Canberra's revenue raising knows no bounds. Phone numbers are the latest items on sale. Dial 1800-CASHCOW for details, writes Angus Kidman.

Published in The Bulletin, June 30 2004

It might not be able to sell all of Telstra just yet but the federal government has found another way of profiting from telecommunications: a planned auction of phone numbers. From August 18, the Australian Communications Authority will begin auctioning off so-called "smartnumbers". Previously allocated from a limited pool by telcos, the new auction will see more than a million 13, 1300 and 1800 numbers up for sale to businesses for the first time.

Most of those numbers are being auctioned with a low reserve of $500 but about 9000 "desirable" numbers have reserves of between $1500 and $40,000 each. The highest prices are reserved for easy-to-remember "pattern numbers" such as 1800 666 666, or "phonewords" such as 1300 847 446, which translates to 1300 VIRGIN.

Aside from a limited pool reserved for charities, the auction process will effectively be a free-for-all. If every number sold for the reserve price, the government would pocket more than $1bn. Clearly, that's not going to happen but, even if just a quarter of the desirables sell, the ACA will collect $43m.

Nonetheless, fears of a pricing riot reminiscent of the late '90s rush for internet domain names seems unlikely. While buyers can on-sell numbers, the high number on sale makes it unlikely there'll be much of an aftermarket.

Many submissions to an ACA paper on the pricing structure suggested the reserve prices were already way too high. And whether phonewords -- common in the US but relatively rare in Australia -- are even that valuable is debatable. Such numbers are constructed to work on an ITU standard keypad, which research suggests is used by 72% of fixed phones and 93% of mobiles. If your phone happens to be different, that's too bad.

Mobile phone text messaging is also a potential source of confusion. People are now used to hitting the 7 key three times for the letter R, for instance, but with a smart number they would do so only once.