How Toll-free Numbers Work


Delivery services often have toll-free numbers.
Delivery services often have toll-free numbers.
© Paul Hawthorne/Getty Images

With its infuriatingly catchy TV jingle and your expanding waistline, it's only a matter of time before you pick up the phone and punch in 1-800-ULOSEIT. Faster than you can say "éclair," you're speaking with a weight-loss consultant in Virginia Beach from your home in Boise, at no cost to you. What happened between dialing the number and being connected to the weight-loss consultant?

Once you dial the number, 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].

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.

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 [source: Asphalt Contractor, March 2006].

Are the FCC regulations really enforced? Are toll-free numbers effective marketing tools? How do you get the toll-free number of your choice? Go to the next page to find out.

Toll-free Numbers and Responsible Organizations

Toll-free numbers are often routed into a central call center.
Toll-free numbers are often routed into a central call center.
© Photographer: Yiannos1 | Agency: Dreamstime

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 number (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, reserve numbers 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, customers who wanted to keep their number were locked in with the phone company 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 Web sites 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.

Toll-free Numbers and the FCC

Fed Ex has one of the easiest recognizable vanity toll-free numbers: 1-800-GO-FED-EX.
Fed Ex has one of the easiest recognizable vanity toll-free numbers: 1-800-GO-FED-EX.
© Justin Sullivan/Getty Images

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:

  • Toll-free numbers must be allocated on a first-come, first-served basis.
  • Subscribers are only permitted to subscribe to the amount of toll-free numbers that they actually intend to use.
  • A RespOrg can't reserve a number without having first identified a user. The practice of reserving numbers and not allocating them is known as "hoarding."
  • To prevent hoarding, the FCC mandates that a RespOrg must allocate a reserved number within eight months.

[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.

  • The vanity number 1-800-GREATRATE sold for $8,600 on eBay.
  • The owner of a Minnesota Mercedes dealership won a case brought against him by Mercedes Benz USA who had been trying to buy his 800-MERCEDES toll-free number from him.
  • A vanity number with a Beverly Hills area code sold for $349.99 on eBay.
  • Sichuan Airlines bought the number 888-888-8888 for $280,000 in a charity auction. (The Chinese consider "8" a lucky number.)

[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.

Vanity Toll-free Numbers

Callers often retain vanity numbers that spell out company information better than numbers.
Callers often retain vanity numbers that spell out company information better than numbers.
© Photographer: Stuart Miles | Agency: Dreamstime

Much of the "sizzle" of toll-free numbers comes from getting a good vanity toll-free 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 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 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 flat-rate long-distance plans, it might seem that toll-free numbers are becoming outdated.

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.

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