U.S. COMPANIES ASK CANADIAN PARTNERS JOIN 888 AUCTION FIGHT

The possibility of a toll-free number auction was a particularly hot topic at Supercomm ‘97 because it has the potential to wreak havoc in the business world. Supercomm panelist David Berndt of Ford Motor described his company's situation for ICB Toll Free News.

New York, NY US - July 1, 1997 (ICB TOLL FREE NEWS) The FCC has many issues to address before the U.S. business community will be satisfied, according to a panel that convened during the Supercomm '97 show held last month. The participants were particularly concerned about on-going problems at the FCC, including the potential threat of 800/888 number auctions and the on-going changing of the guard at the agency, including FCC Chairman Reed Hundt's recent resignation.

The possibility of an 800/888 toll-free number auction was a particularly hot topic, because it has the potential to wreak havoc in the business world. Supercomm panelist David Berndt of Ford Motor described his company's situation for ICB Toll Free News.

"(Our carrier) AT&T came to us in January of last year and said, 'What numbers are critical to you that you want to reserve,'" Berndt said. "We gave them about 100 numbers for Ford Motor, Hertz, and all of the company's other holdings, and said 'these are the ones we want to hold on to when we get 888.'"

At the time, Ford officials assumed they had a guaranteed lock on the requested 888 numbers, many of which corresponded to the company's existing 800 numbers. This confidence was shattered in late 1996, when the FCC announced it was seriously considering an 888 number auction. FCC officials promised to announce their decision by January, Berndt said. Ford Motor, and thousands of other businesses, are still waiting for the FCC's decision. They are not waiting quietly, however.

"An auction - the bottom line is, it's ludicrous, because Bellcore here in the U.S. does all of the number assignments for North America," Berndt said. "888 was assigned way back when (to be) the next long-distance toll-free numbers."

Berndt reflected the opinion of many business people when he said that Ford simply wants to have first-crack at the numbers it requested last year. Many companies are concerned that rival organizations will snap up familiar "vanity numbers" in the 888 exchange.

In addition, Berndt also believes a North American auction involving both the U.S. and Canada would be ludicrous. He noted that Canadian firms would be bidding in a U.S. federal auction for Canadian long-distance numbers. In other words, the U.S. government would be selling numbers for use in another country. "It runs against the entire concept of national sovereignty," Berndt said. He is encouraging companies to enlist the help of Canadian subsidiaries and business partners in fighting the FCC's auction plans.

FCC officials say there are many reasons this and other telecom-related actions have been delayed, including the passage of telecom reform in 1996. Quite simply, the FCC has been too busy addressing the various merger requests and attempted market expansions to deal with the broader problems. Although this certainly has been a factor, the panelists believe there is another problem at hand: the changing of the FCC guard.

The FCC has undergone an unusual number of changes over the past several years, leading to instability and in some cases, an inability to make decisions. For example, in the past year alone, the FCC has lost Commissioner James Quello, who declined to be renominated; and former FCC Common Carrier Bureau Chief Regina Keeney, who was nominated to be a commissioner but later withdrew her name. Most recently, FCC Chairman Reed Hundt, who has wielded substantial influence over federal telecom regulation, announced he will step down later this year.

Hundt's decision to leave is likely to further delay many decisions that directly affect the toll-free industry, including the simple question of whether or not an auction will be held. Hundt has indicated he will address as many issues as possible before leaving. However, based on his recent actions, it appears that his final days are more likely to be filled with merger hearings and requests to enter new markets. As such, the 888 question appears unlikely to reappear on the FCC roster in the near future.

Whether or not to hold an 888 auction will most likely be left behind for the next commissioner, who has not yet been selected. To date, several names have been floated around Washington, including FCC Commissioner Susan Ness; William Kennard, who was tapped to replace retiring commissioner Quello; and FCC Common Carrier Bureau Chief Kathleen Wallman.

Author/Correspondent's Profile: Judith Oppenheimer, Publisher, ICB Toll Free (800/888) News

1 888 FLOWERS? INQUIRING MINDS WANT TO KNOW...

Should 1 888 FLOWERS be assigned to 1 800 FLOWERS? Regulators want to know if you think right of first refusal - where the holder of a toll-free number would have first dibs on matching numbers in new toll-free exchanges - is a good idea or not, and why.

New York, New York US - July 8, 1977 (ICB TOLL FREE NEWS) Should 1 888 FLOWERS be assigned to 1 800 FLOWERS? In this case it’s a fait accompli - the savvy folks at 800 FLOWERS took care of it themselves - but it’s a good question nonetheless, and the FCC wants your opinion.

Regulators want to know if you think right of first refusal - where the holder of a toll-free number would have first dibs on matching numbers in new toll-free exchanges - is a good idea or not, and why. They also want to know if you think there are better ways to distribute toll-free numbers, such as lottery or assignment by SIC code.

If these questions seem trivial, or the answers obvious, keep reading. First, though, accept for the moment two facts as gospel: one, that right of first refusal will not deplete, or accelerate any perceived depletion of, the toll-free resource; and two, that with or without right of first refusal, toll-free numbers are, and will remain, available for everyone who wants them.

That said...

Another new toll-free exchange, 877, is due out next April. Sans 800 FLOWERS’ right of first refusal, a company that sells flower-designed wall paper, or flower-shaped cookies, might obtain 877 FLOWERS. Or the number could be haphazardly, numerically assigned to a local dry cleaner, a regional manufacturer, or other company or individual asking any carrier for a toll-free number.

Should it be? What’s the upside - and the down? Who benefits - who loses - who pays? How much?

American Express “owns” 1 800 THE CARD. Certainly VISA would like first dibs on 888 THE CARD, but it’s too close for trademark-comfort. However, AT&T, MCI, or some young upstart carrier might love it for their pre-paid calling card businesses. And 877 THE CARD could go to a sports trading card company.

Or, again, these numbers could be randomly assigned, even landing up on an automated voice mail box or fax machine.

What about 1 800 MATTRESS? Could a miscreant but savvy 877 MATTRESS navigate trademark loopholes, capture wrong number calls, and deliver inferior (or perhaps superior!) off-brand products?

For that matter, would a numeric 1 888 or 877 336-8478, intentionally or randomly assigned elsewhere, land 1 800 DENTIST in hot water with its dentist-affiliates, perhaps in exclusivity contract violation, or just disappointed with a diluted and less effectual 800 advertising product?

Are Toll-Free Numbers Comparable to Bank Account Numbers?

Without right of first refusal, the FCC will, in essence, direct the marketplace to treat toll-free numbers like bank account numbers - each digit for itself. Beyond the obvious Twilight-Zone-esque, giant step backwards this would represent for business communications in general, plus blatant conflict-of-interest and philosophical contradiction with its own toll-free auction interests, what would the tangible ramifications for advertisers, stockholders, and consumers be?

Assuming a reasonably high degree of consumer confusion, amply illustrated with current 888 numbers, could the cookie company crumble under the weight of misdial costs from tulip-seeking callers? Might gum-chewing baseball-card-traders tie up American Express phone lines, or frustrated credit card holders expire in voice-mail hell? Could the all-important 800 DENTIST ad budget liquidate into a litigation fund?

Or worse, will public faith in 800 get lost along with the daily onslaught of local area code changes? Would brand values of 800 number companies dive, taking stockholder confidence with them? Would carriers lose face, and traffic revenue, as toll-free service marketshare further erodes to the internet?

Don’t Buy, Don’t Tell.

What of the toll-free numbers inevitably purchased out of corporate necessity from existing arbitrary-number-assignees? In April ‘97 the FCC outlawed toll-free number buying and selling, yet despite threat of penalties, confiscations and jail, we’ve observed no suspension of corporate need, or willingness to compensate current users in order to fulfill legitimate corporate communications agendas. Sans official replication - “right of first refusal” - we can only expect the need, and practice, to escalate.

We disagree with the prohibition to begin with -- there are no victims or losers in a free market distribution of toll-free numbers -- only winners, primarily consumers. Indeed, it’s text-book apple-pie business 101.

Nonetheless, for the time being the prohibition is law, and we question regulator-driven incentives to breach it. Of course, with prohibition-market status, perhaps the cost of vanity numbers will be driven so high, that only the mega and multinational can afford them to begin with.

Not surprisingly, these are some of the same issues raised in the debate over auctioning off toll-free numbers to the highest bidders. If that topic has caught your attention, take note.

Per the abbreviated Public Notice below, the FCC is seeking comment on toll-free vanity number issues.

While not officially related, this is particularly interesting in light of the Congressional 888 auction controversy. (Congress is considering auctioning off toll-free numbers to the highest bidders as part of its budget agenda - see recent NewsWeb articles, July 1, 1997, “U.S. COMPANIES ASK CANADIAN PARTNERS JOIN 888 AUCTION FIGHT” (http://www.bizwiz.com/cgi-bin/rbox/nwstory.pl?terms=97nw547204437) and June 3, 1997, ‘The Most Neglected $12 Billion Asset in Corporate America Today” (http://www.bizwiz.com/cgi-bin/rbox/nwstory.pl?terms=97nw519115354).

Confusing the matter is the fact that the first 888 numbers set-aside for "protection" pending the FCC's right of first refusal decision (see FCC Notice below), are the very same numbers now eyed by the government for auction, having been red-flagged by their 800-holders as "valuable." So company's that would normally lobby for protection, now may legitimately fear doing so.

Again exacerbating the need for creative "black-market" remedies.

Businesses would be well advised to review the background information on this issue as well as the contradictions and questions raised and as yet unanswered via Petitions for Reconsideration and/or Clarification, and Comments and Replies, in the recent FCC Order, The COMMISSION ESTABLISHES RULES PROMOTING EFFICIENT USE, FAIR DISTRIBUTION OF TOLL FREE NUMBERS. Report No: CC-97-17. by 2nd R&O & FNPRM. Action by: the Commission. Adopted: April 4, 1997. Dkt No.: CC-95-155. (FCC No. 97-123). Many of these documents can be found at, or linked from, ICB Toll Free News, http://www.icbtollfree.com.

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FURTHER COMMENTS TOLL FREE SERVICE ACCESS CODES CC Docket No. 95-155

On October 4, 1995, the Commission adopted a Notice of Proposed Rulemaking (CC Docket No. 95-155) addressing various issues relating to toll free service access codes and, among other issues, requesting comment on the issue of vanity-number treatment in future toll free codes. Toll Free Service Access Codes, Notice of Proposed Rulemaking, 10 FCC Rcd 13692 (1995) (NPRM). The pleading cycle in response to the NPRM closed on November 15, 1995. In January 1996, the Common Carrier Bureau directed Database Management Services, Inc. to set aside 888 vanity numbers by placing them in "unavailable" status until the Commission resolves whether these numbers should be afforded any special right or protection. Toll Free Service Access Codes, Report and Order, 11 FCC Rcd 2496 (1996).

The record on the NPRM is almost two years old. At this point, the industry is preparing to deploy the next toll free code in 1998. We seek, therefore, to refresh the record in CC Docket No. 95-155 on issues associated with the treatment of vanity numbers, both with 888 as well as numbers in future toll free codes. Specifically, parties should comment on issues such as, but not limited to, a vanity-number lottery and Standard Industrial Classification Codes. We ask that parties confine their discussion to issues concerning vanity numbers and avoid simply reiterating their earlier pleading.

Comments and reply comments in response to this Notice should be no more than 20 pages, and must be filed on or before July 21, 1997, and reply comments must be filed on or before July 28, 1997... For further information, contact Robin Smolen (202 418-2353)of the Network Services Division, Common Carrier Bureau.

Author/Correspondent's Profile: Judith Oppenheimer, Publisher, ICB Toll Free (800/888) News