Partner Channel: Agents Dip into New Pool of Vanity Numbers

Posted: 2/2002

Partner Channel

Agents Dip into New Pool of Vanity Numbers

By Josh Long

Jay Conrad Levinson, author of the book series Guerrilla Marketing, says that he believes 500 number toll-free services will help put small businesses on the map — just like the Internet.

500PLUS LLC, a Gaithersburg, Md.-based telephony marketing firm eight years in the making, recently began marketing the new series of toll-free numbers through a growing agent network that offers local and regional businesses a way to garner name recognition by promoting toll-free numbers, such as 1-500-FLORIST and 1-500-PLUMBER, in the company’s local respective area.

Levinson anticipates small businesses will snag the best vanity names within a year.

The marketing success of 1-800-FLOWERS.COM Inc. could indicate a winning business model for 500PLUS and the network of agents CEO Alexander J. Eucare, Jr. is recruiting. Jim McCann, CEO and chairman of 1-800-FLOWERS.COM, paid a fortune for the 1-800-FLOWERS number in 1986 — reportedly $9 million — and since has established one of the most successful florist chains in the United States.

500PLUS, which could give small businesses the tool to accomplish a similar feat, has recruited 20 independent agents and expects to bring a total of 300 agents on board by the end of the summer. 500PLUS has raised more than $3 million through local angel investors and has sought to raise an additional $15 million, Eucare says.

The company, which has signed an agreement with one of the top 10 international carriers, is in talks to partner with media outlets specializing in television, radio, print and the Internet to offer potential advertisers 500 services. A package would include a toll-free number and a matching domain name, five-page hosted website and a matching e-mail address. 500PLUS plans to charge a small business between $2,500 and $6,000 a year depending on market size.

To deploy the 500-number service, Eucare says he has partnered with more than 100 small independent phone companies throughout the country to market toll-free 500 service in 20 states in the Verizon Communications Inc., SBC Communications Inc. and Pacific Bell, an SBC subsidiary, territories. In those areas, the incumbents are not charging a network access fee to load the numbers in their switches, Eucare says. The telephone companies do want some money per call, he notes.

500PLUS also plans to activate service this quarter in 14 states within the BellSouth Corp. and SBC subsidiary Ameritech territories. The company plans to activate 1 million numbers in the BellSouth, Ameritech and 14-state Qwest Communications International Inc. region by the end of the summer.

BellSouth, Ameritech, Qwest and part of Verizon (formerly GTE), require access charges through tariffs that total $350,000 to $400,000 per exchange to load the telephone numbers in their central office switches, he says.

Each exchange includes 10,000 numbers. 500PLUS is waiting to garner enough customers before paying the network access fees and making the service available in those regions.

500PLUS can offer a small business in Boston the same 500-FLORIST number and web site as a company in San Francisco by using caller-ID routing and Internet location technology.

The company’s coverage area reportedly includes 210 markets. As of December, a half dozen small businesses had subscribed to the 500+ service. Among the numbers snagged: 1-500-LAWYERS, 1-500-INNOCENT and 1-500-MORTGAGE.

The story of 500 service began in the early ’90s, when the FCC assigned telephone companies, which mostly included independent rural local exchange carriers, blocks of 500 numbers.

This is how Eucare tells it: AT&T and MCI , the only carriers with pockets deep enough to pay RBOC access charges, offered consumers the 500 service so they could make a call from anywhere in the country and track the person in three locations through follow-me technology.

But Eucare says the RBOCs allegedly wanted more than $400 million to activate the 500 exchanges to cover access charges, which consisted of loading the numbers in the CO switches. The independent telephone companies didn’t have that kind of cash, and they feared the FCC may make the 500-numbers portable as it has done with 800 service, effectively rendering the independent teldcos’ investments a bust.

To complicate matters, Eucare alleges AT&T and MCI failed to strike reciprocal payment agreements with cellular carriers and payphone providers.

AT&T and MCI no longer offer 500 service. MCI ceased offering the 500 follow-me several years ago. And AT&T discontinued the service in September 2000 due to “declining market interest,” says AT&T spokesman Gary Morgenstern.

500PLUS reportedly is the only toll-free 500 game in town. An FCC official says the commission does not keep tabs on who offers 500 services. Ron Conners, director of the North American Numbering Plan Administrator (NANPA) at Washington D.C.- based NeuStar Inc. warned that 500 numbers are not intrinsically toll-free. 500PLUS may offer a toll-free service, he says, but service providers can charge callers a fee as did AT&T and MCI. And while 500PLUS has forged relationships with more than 100 independent telephone companies, many exchanges have yet to be assigned to service providers.

Eucare says he has figured out a way to avoid the earlier pitfalls of MCI and AT&T — tailor a toll-free service to small businesses that want to market a name in their region without spending a fortune on advertising.

As of December, 500PLUS had 180,000 non-vanity subscribers that have paid monthly network usage fees only to use the 500-numbers. The company plans to charge small businesses $5 a month after a year, but Eucare believes the real money will be derived by selling 500 toll-free names such as 1-500 INSURANCE.