Insights

7 Things You Need to Know About the 833 Auction

Jan 17, 2019

This past September, the Federal Communications Commission (FCC) took action to modernize the assignment of Toll-Free Numbers (TFN) by announcing the use of an auction to distribute certain TFNs. The auction will feature numbers from the 833 Toll-Free code that are highly sought after and have been identified as “mutually exclusive.”

Unsurprisingly, such a new and experimental approach to distributing Toll-Free Numbers has produced a broad range of questions from how many numbers will be involved to how will the auction work to, “Hey – why is the FCC doing this in the first place?” At Somos, we’re here to answer your questions and help you understand what this auction can mean for you.

1. Why an auction?

As described at the 2018 Toll-Free User Summit (TFUS18) by Dr. Jay Schwarz, Advisor to Chairman Pai of the FCC, the introduction of an auction model to Toll-Free is a favorable economic decision, with the numbers going to those who value them the most. The FCC hopes that adding an auction into Toll-Free Number allocation will improve the current system and embrace the entrepreneurial spirit of the industry. 

2. What Toll-Free Numbers will be up for grabs?

The numbers to be auctioned are approximately 17,000 numbers in the 833 Toll-Free code which have been identified as high demand and “mutually exclusive.” The numbers selected have had multiple, competing requests and include easy to remember numbers, such as 833-LAWYERS or 833-333-3333. A major goal of the auction is to ensure that sought-after numbers retain their value and are awarded to the party that will best utilize the number.

3. Who gets to bid on the identified Toll-Free Numbers?

There are three potential categories of participants in the auction, which include: 

• Responsible Organizations (Resp Orgs) bidding on their own behalf
• Resp Orgs on bidding on a customer’s behalf
• Non-Resp Orgs*

In order to be eligible to participate in the auction itself, participants will need to submit an application and deposit as well as be properly vetted. Somos will be responsible for reviewing the applications for accuracy and completeness. 

*Non-Resp Orgs who successfully bid in the auction are required to choose a Resp Org to manage the TFN BEFORE the purchased number can be used or resold. 

4. What will the auction process look like?

The FCC will conduct a “Vickrey” auction which will be administered by Somos. A Vickrey auction is a single round, sealed bid auction where the winner is the highest bidder, but pays the price of the second highest bid. The FCC has yet to determine how numbers with no bids will be distributed.  

5. Can you provide more insight into Somos’ role in the auction?

Somos will actually have two roles in the auction for 833 Toll-Free Numbers. The first will be to act as the auction administrator. This includes administering the auction and recording subsequent secondary market transactions on those numbers.  Secondly, Somos will also work with Resp Orgs and End Subscribers to explore ways to better serve their secondary market needs (Learn more about the secondary market opportunities here).

6. It was mentioned above that non-Resp Orgs can purchase Toll-Free Numbers in the auction. How will the industry identify who owns the number purchased (i.e., Resp Org vs. End Subscriber)? 

The initial auction platform provided by Somos will capture the initial purchaser of the 833 Toll-Free Number(s). Resp Orgs will be required to update the records if the number has been sold to a new owner. 

7. Now the REAL question – How will success be measured for the auction?

At the end of the day, the baseline goal for the FCC is to determine the most equitable and efficient method of distributing Toll-Free Numbers. As addressed by Jay Schwarz at TFUS18, end user satisfaction will play a key role in determining whether or not this allocation method makes sense for the industry for future TFN allocation. Whether successful (or not) one thing is certain – the introduction of an auction is a bold, innovative way that the FCC can use a market-based approach to modernize a legacy system.