WASHINGTON (07/06/2000) - A nearly century-old practice of local telephone companies is threatening a crisis in the telephone number system. That's the claim of a new report published by Boston consulting firm Economics and Technology Inc. (ETI).
At issue is the local telephone companies' practice of subdividing regional calling areas into rate centers. The purpose of rate centers is to calculate the mileage of a call to come up with a toll charge.
When a user makes a call to a location that is not close enough to be part of the user's free local calling area but is not far enough to be handed off to a long distance carrier, the telco usually will calculate the miles between the two parties' rate centers. The mileage determines the rate per minute.
The problem, says ETI's report, is this system doesn't take into account new local carriers. Each new carrier that enters a market must request a block of phone numbers for each rate center it wants to serve to ensure full connectivity with the incumbent carrier. That can lead to a tremendous waste of numbers because the current minimum block is 10,000.
For example, the Boston metropolitan area has 47 rate centers. A new carrier in Boston must start with 470,000 numbers if it wants to solicit customers in the city and suburbs.
ETI says mileage-based pricing - the whole rationale for rate centers - is outdated. Long-distance carriers don't use it anymore for calls across the country, but local carriers paradoxically still do for short-distance toll calls. "Incumbent local exchange carriers are extremely resistant to any measure that would require them to forego this profitable source of revenue," says ETI.
ETI urges regulators to force local carriers to abandon rate centers and establish a single toll charge - or expand their free calling areas while slightly increasing the monthly fee for a phone line. In March the U.S. Federal Communications Commission took a more limited step to slow the pace of new area codes: mandating software changes to let carriers request 1,000 numbers at a time.