What Would a Toll Free Number Marketplace Look Like?

In September of 2017, the FCC announced that the rules surrounding the regulation of 800 numbers might need to change. Cue speculation about the likelihood of a marketplace for toll -free phone numbers. While the proposed rule changes affect almost every aspect of how toll-free numbers are reserved and managed, among the most exciting is the potential removal of regulations that prevent business owners from buying or selling toll-free numbers. Since the beginning of toll-free, the government has regarded 800 numbers as a public utility. This precludes private companies from profiting from their sale. Were this restriction on buying and selling 800 numbers to be lifted, the potential for a toll-free number marketplace to spring up seems more likely than ever. Here's what it might look like.  

The Potential for a Toll-Free Number Marketplace

The precedent that subscribers may not buy or sell numbers, known as the Brokering Rule, has been the hallmark of how toll-free numbers are assigned for almost three decades. In the most recent proposed rule changes, the FCC suggests this rule should be removed to allow for secondary auction markets. Such markets, the FCC recommends, would create greater equity in the assignment of high-value vanity phone numbers by giving everyone a chance to bid on their desired phone number. Currently, phone numbers can only be accessed through the SOMOS database’s spare pool, which assigns numbers on a first-come, first-served basis. The FCC describes their proposed rule changes as follows:

“A secondary market would allow subscribers to reassign their toll-free numbers to other subscribers for a fee (or other compensation) the parties negotiate.

We are mindful of long-standing Commission and legal precedent that a telephone number is a public resource that is not privately owned and cannot be sold. We seek comment, however, on whether we should change our rules so that even though a subscriber does not own a toll-free number, he or she may reassign the right to use that number for a fee.

For example, in a secondary market, a business owner who wants to sell his or her business may sell the right to use the toll-free number associated with the business."

  The FCC suggests that such a toll-free number marketplace would benefit both buyers and sellers of phone numbers, in that it would be a more equitable and efficient way for valuable numbers to be assigned. Prevailing supply and demand would be the defining influence on a number's value, rather than how quickly a provider moves to secure potentially valuable numbers. So how would this work in practice?  

What Would a Secondary Market Look Like?

This question, on the lips of everyone in the toll-free sector, actually raises more questions before the main issue is addressed: How would it work? Who will host such a secondary marketplace? Who manages the marketplace and what new regulations would it necessitate?   For its part, the FCC has already shaped the question by stating:

“A secondary market would allow subscribers to reassign their toll-free numbers to other subscribers for a fee (or other compensation) the parties negotiate.”

A secondary market would not be regulated in the same way that the FCC regulates the assignment of new numbers. Instead, the rule changes make clear that secondary markets would create direct exchanges between private parties. Such transactions, if allowed, would be exceedingly difficult for the FCC to track. Due to this, it would be reasonable to conclude that secondary markets are likely to form around some kind of private auction or sales sites. If the secondary market for toll-free numbers takes the form of an auction site, it will be up to the private company who designs and creates the auction site to determine exactly how it will look. There are many types of auction sites on the web today from which to draw inspiration, and they all have their strengths and weaknesses. The most notable is eBay, although others serve specific niches in their own right.  [search-tag] Toll-free numbers, however, have a unique set of requirements that will pose different challenges to a toll-free auction site. The first challenge is the exchange itself (i.e. the transfer of the number, or porting), which is managed by RespOrgs, entities that are separate from the seller. Presuming RespOrgs will not be allowed to broker numbers, the auction site would need to create a process by which phone numbers are expediently transferred after a sale. The auctioneers may need to warehouse numbers through their RespOrg to mitigate risk, but this also means end users looking to sell a number would effectively give up their ownership of the number while it is listed in the marketplace. Transfer aside, the bidding structure of the marketplace could mimic sites that offer an open bidding session for a period of time, with or without an option to purchase a number outright for a set price. What will need to happen for a marketplace to succeed is a means for toll-free number subscribers to quickly list their numbers for auction, as well as a painless process to bid on, acquire, and transfer the number. Auctioneers will need to define the process of bidding, purchasing, and porting phone numbers explicitly, and provide educational resources about the process. An open marketplace will undoubtedly attract buyers from all walks of the business community, most of whom will not have any prior knowledge of how toll-free numbers work or how they are regulated. It is this challenge that will put any procedures that are created for the marketplace to the test. If would-be buyers can’t understand how the market works, they will not bid.  

The Waiting Game...

The challenge with speculating on the nature of a secondary marketplace is that the rules changes have yet to be determined. The proposals are just that; they remain in the early stages of comment and there's plenty of time for adjustment, revision, or even complete abandonment if a consensus is not reached before further political upheaval.  The proposed rules change puts forward many ideas on what to change. Depending on which changes become actual rules and which do not, the anticipated auction site could take many different forms. For example, if the brokering rule is rescinded, but the warehousing rule is not, auctioneers will need to carefully decide how to handle phone numbers that are not in use. Conversely, if RespOrgs are allowed to broker and warehouse phone numbers, auctioneers will need to design a marketplace that promotes fairness and does not give preference to RespOrgs, whether intentionally or unintentionally. Ultimately, we will only know what the result will be if and when the FCC changes the rules. You can follow those updates and other news relevant to a potential toll-free number marketplace via our FCC Review summary page, or by subscribing to our updates via the sign-up box to the top-right of this page.