The Pros and Cons of the FCC's 833 Number Auction
One need look no further than the recent launch of the 833 prefix to see that toll free numbers are more popular than ever. Businesses and government agencies alike recognize the value and versatile nature of toll free, which inevitably leads to a dwindling pool of available numbers. However, the roll out of this new prefix - and a proposed 833 number auction to allocate the new digits - has raised questions over whether new phone numbers are fairly allocated.
Toll Free Number AllocationThere currently exists a first come, first served policy whereby new numbers are reserved by the first RespOrg to come along. This has caused problems for companies who rely on vanity phone numbers — such as 1-800-HOMECARE™ — because it allows anyone with a connection to the SOMOS database to reserve identical vanity numbers under the new prefix if they are the first to seek them out (i.e. reserve 833-HOMECARE). Under pressure from the industry, the FCC has proposed to change this and implement a new auction system for vanity phone numbers.
What is the Proposed 833 Number Auction?This past September, the FCC proposed a series of rule changes that it hopes will make how toll free numbers are assigned more equitable. Chief among these changes is a proposed 833 number auction system that will allow parties interested in certain vanity phone numbers to have an equal chance of reserving the desired number. Currently, there exists a first come, first served rule that allows the first person to find a number in the spare pool to reserve it. Many active members of the industry have voiced concerns over how this rule has, in the past, put some at a disadvantage during a new prefix rollout, as was the case with 888, 877, 866, 855, 844, and most recently, 833. Under the current rules, a company such as 1-800-HOMECARE™ must rely on their RespOrg to reserve the new 833-HOMECARE. If a competitor has a more responsive RespOrg, or one with a faster connection to the SOMOS database, the competitor could easily reserve the new number and use it to compete against 1-800-HOMECARE™. Under the proposed rules to create an 833 number auction, the phone number 833-HOMECARE would pass into an auction system where both 1-800-HOMECARE™ and their competitor(s) may bid on the number. In this scenario, 1-800-HOMECARE™ will have had an equal chance to reserve the number.
Pros of the 833 Number AuctionThe main benefit of the new 833 number auction system would be to protect existing brands and companies. Businesses that rely on their vanity toll free number could potentially experience problems arising from the rollout of a new prefix such as 833. Many major industry players have long protested the manner in which new prefix rollouts are inequitable and negatively impact their brands, a problem that began almost immediately during the 888 prefix rollout. An auction could help ensure that the most motivated stakeholder gets their hands on the number they need to maintain brand integrity and limit confusion to customers. Additional benefits of the auction system are that all phone numbers in the spare pool with vanity value would fall under the auction system. Toll free numbers are frequently released back into the spare pool, and there is an entire industry devoted to running scripts to capture numbers of any value, dubbed “number-grabbers”, which leverage the first come, first served rule to their advantage. Under the proposed rules, any number with vanity value would pass to auction, allowing all interested parties a chance to bid and reserve a number. [search-tag]
Negatives of the 833 Number AuctionWhile the comments period for the proposed rule changes may reveal additional problems with moving to an auction system, the immediate negative impact of the rule changes will be felt by RespOrgs. Under the current system, reserving new phone numbers is a quick and easy process. By contrast, an auction system, which will inevitably need to be managed by RespOrgs, will create another layer of administrative burden. This on a system that already causes more than its fair share of confusion among end users. Hence, the FCC will need to carefully consider how they plan to implement such an auction system, not to mention how to prepare the wider industry for a major change. An auction system will also favor large corporations. Part of the reason the first come, first served rule was applied to reserving new numbers was to prevent a monopoly over vanity phone numbers by the largest players in the industry. With an auction system, it is possible that companies with the deepest pockets (including your phone company) will reserve all phone numbers with vanity value, effectively shutting out smaller companies and end users from having access to those numbers. With all of these negative impacts in mind, the FCC will need to carefully manage how it mitigates this risk, which could potentially lead to the collapse of competition in how new numbers are reserved.
The TakeawayIt is important to keep in mind that the 833 number auction will only affect phone numbers with vanity value in the spare pool. As it stands, most phone numbers with vanity value are already reserved, and so the proposal for the 833 number auction will only affect a small part of the industry. Additional rule changes, such as the dismantling of the Brokering Rule, will seek to create more equitability and competition in the industry by allowing secondary markets where toll free subscribers may sell their vanity phone numbers in an eBay-style auction. If and when this happens, the potential for major changes in the phone number marketplace is greatly increased. Viewed in this light, the proposed 833 number auction holds significant importance for everyone in the telecom sector, as well as any business owner looking for a more memorable number.
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