ENSURING THE EFFICIENT ALLOCATION OF TOLL FREE NUMBERS

1
ENSURING THE EFFICIENT ALLOCATION OF TOLL FREE
NUMBERS

• A market-based approach

LESLIE SELZER COMMON CARRIER BUREAU FEBRUARY 26,
2001
2
WHAT ARE THE PROBLEMS?

• Commission rules require toll free numbers to be
  assigned on a first come/first serve (FCFS)
  basis.
• Some RespOrgs fail to return TF numbers to the
  spare pool after the subscriber (sub) has
  terminated service. Numbers are directly
  transferred to a new sub.
• Some subs and RespOrgs unlawfully buy/sell TF
  numbers.
• Others follow the rules. No level playing field.

3
WHAT ARE THE PROBLEMS? (contd)

• TF numbers are inadvertently disconnected.
• Some of these numbers are re-connected.
• Others are assigned to different subs.

4
WHY DO THESE PROBLEMS PERSIST?

• Two visions of TF numbering resources currently
  co-exist Regulatory and Market. Conflict
  results.
• REGULATORY - Numbers are public resources that
  cannot be bought, sold, or transferred. Detailed
  regulation/enforcement required.
• MARKET- Many subs/RespOrgs provide services that
  effectively result in numbers being (unlawfully)
  bought/sold, leased, or transferred.

5
SOURCES OF CONFLICT

• ASSIGNMENTS - Rules require strict application
  of FCFS. This may prevent numbers from moving to
  highest and best use. Conflicts with business
  practice.
• SECURITY - Subs have no property rights (PR) to
  assigned numbers. This limits subs ability to
  protect their numbers from reassignment if
  disconnected. Lack of PR harms subs and results
  in requests for tougher enforcement.

6
SOLUTIONS TO CONFLICT

• ENFORCE EXISTING RULES OR ADD ADDITIONAL RULES -
  December 2000 disconnect and suspend letter
  focuses on enforcing FCFS.
• MIXED MARKET - Primary market assignment based on
  FCFS. Permit brokering in secondary market.
  Define PR.
• PURE MARKET - Permit market to allocate in both
  primary and secondary markets. Define PR.

7
BENEFITS OF MARKET-BASED APPROACH

• Numbers are transferred to subs with highest and
  best use.
• Brokering in secondary market could enhance value
  of numbers to RespOrgs and subs. For example,
  could promote greater use of shared vanity
  numbers.
• Defining subs property right would protect
  against unauthorized disconnects and transfers.
  Enhance value of numbers.

8
BENEFITS OF MARKET-BASED APPROACH (contd)

• Could reduce incentive to hold numbers.
  Recognizing the opportunity cost of numbers
  encourages number holders to dispose of unused
  numbers. Incentive is to convert numbers into
  cash by selling them.
• Legalizing market would level playing field. All
  could participate in market, not just those
  willing to break the rules.

9
BENEFITS OF MARKET-BASED APPROACH (contd)

• Consistent with pro-market, deregulatory
  philosophy of Commission/Congress.
• Reduces costs and burdens on RespOrgs,
  government, and subs.

10
IMPLEMENTATION ISSUES

• PRIMARY MARKET - May require congressional
  approval.
• SECONDARY MARKET - Requires FCC to lift its
  anti-brokering rules and establish ground rules.
• May reduce the need for detailed regulation and
  enforcement.

11
CONCLUSION

• A market-based allocation scheme will promote
  highest and best use of TF numbers.
• Implementing a mixed market allocation approach
  may be feasible in a reasonable period of time.
• Implementing a full market allocation approach
  may be more difficult to implement and would
  likely take longer.
• A market-based allocation scheme for toll free
  numbers could reduce need for detailed regulation
  and enforcement.