How Do Toll-Free Calls Work? Understanding the Process

With their memorable TV jingles and easy-to-recall slogans, toll-free numbers have a significant presence in advertising and have made a lasting impression in our minds. But have you ever wondered how a toll-free call works? Whether you're contacting an accident lawyer or a quirky weight-loss company, what happens between dialing the number and being connected to a representative, potentially located far away?

Are the regulations enforced by the FCC truly followed? Do toll-free numbers really serve as effective marketing tools? How can you obtain the toll-free number you desire? In this article, we’ll address all these questions surrounding the well-known toll-free call.

How Do Toll-Free Numbers Operate?

In 1967, AT&T introduced the first 1-800 toll-free numbers. While these numbers are referred to as toll-free in the United States, they are known as freephone numbers in other parts of the world.

Since their debut, the demand for toll-free numbers, essentially a call-forwarding service that transfers charges to the receiving party, has skyrocketed. By February 2008, over 24 million active toll-free numbers existed in North America. In 1996, when 1-800 numbers became scarce, 888 toll-free numbers were launched [source: SMS/800]. Today, toll-free numbers feature prefixes like 800, 888, 877, and 866, all operating in the same manner. When the 866 prefix is exhausted, the 855 prefix will be introduced.

When dialing local or international toll-free numbers, the Service Switch Point (SSP) in the telephone network identifies the toll-free call by its 800 prefix, prompting it to query the Service Control Point (SCP) for the routing instructions set by the toll-free subscriber, like the weight-loss center in this case. These instructions typically tell the system to forward the call to the requested location and charge that number for the call. The connection is then made smoothly. [source: SMS/800].

Why are toll-free numbers so widely used? A memorable toll-free number can become a key marketing tool. For instance, Asphalt Sources, Inc., a construction company, saved over $27,000 annually by cutting down its Yellow Pages ad and leasing a 1-800 number. This change resulted in increased profitability and a higher volume of incoming calls [source: Asphalt Contractor, March 2006].

Toll-Free Prefixes and the Organizations That Oversee Them

All available toll-free numbers are stored in a central system known as the 800 Service Management System (SMS/800). This system tracks whether a toll-free prefix (1-800, 1-888, 1-877, 1-866) is available or in use, and if in use, it also stores the customer's routing details.

To obtain a toll-free number, a customer must reach out to a Responsible Organization (RespOrg). RespOrgs are entities, usually telecom companies, that have undergone a certification process and are granted SMS/800 access. These organizations can verify availability, assign toll-free numbers to customers, and modify customer accounts. A RespOrg could be a telephone provider or even an individual working from a computer. Some companies choose to manage their own accounts and become their own RespOrgs.

Before 1991, only telephone companies provided 1-800 toll-free numbers. However, in that year, the FCC mandated full portability for all toll-free numbers [source: SMS/800]. Portability allows customers to change their carrier at any time while retaining the same phone number. Prior to this rule, large corporations that wanted to keep their numbers were often tied to the initial telecom provider, even if they were dissatisfied with the service or pricing. This change enabled the rise of third-party RespOrgs, and today, the SMS/800 website lists over 400 RespOrgs across the country.

The Toll-Free Call Market: Advantages and Drawbacks

Portability revolutionized the toll-free industry. Numbers no longer expire, fostering a vibrant market for buying and selling toll-free numbers. RespOrgs and their agents have also established websites offering toll-free numbers to customers. These services typically charge between $20 and $50 to help you secure a toll-free number. While some of these websites are run by RespOrgs, others are intermediaries, and the distinction can sometimes be unclear. Though middlemen can be helpful, they, like any business, may also be dishonest.

Judith Oppenheimer, publisher of ICB Toll-Free News, an online industry newsletter, advises that consumers exercise caution when selecting a RespOrg.

"People should carefully read their contracts and insist on knowing who their RespOrg is, regardless of the service provider," she said. "There are numerous websites selling toll-free numbers, claiming their legality, but it's hard to tell online as some dishonest actors make themselves appear legitimate" [source: Interview with Judith Oppenheimer, Feb. 19, 2008]

With the industry's potential for disorder, what steps is the Federal Communications Commission taking to curb illegal activities? What practices are permitted, and which are not? Let’s examine the role the FCC plays in this matter.

The Role of Toll-Free Numbers and the FCC

The Federal Communications Commission (FCC) asserts that toll-free numbers belong to the public domain and cannot legally be sold for profit (i.e., "brokering"). The FCC strictly forbids any activities that go against this principle. In a recent legal filing addressing small business owners seeking relaxed regulations, the FCC outlined its guidelines. Among them:

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

Up For Auction: Vanity Toll-Free Numbers

Despite FCC regulations, the practice of profiting from selling numbers has been widespread, particularly with vanity numbers [source: Interview with Bill Quimby, Feb. 20, 2008]. A vanity number is one that forms a catchy word or phrase on the keypad. Below are some examples of individuals and companies profiting from selling toll-free numbers.

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

Endless Hoarding for Endless Calling?

Bill Quimby, the founder and president of TollFreeNumbers.com, pointed out that phone companies often unintentionally hoard numbers due to poor management practices.

"Since phone numbers are intangible, it's incredibly easy for them to be misplaced," he explained. "RespOrgs can lack organization, and there's no system in place within the SMS/800 to clean things up" [source: Interview with Bill Quimby, Feb. 20, 2008].

He also mentioned that many individuals have found ways to bypass FCC regulations, and that the oversight is often quite weak.

"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 clearer picture of the toll-free industry, let's dive into the world of vanity toll-free numbers and explore some strategies for securing a great one.

Vanity Toll-free Numbers

A major attraction of toll-free numbers lies in acquiring an appealing vanity number. These vanity numbers serve as potent tools for marketing and branding. Examples of some widely recognized and successful vanity numbers include 1-800-FLOWERS, 1-800-GO-FED-EX, and 1-800-MICROSOFT. These numbers are often composed of seven or more digits that correspond to a memorable word or phrase.

When combined with toll-free calling, a well-chosen vanity number can significantly impact a business. A 2007 study by the RespOrg 800response found that recall rates for vanity numbers were 84 percent higher than for numeric phone numbers in billboard and TV ads. Furthermore, 72 percent of participants could remember a vanity number from a 30-second radio ad, compared to just 5 percent who could recall a numerical number [source: "Consumer Recall Rates of Phone Numbers in Advertising," January 2008].

Due to the high demand for vanity numbers, many customers are disappointed to discover that the number they want has already been taken. This is where the real challenge begins. Quimby notes that customers often initially seek what he refers to as a "generic" vanity number—a phone number that directly describes the business, like 1-800-PLASTER or 1-888-MASSAGE. He advises customers to get creative in order to find a unique, available toll-free number.

"People tend to think of a straightforward name for their business," Quimby explained. "For example, if it's popcorn, they might want 1-800-POPCORN, or if it's mortgages, 1-800-MORTGAGE. However, you don't just need to tell people what your business does; you need to highlight what makes you the best. Vanity numbers like 1-800-FASTCLOSER or 1-800-QUICKLOAN are far more effective than the generic ones, as they communicate the benefit right off the bat."

A Solution for Local Numbers and International Calls

What does the future hold for toll-free numbers? With the widespread use of cell phones and the rise of service providers offering unlimited calling plans, one might assume that toll-free numbers will become less common.

Telecommunications advancements have been evolving for years, and despite this, toll-free numbers are still relevant. Far beyond their original purpose of reversing charges, toll-free numbers continue to serve as powerful branding assets for both small and large businesses.