Hoarding? Warehousing? Brokering?

Telecom companies oppose new FCC rules about obtaining toll-free numbers

By Thom Weidlich

Several telecom companies and industry groups, alarmed at tough new rules released by the Federal Communications Commission in April, are begging the agency to either clarify or reconsider the provisions.

The telcos include Sprint, MCI and Cable & Wireless. Vanity International, a Chicago-based consultant, and the National Association of Telecommunications End-Users filed emergency petitions to stay the order. To date, the FCC has taken no action on any of the requests.

Among other items, the order imposes strict new rules concerning the warehousing, hoarding and brokering of toll-free numbers. It affects all marketers who use such numbers.

According to the FCC, "hoarding" occurs when a marketer or other subscriber obtains more numbers than it intends to use. "Warehousing" is when a Responsible Organization, or "RespOrg" -- a company that procures numbers for marketers -- reserves a number without having an identified subscriber for it. Brokering occurs when a marketer obtains a toll-free number only for the purpose of "selling" it to another company.

The penalties for these violations can be severe, including imprisonment, a $1 million fine and termination of all toll-free service for a marketer or decertification for a RespOrg.

How will the commission know that a marketer is hoarding? Any subscriber with more than one number will create a rebuttable presumption that it is.

"If you're in business and have a flexible advertising program, you could be presumed to be guilty of wrongdoing," says Mark D. Olson, a Covina, CA, lawyer who filed the petition of the end-users group.

The carriers argue that marketers often obtain numbers in anticipation of future programs -- that what the FCC objects to is actually a normal business practice. Also, they don't want to be responsible for monitoring their customers' activities. MCI points out that if a carrier mistakenly identifies a customer as violating the rules, it opens itself up to a lawsuit for interfering with the marketer's business. These telcos argue that before cutting off a marketer's service the FCC should have to pronounce that hoarding has taken place.

Still, in July, Cable & Wireless sent a bulletin to its sales agents asking them to investigate any suspicious activity among subscribers. The bulletin declares that C&W; "will terminate service to any subscriber violating [the FCC's] order."

"We're only doing what all carriers are doing," says C&W; spokeswoman Nancy Gastrock. "We're trying to cover ourselves and make sure we're following the rules."

As for warehousing, Sprint, C&W;, MCI and others want the FCC to change its rule that a RespOrg have an identified subscriber for each toll-free number requested. They propose that a RespOrg be given the 45 days it is allowed to hold a number in reserve status (down from the formerly allowed 60 days) to find a subscriber.

Sprint, which was first to ask the FCC to reconsider, says in its petition that "it is sometimes easier to close a sale if the service provider is able to offer a potential customer several numbers from which to choose," a practice that would be impossible under the new rules.

The carriers maintain that their clients often need numbers in a short time frame for special events, trade shows or other emergencies.

Some of the groups are also worried that the typical practice of marketers selling toll-free numbers will result in accusations of brokering.

U S West was the only company to oppose Sprint's petition, agreeing with the FCC that allowing RespOrgs to reserve numbers without a named subscriber will render blocks of numbers unavailable.

POINT, COUNTERPOINT

FCC: If a RespOrg "does not have an identified toll-free subscriber agreeing to be billed for service associated with each toll-free number ... then there is a rebuttable presumption that the [RespOrg] is warehousing numbers."

Sprint: Sprint "recommends that the Commission instead adopt a requirement that a RespOrg have an identified subscriber for a toll-free number by the expiration of the 45-day reservation period associated with that number."

FCC: "Routing multiple toll-free numbers to a single subscriber will create a rebuttable presumption of hoarding or brokering."

MCI: "The Commission should recognize the fact that maintenance of more than one number by a RespOrg or subscriber is not necessarily an indication of wrongdoing. Instead, in most instances, it is indicative of normal business practices."

FCC: Number brokering "is not in the public interest. Brokering provides motivation for hoarding and therefore results in quicker exhaustion of the current [service access code]."

ICB Toll-Free Consultancy: "There is no evidence in the record that the private exchange of numbers has any cognizable effect on the availability of toll-free numbers. ICB submits, moreover, that the free transfer of numbers between end-users is in the public interest."

(October 1, 1997)