-number blocks per month leads us to conclude that adequate unassigned telephone numbers remain in the 909 area code to meet carrier and customer needs, and that splitting the 909 area code is not warranted at this time. We direct our TD staff to monitor carefully the remaining telephone numbers in the 909 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.

We expect two other number conservation measures to help increase the effectiveness of California's area code number pools and prolong the life of the existing 909 area code. First, we believe that the wireless carriers' implementation of local number portability technology will be another important number conservation tool for the 909 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 909 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 plans to file, in October 2003, a petition for FCC authorization to implement a technology-specific overlay proposal. We believe this option should be more fully explored as a means of prolonging the life of the 909 area code before taking action to impose a split or overlay on its 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 909 split plan.

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 909 area code number pool, and thus no longer obtain telephone numbers through the 909 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 909 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 909 area code number pool, no requests for 10,000-number blocks through the 909 area code lottery have been received. During this period, paging carriers have been able to meet their demand for numbers in the 909 area code without drawing additional codes from the 909 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 909 area code.

The existing thousand-block number pool for the 909 area code shall continue in operation. Continued operation of the 909 area code number pool will help assure that the positive efficiency gains that have been achieved in the 909 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 909 area code number pool. Now that federal number pooling has taken effect, the state-mandated 909 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 909 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 909 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.

12 The comments were jointly sponsored by the California Cable Television Association, AT&T Communications of California, ICG Telecomm Group, XO California, Inc, Time Warner Telecom of California, L.P., and WorldCom, Inc. (Joint commenters). 13 Carriers collectively drew 161 thousand blocks from the 310 area code in May 2003, compared with an average of 14 thousand-blocks from the pool in each of the prior four months. In no other area code besides the 310 and 909 area code did carrier draws from the pool spike in May 2003. We note that only the 310 and 909 area codes had split and/or overlay proposals pending before the Commission at the time.

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