Critics See No Need for New Area Codes

The costly and disruptive nationwide explosion of area codes has long been blamed on popular gadgets such as fax machines and wireless phones, but critics are now charging that the shortage of telephone numbers is largely artificial.

Regulators in nearly half a dozen states are moving to impose moratoriums on new area codes out of concern that the burgeoning telephone industry is warehousing a vast reservoir of numbers instead of giving them to new customers.

Poor management of telephone numbers, coupled with a refusal by the telephone industry to invest in new technology, is driving a need for more new area codes than are necessary, they say.

The repeated changes of area codes, particularly in California, have inconvenienced tens of millions of U.S. consumers and saddled businesses with huge costs, triggering a growing consumer backlash that has caught federal regulators by surprise.

“Telephone number assignment policies are broken and antiquated and reflect the old Ma Bell monopoly when there was only one phone company serving a geographic area,” said John Hanger, a Pennsylvania Public Utilities Commissioner. “The current system is lunacy. It has to end.”

The telephone industry denies that it has created an artificial shortage, arguing that it does not have the technology to avoid creating area codes. Critics say the technology does exist but that the phone companies find it cheaper to create area codes than invest in more sophisticated switching equipment.

Each area code change costs companies as much as $40 million, according to one Pennsylvania estimate. Consumers are forced to reprogram their computers and home burglar alarms, as well as notify friends and relatives.

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Over the past three years, the number of U.S. area codes has surged 67%. The impact is especially large in California, which by the end of this year will have more than doubled the 10 area codes the state had in 1991. Exactly how much number hoarding is going on in California is unclear.

But of the 1.5 billion possible phone numbers created by the existing 193 area codes nationwide, about half a billion are not actively used, according to Lee Selwyn, a Boston consultant who is assisting Illinois regulators in examining the issue.

Selwyn said there are enough surplus telephone numbers to eliminate more than 60 area codes. The telephone industry acknowledges that there are surplus telephone numbers, but has not disclosed its estimates.

The recent rise in area codes, many experts agree, is more a case of the proliferation of new phone companies than the fast-growing communications technologies traditionally blamed for the increase.

There are 55 million cellular phones in operation and 45 million pagers, besides the 174 million residential and business phone lines, according to industry estimates. (Each business line, however, can support up to 24 telephones.)

Every carrier licensed by the government to offer service in a state is entitled to order phone numbers. And in most instances, because there is no penalty for overestimating demand, they load up. As a result, phone competition can easily send the arithmetic of phone numbers off the charts.

The problem starts with the technology of switching equipment, which requires that allotments of telephone numbers be made in batches of 10,000. But in many cases phone or paging companies do not have customers for that many numbers.

The Pennsylvania Utility Commission found that some local phone companies holding blocks of 10,000 numbers had given fewer than half a dozen to subscribers.

As competition in the telephone industry heats up, more phone companies are seeking batches of phone numbers.

In California, there are more than 60 carriers licensed to offer wireless or local phone service in the state. To compete statewide, each of those carriers needs an allotment of 10,000 numbers in each of 725 local dialing areas: a total of 7.25 million phone numbers for each company.

Massive shifts in area codes are wreaking havoc on many businesses.

John Bauer, a Fort Lauderdale food importer-exporter, said the region’s recent addition of the 954 area code cost him several thousand dollars in direct expenses and untold lost business from overseas customers whose telephone equipment cannot handle new U.S. area codes without the traditional “0” or “1” in the middle.

To cope with the problem, Bauer said, he maintains a separate telephone number in the old 305 area code that serves Miami, and has calls forwarded to him in Fort Lauderdale.

“We’ve had to change everything,” Bauer said. “There must be a better way than constantly changing area codes. It’s a real pain.”

Around the nation, consumer opposition to area code proliferation is hardening.

The Ohio town of Parma last year presented former FCC Chairman Reed Hundt with petitions signed by 4,000 residents opposed to the addition of a 440 area code.

Hundt said later he was surprised by the depth of the public outcry, having never seen another case “where so many citizens have complained about the process.” But state officials say that consumer anger over area codes should come as no surprise.

In Georgia, Public Service Commissioner Stan Wise said that if his state were to implement “an area code split, people would march on the Capitol.”

The nation’s area code system has been controlled by the Baby Bells and their research arm, Bellcore. But under a plan devised by an FCC advisory group, known as the North American Numbering Council, that authority is being transferred over the next year to contractor Lockheed Martin Corp. But whether Lockheed can stop the proliferation of area codes will depend on new technology.

In the current system, a caller dials seven to 11 numbers and initiates a series of electronic negotiations that makes a connection or results in a busy signal. When the number is received by the central office telephone switch, it checks to see whether the first digit is a “1.” If so, it knows the call is long distance and sends the call to the designated long distance company for processing.

The long distance company examines the area code and three-number prefix to route the call to the local switch that controls the dialed phone number. Engineers say these central office switches are the Achilles’ heel of the system.

They require that telephone numbers be allocated in blocks of 10,000 because the switches are not smart enough to route calls unless all the numbers within a prefix belong to a single carrier. And carriers need blocks of 10,000 for each local dialing area or so-called rate center.

Critics say that more sophisticated switches are available that can handle calls to prefixes that are shared by more than one telephone company. Such technology would delay the need for new area codes for several years, Selwyn said.

Pennsylvania, Illinois and some other states are pressuring the phone industry to modify the phone network so that numbers could be allocated in units of 1,000 or less.

But some numbering officials say that the telephone industry is years away from updating the nation’s phone network to allocate numbers in the smaller quantities sought by state regulators.

“We have to fix the network and that’s a big and complicated job,” said Ron Conners, director of the Lockheed operation that manages the phone number system. “There are more than 10,000 switches out in the phone network. The problem is not that we are running out of phone numbers; it’s that we are running out of these blocks of 10,000” units.

But faced with increasingly frequent requests to add area codes, irate state officials are vowing to crack down on area code proliferation.

Hanger and his four colleagues on the Pennsylvania Public Utility Commission last summer rejected a request to create area codes in a vast area of the state covered by the 215, 610 and 717 area codes and ordered the industry to conserve phone numbers instead. The states of Virginia, New Jersey and Illinois are weighing similar bans.

Selwyn, who is president of Economics and Technology Inc., said the area code explosion has been exacerbated by a 1995 Federal Communications Commission decision barring states from giving mobile phone users their own telephone area code.

He noted that New York City, the nation’s largest telephone market and the last area allowed to segregate wireless carriers by area code, has added only one area code in the last 12 years--other than the 917 code set aside for wireless carriers in 1992. By contrast, Chicago and Los Angeles have each added five or more area codes in that period.

But the FCC argues that segregating cellular users by area code would be unfair because they would be the only consumers required to dial 11 digits for local calls.

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The FCC does not oppose all overlays, which can help deal with demand for new telephone numbers. Unlike geographically splitting one area code in two, overlays superimpose a new area code on a region for new customers and existing customers retain their area codes. But the downside is that everyone would have to dial 11 numbers to make a local call.

Nonetheless, state regulators see overlays for wireless as a partial solution. The Connecticut Department of Public Utility Control voted last month to segregate all wireless services in their own area code and said it would ask the FCC to reconsider its prohibition.

Officials of the wireless industry, which is signing up 28,000 subscribers a day, say that they shouldn’t be singled out for blame for area code proliferation.

At the current pace of number use, the available pool of three-digit area codes will be exhausted in about 30 years.