Area Codes Become a Weapon in the Telecom War

If Vonage (NYSE: VG  ) has its way, the days of AT&T (NYSE: T  ) , Verizon (NYSE: VZ  ) , and their big-carrier peers controlling the way area codes are assigned are coming to an end.

The VoIP upstart is lobbying regulators to allow for sales of premium area codes such as 212 for Manhattan, 617 in Boston, or 213 in L.A., on the theory that some will pay up for access in the same way some pay up for custom license plates.

Business owners might also enjoy the option, especially home workers who pay for premium VoIP telephony from the likes of 8x8 (NASDAQ: EGHT  ) , says Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova in the following video.

Startups often invest in infrastructure gimmicks to help attract large, professional clients. Investing in a premium area code isn't much different. Vonage and its peers, meanwhile, get the benefit of upselling a service that previously had been off-limits. Everyone but the incumbent carriers win, Tim says.

Should Vonage be allowed to sell premium area codes? Please watch this short video to get Tim's full take, and then leave a comment to let us know which telecom stocks you like most right now.

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  • Report this Comment On April 24, 2013, at 11:52 PM, mlwillard wrote:

    Speaking as somebody who has over 30 years in telecom - the last 10 years doing what is called "translations" - meaning doing the work to open new area codes and new exchanges you apparently have no understanding as to how this stuff works. Granted, an area code isn't as "hard-coded" today as it used to be even 20 years ago.

    And, no the "phone companies" do NOT control the area codes; that is an organization called NANPA - the North American Numbering Plan Admin. That organization is the group that assigns new area codes based on a state's Public Utilities commission request for relief - when an area code starts to run out of exchanges to assign. Granted, most of the incumbent telephone companies - Verizon, AT&T- have exchanges in the "premium" area codes because they have been around since 1947 when a lot of the original (212, etc) area codes were assigned. Since these area codes have been around the longest logic dictates that there wouldn't be that many "free" exchanges within the older area codes. If an exchange in one of the "premium" area codes becomes free, to my knowledge, there is no "rule" in place as to say it has to go to an incumbent. Another issue that could arise with this idea of "selling" premium area codes is 911. Currenlty the 911 databases across the country work on a combination of your phone number and PHYSICAL address. If your phone number and address don't match up - 911 response can be delayed. That has already happened in the past with what is called a "vanity" address; the 911 database had the "real" address on file but when somebody called for help all the caller could provide was the vanity address. It delayed response and I believe that, unfortunately, the called died. Speaking as somebody who has to deal with this on a daily basis it's not a well-thought out plan.

  • Report this Comment On April 25, 2013, at 12:01 AM, masterwallstreet wrote:

    In my opinion only, I like your article about the area codes. Recently they just added video calling and free text to their mobile services. They also have a new calling card. They have several new services in many countries. They are very reasonably priced and it is a profitable company. They have so many patents out. What is the possibility that AT&T or Verizon or T Mobile will start paying for the use of their patents? What are the possibilities that they get bought out by the competition because it cost them several hundreds of millions of dollars of lost revenue a year?

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