Good morning. My name is Blossom A. Peretz, Ratepayer Advocate for the State of New Jersey. I want to thank you for this opportunity to address the Board of Public Utilities on the important issue of area code relief for the 201, 973, 732 and 908 area codes.

The explosion of telecommunications services has caused a tremendous need for more and more telephone numbers. Whereas the family home once had one telephone number, now, it may have many: one for a home fax machine, one for a dedicated computer modem and one or more for additional telephone lines. However, the growth of telecommunications services is not the sole reason for the need for new area codes.

The rules which control how telephone companies receive telephone numbers to serve customers are determined primarily by the federal government. These rules are outdated and inefficient. They require a carrier to request and receive a block of 10,000 numbers for each rate center where it intends to serve customers. Furthermore, these federal rules do not require carriers to use this block of numbers efficiently, nor may they be required to return large blocks of unused numbers. This system has always been inefficient, but its effects were never fully realized when the local exchange market was limited to the incumbent carrier.

However, with the introduction of competitive carriers to the marketplace, we see that the amount of available telephone numbers within an area code cannot withstand the strain of being distributed in blocks of 10,000 numbers to each requesting carrier in every rate center throughout the state. As a result of this method, area codes "exhaust" their supply of available numbers, even though many of these numbers may lie unused by the carriers. Ultimately, the present number distribution system has been exposed as one where efficient number distribution is not permitted, responsible number use is not encouraged and the exhaust of numbers as a result of administrative inefficiency is a self-fulfilling prophecy.

Largely as a result of this inefficiency, we find ourselves here today, discussing the possible addition of four new area codes for the State of New Jersey. The United States Census has estimated that New Jersey has 8,115,011 residents. Presently, with the six area codes which serve our state, New Jersey has approximately 45.6 million telephone numbers available for use. With the possible introduction of up to four additional area codes, the State of New Jersey would have approximately 76 million available telephone numbers, or 9 telephone numbers for every resident of the state.

Members of the telecommunications industry have proposed to the Board a form of area code relief known as an overlay. With an overlay, a new area code is introduced into the same region presently served by the old area code. Most significantly, the introduction of an overlay permits all consumers to maintain their current area code, although in the future, consumers may receive a new telephone number with the new "overlay" area code. Unfortunately, the introduction of an overlay requires 10-digit dialing, even for local calls.

The other option for area code relief is known as the geographic split. Under this method, the pre-existing area code is literally split in half, with half the consumers retaining their old area code and half the consumers receiving a new area code. Most significantly, the geographic split preserves seven digit dialing and somewhat maintains the geographic identity long associated with a particular area code. However, the geographic split requires approximately half of the consumers to change their area code, and may also require them to change business stationary, signs and other pre-printed materials.

In past area code proceedings before the Board, the Ratepayer Advocate has recommended a geographic split. However, we have always recommended the Board review de novo the question of the geographic split versus the overlay in each new area code proceeding. In this proceeding, we have not opposed the industry’s proposal for an overlay. While we strongly believe the introduction of any new area codes is an inconvenience that may have been avoided if more efficient number distribution methods were permitted by the federal government, we recognize that for the 201, 973, 732 and 908 area codes, some form of relief is necessary at this time.

Ultimately, the Ratepayer Advocate has concluded that it would be unfair and inefficient to subject the residents of the 201, 973, 908 and 732 area codes to further geographic splits. Also, and rather ironically, we are hopeful that many of the carriers who continue to hold telephone numbers in the current area codes will be able to provide consumers with the current area codes well into the future. Our decision is not a perfect one, but the issue at hand presents no easy choice or obvious answer.

If there may be one thing I hope the Board will take from my remarks, it is that the issue of number distribution and area code relief is a problem, and we need to fix it. The question is, "How do we fix the system and eliminate the need for further area code relief?" Here are some suggestions:

The FCC is in the process of developing more efficient rules as well as greater autonomy to individual states to implement those rules. Among the issues addressed in the FCC’s recommended rules are:

• Developing uniform number status definitions;

• Verifying the need for new numbers by a carrier, including a utilization threshold;

• Strengthening the need for number forecast and utilization data collection;

• Auditing carriers to verify compliance with guidelines;

• Stronger enforcement of rules;

• Reclaiming and reusing unused blocks of numbers; and

• Number pooling, including thousand-block pooling and individual number pooling.

The last two issues are particularly noteworthy. A rule which would permit reclaiming and reusing blocks of numbers which have been provided to a carrier but have remained unused by the carrier over an extended period of time would prevent carriers from hoarding numbers and would ensure that any numbers distributed to a carrier are available for use by consumers. Additionally, a rule which would promote the more efficient distribution of numbers to carriers, including: distributing numbers in blocks of one thousand or distributing numbers individually is even more important. Since the primary fault in the present number distribution scheme is that carriers receive 10,000 for every rate center, distributing numbers in blocks of 1,000 or less goes a long way toward more ensuring efficient use. The Ratepayer Advocate believes that implementing effective rules in these areas will eliminate many of the administrative inefficiencies which plague number distribution. We are pleased that the Board has filed comments with the FCC demonstrating its support for the Commission’s proposals to strengthen its rules.

Unfortunately, in other regards, we do not believe the Board has acted as swiftly or as decisively as it could have to prevent area code exhaust and to implement interim number conservation measures. For example, on September 28, 1998, the FCC invited states’ public utility commissions to petition the Commission for additional authority to implement number conservation measures. Since that date, at least 10 states, including: Connecticut, New York, Massachussets, New Hampshire, Maine, California, Texas, Ohio, Wisconsin and Florida requested and received authority to implement interim number conservation measures. Many of these measures are in the previously mentioned areas, including implementing thousand-block pooling and implementing number utilization thresholds. However, despite the February 9th, May 11th, October 26th requests of the Ratepayer Advocate that the New Jersey Board request similar authority, it has declined to do so.

Additionally, the Ratepayer Advocate is disappointed that the Board has not investigated the number conservation measure known as rate center consolidation. Rate center consolidation involves creating larger geographic areas in which individual blocks of numbers may be used by consolidating or combining existing rate centers. The FCC has stated that rate center consolidation has significant potential to reduce the industry demand for new telephone numbers and has suggested that local exchange carriers pursue this matter more aggressively. Furthermore, the authority to implement rate center consolidation lies fully within the Board’s authority.

The Ratepayer Advocate is aware that at least one local exchange carrier opposes rate center consolidation and has pointed out to the Board that rate center consolidation would have a cost as well as an effect on the state of the local exchange market. The Ratepayer Advocate is aware of the issues rate center consolidation raises, which is why we asked the Board to consider rate center consolidation -- not implement it blindly. In fact, rate center consolidation has been studied and/or implemented in several states, including: Connecticut, Pennsylvania, New York, Missouri, Colorado and Ohio. We believe New Jersey should be in the forefront of states considering every possible means of number relief for its residents.

In conclusion, it is unfortunate that in the past the Board lacked the authority to implement the methods of area code relief which would have prevented the administrative exhaust of telephone numbers in the 201, 973, 732 and 908 area codes. Therefore, we find ourselves here to discuss the option of implementing a geographic split or an overlay. The telecommunications carriers have presented a plan to implement overlays, and the Ratepayer Advocate does not oppose this option. At this point, however, we are most concerned that the Board request and receive interim authority from the FCC to implement number conservation methods including, but not limited to, reclaiming unused and reserved numbers, setting and enforcing number fill rates, requiring sequential number assignments and implementing thousands-block pooling. Furthermore, we hope the Board will implement and strictly enforce the most stringent number conservation rules upon the release of the FCC’s permanent number conservation rules.