IV. Adoption of Inventory Rules

We conclude that adoption of the rules set forth below for determining carriers' six-month inventories is warranted in order to promote the more efficient utilization of telephone numbers. Efficient utilization of numbers, in turn, will help extend the life of area codes and avoid the risk of prematurely opening a new area code to relieve code exhaust.

We accordingly direct carriers to apply the following rules in determining their six-month inventory levels for each applicable rate center and area code in California within which a carrier holds numbering resources.

Code or block holders that have acquired and retained public numbering resources and have filed at least three Numbering Resource Utilization/Forecast (NRUF) Reports with the North American Numbering Plan Administrator (NANPA) shall apply the following guidelines in determining the level of numbering resources that they may retain as a six-month inventory. A separate calculation shall be made for each rate center within each area code within which the carrier holds an inventory of telephone numbers:

· Calculate the change in the historical demand for telephone numbers, which represents the code or block holder's actual growth. Code or block holders shall use the most recently filed NRUF Report (NRUF at time 2) and the NRUF Report filed 12 months before the most recently filed NRUF Report (NRUF at time 1). The change in the historical demand for telephone numbers consists of those telephone numbers categorized as Assigned or Intermediate in the NRUF Reports. The formula for calculating the change in the historical demand for telephone numbers shall be ((Assigned numbers + Intermediate numbers as of NRUF at time 2) - (Assigned numbers + Intermediate numbers as of NRUF at time 1))/2.

· Determine the appropriate growth rate, whereby the maximum growth rate is 15%, to use to calculate the projected growth in telephone numbers for the next six months.

· Compute the projected growth in telephone numbers. The formula shall be the product of the change in the historical demand for telephone numbers and the appropriate growth rate.

· Find out the excess inventory of telephone numbers. The formula shall be the difference of the Available numbers reported in NRUF at time 2 and the projected growth in telephone numbers.

· Figure out the short-term inventory level. The formula shall be the difference between the total numbering resources and the excess inventory of telephone numbers.

In order to clarify how the above rules would apply in determining excess inventory, the following example is provided using a hypothetical "Carrier X." Assume that based on the most recently filed NRUF report ( NRUF at time 2), Carrier X has 10,000 total numbering resources from 10 thousand-blocks in Rate Center A, which includes 7,000 Assigned numbers, 500 Intermediate numbers, and 2,500 Available numbers. Also, assume that the NRUF report filed 12 months earlier (NRUF at time 1) indicates that Carrier X had 8,000 total numbering resources from 8 thousand-blocks in Rate Center A, which included 6,000 Assigned numbers, 500 Intermediate numbers, and 1,500 Available numbers. The change in the historical demand for telephone numbers would be ((7,000 + 500) - (6,000 + 500))/2 = 500 numbers. Assume that Carrier X has determined that the appropriate growth rate is 15%.

By applying the above-referenced inventory guidelines under these assumptions, the resulting projected growth in telephone numbers would be (500) * (1.15) = 575. The excess inventory of telephone numbers to be donated to the pool would be (2,500 - 575) = 1,925. The short-term inventory level would be (10,000 - 1,925) = 8,075 numbers.

For code or block holders which have acquired and retained public numbering resources and have filed no more than one or two NRUF Reports with NANPA, we apply a modified version of the rules set forth in the preceding section. This modified version of the rules recognizes that code or block holders with two or fewer NRUF Reports will not have sufficient historical data to compute 12-months of utilization data changes. Accordingly, carriers in this category shall utilize data from their most recently filed NRUF report as the basis for prospective inventory calculations in accordance with the following procedures:

· Calculate the change in the historical demand for telephone numbers, which represents the code or block holder's actual growth. Code or block holders shall use the most recently filed NRUF Report (NRUF at time 2). The change in the historical demand for telephone numbers consists of those telephone numbers categorized as Assigned or Intermediate in the NRUF Reports. The formula for calculating the change in the historical demand for telephone numbers shall be (Assigned numbers + Intermediate numbers as of NRUF at time 2).

· Determine the appropriate growth rate, whereby the maximum growth rate is 15%, to use to calculate the projected growth in telephone numbers for the next six months.

· Compute the projected growth in telephone numbers. The formula shall be the product of the change in the historical demand for telephone numbers and the appropriate growth rate.

· Derive the excess inventory of telephone numbers. The derivation shall be the difference of the Available numbers reported in NRUF at time 2 and the projected growth in telephone numbers.

· Figure out the short-term inventory level. The formula shall be the difference of the total numbering resources and the excess inventory of telephone numbers.

In order to clarify how the above rules would apply in determining excess inventory for code or block holders which have acquired and retained public numbering resources and have filed no more than one or two NRUF Reports, the following example is provided using a hypothetical "Carrier Y." Assume that based on the most recently filed NRUF report ( NRUF at time 2) indicates that Carrier Y has 10,000 total numbering resources from 10 thousand-blocks in Rate Center A, which includes 7,000 Assigned numbers, 500 Intermediate numbers, and 2,500 Available numbers. The change in the historical demand for telephone numbers would be (7,000 + 500) = 7,500. Carrier Y has determined that the appropriate growth rate is 15%. The projected growth in telephone numbers would be (7,500) * (1.15) = 8,625. The excess inventory of telephone numbers would be (2,500 - 8,625) = -6,125. The short-term inventory level would be (10,000 - (-6,125)) = 16,125 numbers.

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