The answer to toll-free boom is birth of 4th and 5th number

08/02/00

By Tom Johnson
STAFF WRITER

Eight million isn't what it used to be.

Back in 1967, AT&T rolled out the original 800 toll-free exchange. It was good enough to meet demand from consumers and businesses -- each area code contains nearly 8 million valid numbers -- for nearly three decades. Times sure have changed.

This past Saturday, the Federal Communications Commission ordered a fourth toll-free exchange (866) into service, only a couple of years after the introduction of the third toll-free number (877). The second toll-free exchange (888) was inaugurated in 1996. The tremendous explosion in electronic commerce and the proliferation of dot-coms will make a fifth exchange (855) necessary this November, officials say.

Toll-free usage has steadily climbed since its introduction in 1967, when 7 million calls were recorded. Last year, AT&T carried about 30 billion toll-free calls, accounting for nearly 40 percent of all voice calls crossing its U.S. network. AT&T officials declined to say how much revenue is generated.

There are now more than a thousand companies offering toll-free numbers for all sorts of uses. A survey by Frost and Sullivan, a market research firm, estimated the nationwide toll-free and 900/976 number service market at $13.6 billion in 1998. The latter applies to phone line services that charge callers for information like psychic advice and other information. The bulk of the market share goes to toll-free lines, Frost and Sullivan estimated.

''Toll-free numbers are more important than ever in today's electronic economy," said Roy Weber, an AT&T Labs Research director, who helped develop the tools to make the technology widely available.

When the toll-free exchange was first introduced, the idea was to figure out a way to reverse charges automatically -- eliminating the need for operators to handle collect calls.

''We thought we were going to run out of operators to handle the calls," Weber said.

At first, it was thought only large businesses would use the service. That, too, has changed.

''It used to be only the big heavy- hitting corporations which had toll- free," said Joyce Smith, an AT&T product manager. "Now everyone has it -- even small businesses and tiny bed-and-breakfast inns. It sort of defines them as 'I care enough about you as a customer to pay for your call.'"

More than 80 percent of American businesses use toll-free services, according to industry analysts. Historically, the 8 million toll-free numbers have been exhausted in two years, leading to the projection that the new number introduced on Saturday and the 855 number slotted to go into service in November will last until sometime in 2004.

''I'm astounded," said Weber, talking of the growth in the use of toll-free lines. "When the original 800 number came out, we had no idea."

One reason the use of toll-free lines took off was the development of computerized databases, which enabled businesses to use and promote a single nationwide toll-free number, instead of different numbers in different states.

Now, if a business doesn't have a toll-free line, it is almost certainly losing market share.

It isn't only businesses, either. In Newark, police have set up toll-free lines for citizens to report drug activity and corrupt cops. The Archdiocese of Newark tried to lure fallen- away Catholics back to confession using a toll-free number.

Even longtime AT&T employee Weber has his own toll-free number.

''I want my kids to call whenever they want," he said of his own personal 800 number, which he says he's had for the past five years. "I don't want them to worry about credit cards or what."

But Judith Oppenheimer, publisher of the industry publication ICB Toll Free News, said the toll-free craze is overblown.

Many phone companies are warehousing numbers so they offer them when they have new products and services to sell, she said. Carriers have been doing the same thing for years with area codes, she said.

She argues the profusion of new toll-free numbers ends up confusing consumers, and in the long run, the effectiveness of the service.

''Most consumers don't have a clue when they hear a toll-free 877 number. They go home and dial 800, and end up with a misdial," she said.