The History of The Phoneword Part 2

Back on the 17th of August we submitted the first article on the history of the Phoneword or 1300 1800 number that spells a word. For example, 1300 OZETEL (693 835). We explained how the phoneword industry came about in Australia, basically following the United States of America’s system and processes. It is an extremely big business here in Australia and the cost of acquiring can be very high depending on what number a business is looking to purchase – 13 CABS was sold for hundreds of thousands of dollars!

There are thousands of phonewords used in Australian business in current day and many of those businesses have experienced a huge growth in call flow because of the ease of remembering these types of business phone numbers. They can be a wonderful addition to the branding of large companies like Harvey Norman, who incorporate 1300 GO HARVEY into their marketing. When you consider the large spend that a company like Harvey’s would have on marketing nationally, it is a natural move to a cost effective phone number that can save on large advertising budgets.

So, we saw that there is also a public list (a free list of numbers having no capital cost) available to used to choose a number. If the number a business is after is not in that free list then the business owner would need to go to the smartnumbers auction process to buy their number.

Companies like Ozetel Telecommunications in Brisbane, can assist with that auction process free of charge if you are connecting the number with them. You would simply be asked to pay the auction price up front and be available on auction day in case others bid against you in the public auction.

But Someone Has Bought The Number
However, if that number has already been purchased by one of the many phoneword companies in Australia, you have no choice other then leasing the number of that company (assuming you must have that specific number). The leasing arrangement changes the game somewhat because;

– the cost will be expensive in many cases (lease usually start from $100 a month and may extend to $1000’s). This of course is an additional cost to the usual monthly fee and call costs that a business will pay to the telco that the number is activated with,
– the business owner never has official ownership of the number and this can be dangerous.

So it is an important choice to weigh up whether, as a business owner, you want the number badly enough.

You Need To Activate Your Number
Often companies will buy the phoneword to ensure no one else gets access to the asset that they want to keep safeguarded. The number may not actually be needed and thus may not be activated immediately. It is important to remember that the phoneword must be activated with a telecommunications company within 3 years to avoid the auction system taking back the number. If this happens of course, the business owner will be forced to pay a capital cost again for the same number – and run the risk of someone else taking their asset.

The History of The Phoneword.

In the late 90’s Australian businessmen went to the USA to review the phoneword industry sweeping over the country and creating a big buzz in the business arena. It had been established in the USA for many years and had been adding value to the marketing push of countless entities. The telecommunications head honchos like John Singleton were standing up and taking notice of the effects of having the ability to spell out a word with a phone number. It was a completely new and exciting idea for the Australia business and telecommunications market and one these leading entrepreneurs wanted a BIG part of!

So what is the concept basically?
If you consider the name of a business, let us say WESTPAC for example. We would simply match each letter of the name (WESTPAC) to the corresponding number on the telephone keypad and create the 1300 number from that. SO, the 1300 or 1800 number for WESTPAC would be 1300 937 872 (2). Now, we have left the last digit off for a reason and will explain this a later in the discussion. But firstly, if we look at the number versus the word, simply put, which one is easier to remember?

1300 WESTPAC Versus 1300 937 872

Testing of Phone Words v phone numbers in TV and radio advertisements have been carried out by the leading phoneword companies in Australia and show that;

• On average, the ads with phone words generated nearly three times more calls than the ads with phone numbers: a 290% increase in response rates.

These result mirrored similar case studies from the USA and UK.

And so the dream began so to speak, it was obvious that this was a niche market for those that could pull it off. And there was a lot of work to do. Would the consumer market in Australia accept the text to number (alphanumeric) dialing like the USA and UK? Would businesses in Australia trust and believe in the concept?

And one of the biggest hurdles – in Australia we were unable to “overdial” a telephone number. A 1300 number has it’s prefix (1300) and then 6 numbers following it, or for the 13 number of course, 4 numbers follow the prefix of 13. Words for businesses or generic words were always going to be longer the 4 or 6 letters and so Australia was going to need to introduce the ability to dial excess numbers when making a call to a 1300 or 1800 number – over dialing. The WESTPAC example above has 7 letters (numbers) and so a caller would enter an extra digit when dialing. As the networks stood (especially mobile phone networks), this would not work. Callers would simply get a fault signal or a beeping sound indicating a network error.

The powers that be (and they had some power), lobbied to ensure this issue was solved. All fixed line networks and mobile phone line carriers were made to develop their networks to ensure people dialing phonewords could over dial to accomodate long words. The limit was 10 letters in total after the prefix but there is a push to extend this even further.

And so to bring it to the current day, we have in excess of 10000 words purchase by the multitude of phoneword companies that have set up over the last 10 years. Of course the biggest of those is Telstra backed, 1300 AUSTRALIA. Numbers had to be purchased at the government auction system known as smartnumbers, administered by the Australian Communications and Media Authority (ACMA) and ranged from a minimum $500 to hundreds of 1000’s of dollars depending on the premium nature of the phoneword. In mid 2012 the reserve price was reduced to $250 but this still is a difficult entry point for small business owners considering the ability to get numbers for free (no purchase cost that is) if chosen from the Public Available List held by telcos in Australia.

Well that is part one. There is much more in this saga and indeed much more as the industry continues to grow and develop. Keep an eye out for more.

Who Decides How Much A Phoneword Costs?

The government of course! But let’s not get negative, it is a business concept and a very good one from an entrepreneurial point of view.

Firstly I guess do you all know what a phoneword is?

Basically it is a 13, 1300 or 1800 number which has digits after the prefix, that spell a word when dialed using a numeric/text keypad on a phone. A business can have up to 10 digits/letters following the 13, 1300 and 1800 prefix. This is called over dialing and has been incorporated into all Australia phone networks (including mobile).

Now, generally they are a great marketing concept because it is much easier to remember 1300 WESTPAC, then the number that would represent that, 1300 93 78 72. Many marketing studies have been done and confirm that incoming call traffic and sales increase with the use of a Phoneword. It not only provides an “easy to remember” number for the caller but also enhances the branding of the company.

SO, where do we get these numbers?

Well if you are lucky enough, the number you want will be in the available, FREE Public List provided to all telecommunications companies in Australia.

However, it is very unlikely you will find the number you want within that free list but instead will have one of two choices;

1. Purchase the number outright so you have complete ownership, from the SMARTNUMBERS AUCTION SITE or,
2. Lease the number from a company who has previously purchased the number.

AND, to our initial question, who sets the prices on these numbers because the price at auction can range from a reserve of $250 all the way to $20,000.

The government body that has created the pricing strategy for phonewords purchased at auction is the Australian Communications And Media Authority (ACMA). The ACMA tell us that “the numerical patterns in numbers and the capacity of numbers to be translated to words” are the defining factors as to how prices are set. The table that best defines these elements and the relevant price charged can be found HERE

I hope that has helped and give some background into where the phoneword charges come from.

How Much Does A 1300 Number Cost

One of the most common questions we get within the 1300 Service Game is How can I choose my number for my business?

Well there a basically four ways to choose a number;

1. A public list is issued to every telecommunications company in Australia, generally once a week, although it can be obtained as frequently as the company likes to update it really. Make a point of asking for the absolute current list from your chosen supplier. The benefit of this public list is that they come free of charge. That is, you do not have to pay anything to choose the number. You would simply go through the list and choose the number that you want (most companies will ask that you select 4 or 5 numbers in order of preference and they will obtain the highest preference for you).

2. Let your chosen supplier pick one for you, again this will be from the public list so the number will be free of any capital cost. The difference of course, is you would let the company issue one for you rather then have the luxury of choosing your own.

3. One of the problems with the public list, if you are specific about what type of number you are after, is that the government has taken out most of the numbers that would spell words and placed them in their web based auction system called Smartnumbers. You can purchase number from this government auction and the reserve prices start at $250 for the lower ranked or more obscure words. Prices can reach into the tens or hundreds of 1000’s believe it or not for the higher ranked words. So it is a careful decision that a business owner must make.

4. Finally, there are many companies in Australia that purchase these numbers via the auction system and the lease them back to businesses. This can be the most costly of all given that leases can again range from small amounts to very expensive depending on the Phoneword.

So that is basic round up of choosing a number, depending on your business cash flow and model.

Originating Article Posted by; Anthony’s Blog