Making a Toll-Free Call? How These Numbers Work

In 1967, AT&T rolled out the first 1-800 toll-free numbers. In the United States, these numbers are known as toll-free, in the rest of the world, they're known as freephone numbers.

Since toll-free numbers were introduced, the demand for the service, basically a call-forwarding plan that reverses charges to the called party, has soared. As of February 2008, there were more than 24 million working toll-free phone numbers in North America. In 1996, as the supply of 1-800 numbers became exhausted, 888 toll-free numbers were introduced [source: SMS/800]. Today, toll-free numbers can have 800, 888, 877 and 866 prefixes. All these numbers work in exactly the same way. When the 866 prefix is depleted, the 855 prefix will be rolled out.

Once you dial local or international toll free numbers, the Service Switch Point (SSP) in the telephone network recognizes it as toll-free by its 800 prefix, prompting it to query the Service Control Point (SCP) that has the routing instructions the weight-loss center (the toll-free subscriber) requested. In the example above, the instructions were to route all calls to the Virginia Beach office and charge that number for the call. Just like that, the call is completed. [source: SMS/800].

Why are toll-free numbers so popular? A memorable toll-free number can serve as a primary source of advertising and marketing. Construction company Asphalt Sources, Inc., for example, reduced its annual advertising costs by more than $27,000 by downsizing its Yellow Pages ad and leasing a 1-800 number. As a result, it reported an increase in profitability and incoming calls [source: Asphalt Contractor, March 2006].

All possible toll-free numbers are contained in a centralized database called the 800 Service Management System (SMS/800). The SMS/800 knows whether a toll-free prefix (1-800, 1-888, 1-877, 1-866) is available or in use, and if it's in use, what the customer's routing instructions are.

To get one of the numbers, a customer must contact a Responsible Organization. Responsible Organizations (RespOrgs) are businesses, often telephone companies, that have gone through a certification process and have SMS/800 privileges. RespOrgs can check availability, have toll-free numbers assigned for customers, and make changes to the customer's account. A RespOrg could be a telephone company or it could be an individual sitting at a computer monitor. Companies sometimes opt to become their own RespOrgs and manage their own accounts.

Until 1991, the only providers of 1-800 toll-free numbers were the telephone companies, but in that year, the FCC mandated that all toll-free numbers become fully portable [source: SMS/800]. Portability means that a toll-free customer can switch its carrier at any time and keep the same phone number. Prior to that, large corporations that wanted to keep their numbers were locked in with the phone companies they began with, even if they were unhappy with the service or rates. Portability opened the floodgates for third-party RespOrgs. The SMS/800 Web site currently lists more than 400 RespOrgs around the country.

Portability opened up the toll-free industry. Numbers don't ever expire, creating a thriving market for number purchasing. RespOrgs and RespOrg agents have also stepped in and created web pages hawking their services to people searching for toll-free numbers. These businesses will charge anywhere from $20 to $50 to find you a toll-free number. Some of the businesses advertising online are RespOrgs, but others are middlemen, and the difference isn't always clear. The middlemen can be helpful, but like in any business, they can also be unscrupulous.

Judith Oppenheimer, publisher of ICB Toll-Free News, an online industry newsletter, says that consumers shopping for a toll-free number need to be very careful when picking a RespOrg.

"People should read their contracts and demand to know who their RespOrg is, no matter who their service provider is," she said. "There are so many websites selling numbers and proclaiming that it is legal, but it's pretty hard to distinguish online because the baddest apples can make themselves look very legitimate" [source: Interview with Judith Oppenheimer, Feb. 19, 2008]

Given the potential unruliness of the industry, what is the Federal Communications Commission doing to reign in illegal practices? What's legal and what's not? Let's take a look at the FCC's role now.

The Federal Communications Commission (FCC) states that toll-free phone numbers are in the public domain and, therefore, can't be sold legally for profit ("brokering"). The agency prohibits all practices contrary to this idea. In a recent court filing responding to small business owners looking for looser regulation, the FCC clarified its guidelines. Among them:

[source: Federal Communications Commission court document on Toll Free Administration, CC Docket No. 95-155]

In spite of the FCC regulations, selling numbers for profit has been a common practice, especially in the case of vanity numbers [source: Interview with Bill Quimby, Feb. 20, 2008]. A vanity number is one that spells out a memorable word or phrase on the numeric keypad. Here are a few instances of individuals and businesses selling toll-free numbers for profit.

[source: "Despite Illegality, Companies Bid Premium Sums for Prized Phone Numbers," Knight Ridder Tribune Business News, March 9, 2004]

Bill Quimby, founder and president of TollFreeNumbers.com, said that many phone companies inadvertently hoard numbers through sheer mismanagement.

"Because phone numbers are invisible, it's very easy to lose track of them," he said. "RespOrgs can be very disorganized, and there's no cleaning system in the SMS/800" [source: Interview with Bill Quimby, Feb. 20, 2008].

He also said that many people find ways around the FCC regulations, and that oversight is weak at best.

"The FCC has not been very diligent in paying attention to anything in the toll-free business," he said. "There are a lot of vanity-number businesses that use very thin excuses or technicalities to get around the regulations. That's ultimately wrong, but the FCC hasn't done anything about it."

Now that we have a sense of what's going on in the toll-free industry, let's take a look at the phenomenon of vanity toll-free numbers and provide some tips on how to get a good one.

Much of the "sizzle" of toll-free numbers comes from getting a good vanity toll-free telephone number. A vanity number can be a powerful marketing and branding tool. Some of the more well-known and effective vanity numbers are 1-800-FLOWERS, 1-800-GO-FED-EX, and 1-800-MICROSOFT. The mnemonic word spelled out can be seven or more digits, as these examples show.

A good vanity number, matched with toll-free calling, can make a big difference for a business. A 2007 study by the RespOrg 800response showed an 84 percent improvement in recall rates over numeric phone numbers from billboard and TV advertisements. In addition, 72 percent of survey participants were also able to remember a vanity number in a 30-second radio ad as compared to 5 percent when the toll-free number was numerical [source: "Consumer Recall Rates of Phone Numbers in Advertising," January, 2008].

Because of vanity numbers' popularity, many customers are disappointed to find out that their number has already been taken. That's where the work begins. Quimby says that customers tend to initially want what he calls a "generic" vanity number — a number that is a literal description of the business at hand, such as 1-800-PLASTER or 1-888-MASSAGE. He says people need to be creative to find an appropriate available toll-free phone number.

"People usually think of a generic name for their business," he said. "If it's popcorn, it's 1-800-POPCORN. If it's mortgages, it's 1-800-MORTGAGE. In reality, you don't need to just tell people you're in the mortgage business; you need to explain why you're the best mortgage broker. Vanity numbers like 1-800-FASTCLOSER or 1-800-QUICKLOAN are better than the generics, because they have the benefit built in."

What does the future hold for toll-free numbers? With the omnipresence of cell phones and service providers who offer unlimited calling plan options, you might expect to dial toll free numbers less often.

These innovations in telecommunications have been around for a long time, and toll-free numbers have not gone away. Much more than simply a way to reverse charges, toll-free numbers can be powerful branding tools for small and large businesses.

For more information on toll-free numbers and related topics, check out the links on the next page.