Internet telephony is still nascent, but small businesses across the country are beginning to realize considerable advantages from it, including the option to pick an area code of their choice. At the same time, incumbent telephone service providers are beginning to realize that Internet telephony may have an unwelcome impact on traditional phone business.
Last week, RBOCs (Regional Bell Operating Companies), led by BellSouth Corp., warned regulators that VOIP (voice-over-IP) services could cause a drain on the supply of telephone numbers. They urged the Federal Communications Commission to take a closer look at the startup voice services providers and how they use numbers.
Shafi Khan, network administrator for a wholesale call termination company in Bridgewater, N.J., has been using VOIP service from Vonage Holdings Corp. for 18 months. Khans company, Global Voice LLC, can make an unlimited number of calls in the United States for $40 a month. But more important than the cost savings, he said, are the advantages VOIP providers offer, such as online, real-time bill monitoring and area code selection.
"A big issue in this industry is where youre located," Khan said. "If I were based out of rural Idaho, I would definitely pick a big-city area code like Manhattan."
According to the FCC, the 212 area code in New York has the highest use rate in the country.
The impact of the VOIP industrys random use of area codes is one of the issues that BellSouth, Qwest Communications International Inc. and Verizon Communications Inc. want the FCC to examine.
Without conservation measures, individual area codes will run out of numbers, and new area codes will have to be established. If all the area codes run out, they warn, another digit will have to be added to the 10-digit pattern.
BellSouth spokesman Bill McCloskey said the company is not advocating any particular solution but is just raising questions.
For VOIP providers, however, the issue is a red herring. They argue that with customers numbering only in the tens of thousands, their use of numbers is minimal. Raising the issue, they charge, is a means of backdoor regulatory brinkmanship.
"This is a competition issue, not a numbering issue," said Brooke Schulz, spokeswoman for Vonage, in Edison, N.J. "Its the first strike of the RBOCs trying to get us regulated." Vonage has approximately 10,000 customers, Schulz said.
A Numbers Game
"This is probably a typical block-and-tackle kind of strategy," said Paul White, chief financial officer of DeltaThree Inc., a VOIP provider in New York. "If there are worries about line number exhaust, its from cell phones."
As new carriers find new uses for telephone numbers, old telephone numbers are being returned to the pool as customers drop second phone lines. In the first quarter of last year, carriers returned 12 million numbers, according to the FCC. At the end of last month, service providers had been allocated approximately 1.2 billion numbers, with 620 million still available to be assigned to customers.
While most carriers agree the issue cannot be ignored, VOIP providers say there is no need to consider it a crisis. "Number exhaust is not really expected to occur before 2031," said Vonages Schulz. "From our perspective, this is really a nonissue."