Local Number Portability January 1998

Posted: 01/1998

By Debera Bell-Beam

Phased implementation of local number portability (LNP), a Congressional mandate to be
carried out by the Federal Communications Commission (FCC), has begun with the first
drop-dead date of March 31 for wireline local exchange carriers (LECs) that serve seven
major cities. Initial deployment, broken into five phases, will target the nation’s top
100 metropolitan statistical areas (MSAs). LECs must begin deployment in smaller cities
within six months of a request by another carrier.

Once long-term LNP is in place and operational, consumers will be able to switch local
service providers without changing their phone numbers, a feature particularly attractive
to commercial consumers. Interim measures that allow number portability include remote
call forwarding and inward dialing.

"In many industries worldwide, the power is shifting from the supplier to the
consumer," says Jim Cannavino, president and CEO of Dallas-based Perot Systems Corp.
"Transferring ownership of phone numbers from the telephone service suppliers to the
customer will make it easier for businesses and consumers to manage their local telephone
service."

LNP uses the industry-standard location routing number (LRN), an intelligent network
(IN) technology developed by Lucent Technologies Inc. that assigns a unique 10-digit
number to each telephony switch. LNP services are provisioned on advanced intelligent
network (AIN) elements that replace the dialed telephone number with the LRN. LNP calls
then can be routed to the appropriate switch for connection to the dialed party.

However, to obtain this LRN data and properly provision LNP services, providers must be
connected to regional number portability administration centers (NPACs) that will manage
LNP services and provide LNP call routing data to carriers.

LNP implementation requires modifications to the switching, signaling and advanced
intelligent network (AIN) elements of the public switched network, according to
Mississauga, Ontario-based Nortel (Northern Telecom). Cost estimates vary, with some Bell
companies claiming network upgrades could cost them as much as $2 billion each. And that
doesn’t include other costs such as administration, which the FCC has yet to tag.

Copies of the LNP database are to reside in participating networks, but the master
database is to be maintained by a neutral third party. In this case, two neutral parties
are stepping in to assume that role for the current seven NPAC regions. Each region will
establish its own database.

Perot Systems will implement LNP services for three NPAC regions–the Southeast, West
and West Coast–and Teaneck, N.J.-based Lockheed Martin IMS (LMI) will administer
deployment for the other four regions–the Northeast, Midwest, Mid-Atlantic and Southwest.
Late last year, the FCC selected LMI to serve as administrator of the North American
numbering plan administrator (NANPA) under a five-year contract valued at about $25
million. LMI will oversee assignment of area codes, three-digit central office codes,
carrier identification codes and other numbering resources for the United States, Canada,
Bermuda and much of the Caribbean, according to company reports.

Such a position is not new to LMI, which operated the 800 number administration and
service center (NASC) for five years until October, notes a company spokesman. Number
portability got its start in 1993 when the FCC mandated that 800 numbers no longer
belonged to the phone company that supplied the service. The commission’s reasoning was
that such proprietary ownership discouraged consumers from switching providers because,
prior to portability, commercial users would have to relinquish a number they likely used
to promote their business.

The FCC also requires a neutral, legal entity to select and manage the third-party
administrators. Carrier members of the legal entity, a limited liability corporation
(LLC), must meet the following criteria:

One issue among many yet to be resolved is how NPAC administration costs will be
allocated among the providers. Some suggest the burden may fall heaviest on the smallest
and least able to absorb relatively staggering costs.

Issues surrounding LNP are being orchestrated by the major carriers, who are forming
the LLCs, as are suggestions for implementation, says Gerry Mueller, director of network
products for Transaction Network Services Inc. (TNS), Reston, Va. As a result, the
concerns of the smaller carriers and the smaller service providers have been either
overlooked or not handled very thoroughly. "One of the things we are trying to do as
a company is to make sure we are on top of everything going on with LNP so we can be of
service to those small carriers and service providers," says Mueller, who adds that
the large carriers are running the show at the smaller carriers’ expense. "There’s a
club, and entry into the club is membership into the LLCs, for which you have to pay a
fairly substantial fee–and that’s daunting to most of the smaller service providers. LLC
members are the folks who are making all the decisions about how LNP is going to be
implemented and, in fact, how it’s going to be priced."

The FCC has determined some NPAC costs will be paid through allocation among service
providers, but it has yet to figure the price tag or set the formula by which each
provider’s charge would be determined. "If you want a voice–and they’re very bold
about this–in how the pricing is going to be done and how the contract terms and
conditions are going to be set and so forth, then join the LLC," Mueller says.

But, Mueller says he is uncertain what exactly LLC membership buys. "Is it buying
me a substantial voice and perhaps some substantial cost savings or is it just buying me
membership in this club?" He further suggests that what is cost prohibitive to a
small carrier is just "chump change" to the larger carriers, a disadvantage that
has far-ranging effects. "If the service provider doesn’t sign a user agreement, he
can’t be scheduled for testing, and things cannot move ahead on his attempts to connect
with a given NPAC."

There’s more, according to Mueller. "The user agreement is where the pricing is
contained. Since the allocation model hasn’t been released, we don’t know what portion of
that multimillion dollar bill is going to be allocated to us. It’s a blank check,"
Mueller says. "They’re saying our contract with the LLCs require that any service
provider that’s going to be connected to the NPAC must sign a user agreement. But, I’m
saying, ‘You’re asking me to sign a blank check.’ And they look at me with basically a
blank stare and say, ‘So, yeah, what’s your point."

The point, says Mueller, is that the cost of playing in this game is just too much for
a small provider and potentially even devastating. In addition to its share of allocated
initiative costs, providers also must consider implementation costs for their own systems.
"When you say, ‘Well, in order to do your routing properly, you have to have a system
that will talk to the NPAC and a system that will do translations for you and so forth,’
you’re talking about multimillion dollar systems," he says. "The cost of the
software can range easily up to a million dollars. The hardware systems can, depending on
how big a platform you need, cost anywhere from $250,000 to $750,000. So, it’s not like
you can put in place a system worth a couple of hundred thousand dollars and function in
this arena."