Area Code Plan Does a Number on Valley Firms

The coming sea change in telephone area codes hit the executive suite at Glendale Federal Bank recently when a secretary could not dial through to her boss’ vacation home in Washington state.

While the San Fernando Valley’s 818 area code won’t be split up until June 1997 when a new 626 area code is tentatively slated to be imposed in Burbank and eastward into the San Gabriel Valley, businesses are already scrambling to buy new software to update their phone systems--even if their firm is not in a new area code--just so their employees can dial out to the rest of the country.

Claudia Miller Kelly, with Alltell Information Services, Glendale Federal’s phone systems firm, had tinkered with the company’s phones to temporarily handle most new area codes while awaiting an OK to buy new software.

“Sometimes it’s difficult to get the message through” at a big company, Kelly says. But when that phone call to an executive hit a dead end, “it became a little bit more of an urgency.”

So Kelly has been installing $18,000 worth of software, and by April, Glendale Federal should have all its phone systems up to speed.

These tuneups are needed because all the nation’s area codes--set up in 1947 to clear the way for direct long-distance dialing--until 1993 had 0 or 1 as the second digit.

Then a boom in phone numbers, thanks to beepers, faxes, cellular phones, pay-at-the-pump gas station credit card numbers et al, used up the nation’s existing 144 area codes. Each area code has some 6 million usable phone numbers. So in 1994 new area codes--with middle digits of 2 through 9--began to be parceled out.

Unfortunately, PBX equipment--the in-house telephone switching systems owned by most mid- to large-sized businesses that connect to outside phone lines--were hard-wired at birth to accommodate only that first generation of area codes. Except for PBXs made in the past few years, most need some hardware replaced and new software.

“You have to hurry up and upgrade the software. You’d hate to tell the sales force you don’t want them to call certain phone numbers,” said Kim Konigsberg, telecommunications supervisor for Health Net, a health maintenance organization in Woodland Hills.

So Health Net has been adding software to handle the wave of area code changes at a total tab of $15,000. Health Net handles more than 5 million inbound calls a yearand expects its last batch of software repairs to be done by April.

Since January 1994, 20 new area codes have opened in the U.S., with many more to come. Businesses that don’t make software changes “will be real lonely in a few years,” says Ken Branson, a spokesman with Bell Communications Research Corp.

For telephone software companies, of course, this means a captive market waiting to be serviced.

One big PBX maker is AT&T;, which is about to spin off its equipment business into a new company called Lucent Technologies. Lucent’s L.A. sales staff has been busy since 1994 selling new area code software, and the company says 75% of customers with older PBXs have already upgraded their phone systems.

At 20th Century Insurance in Woodland Hills, which has no agents and does most of its business over the phone, the effort to update its phone systems is underway with a completion date expected in July.

Mary Ames, 20th Century’s telecommunications manager, said if the right phone software is not in place, we could “have hundreds of calls going back to operators.”

Like other big firms, 20th Century also needs to reprogram its so-called automatic route selection, a phone service that searches automatically for the cheapest call from several long-distance firms when an employee dials out, otherwise it gets billed at higher rates.

Ames said 20th Century hasn’t started the other big chore of notifying customers about new phone numbers at its claim service centers: That won’t begin until the end of the year.

For residential customers, or for small firms with just a few phone lines, these area code changes are not a problem, because their calls are handled by a phone company office.

The state Public Utilities Commission is expected to issue a final ruling on where the 818 area code will be split sometime this summer.

Meanwhile, Burbank and Glendale have filed a complaint to try to remain in the 818 area code along with the rest of the San Fernando Valley.

But Monterey Park and its neighbors have also filed a complaint arguing that San Fernando Valley, and not San Gabriel Valley, should take the new 626 area code. Their lawyers are trying to get the other side stuck with a new area code, in part, to spare the hefty expense for local businesses--from changing letterheads, business cards and signage--to alert customers about new phone numbers. One estimate pegs the total cost to San Gabriel Valley businesses to update signs, business cards and other area code changes at $40 million.

Still, change is now a way of life in telecommunications.

Most new area codes lie in big urban areas. Wyoming and Alaska still have one area code for each entire state, while California has 13 area codes, which will double in five years.

Indeed, whichever communities “win” the 818 area code case, they will only gain a reprieve. Given mushrooming phone demand, the 818 area code will have to be split again in eight years.

For now, the nation’s new batch of three-digit area codes is expected to last well into the next century. But some telecommunication savants already talk about phone numbers as an expendable resource, one that should be used carefully.

Once this batch of phone numbers are used up, the next step may be four-digit area codes. “I hope not in my lifetime. It would be just a mess,” said Konigsberg.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Dividing by Numbers

Here is how the proposed 626 area code would be carved out of the existing 818 area code.