Toll-free numbers allow their users to call long-distance free of charge, and instead the receiving party pays. They are considered an important tool for maintaining contact with customers and gaining information about them; by nature toll-free numbers reveal the number of the person placing the call, and unlike Caller ID systems, this cannot be blocked on a toll-free line. In the United States toll-free numbers begin with the prefixes 800, 888, and 877 (with additional expansion prefixes likely to appear in the early 2000s). Typically, a monthly fee and a per-minute fee are charged to the holder of the number.
Then-monopoly AT&T Corp. introduced the first toll-free service in 1967, although it was not quick to catch on. This was due to both technical limitations and market apprehension toward subsidizing incoming calls, a practice some viewed as laughable at the time.
Until 1980, toll-free calls were routed through an arcane and inflexible system that didn't enable nationwide dialing to the same number. Companies that needed toll-free numbers thus had to maintain multiple numbers for different regions. A major breakthrough came in 1980 when AT&T brought the 800number system into a digital switching environment designed by AT&T computer scientist Roy Weber. His innovation, still employed today, used the seven digits after 800 as a unique computer file name that instructed the telephone network how to route the call. In other words, modem toll-free numbers are simply aliases used in the telephone switching network to direct a call to a local line somewhere.
As a result, switching instructions for toll-free numbers can be customized for time of day, calling volume, geographic origin of caller, and other variables. In the simplest case, the computer file tells the network to dial one number, for example, the company's main local line, all the time. More complicated schemes could direct the computer to dial the company's main line during its normal business hours, to a support center during off hours, and to a different support center if calling volume ever exceeds a specified level.
AT&T maintained its monopoly on toll-free service even after it was forced in 1984 to spin off local phone service, the move that created the regional Bell operating companies. In 1985 the Federal Communications Commission (FCC) ordered local phone companies to provide equal access for other carriers of toll-free service. Other major long-distance and regional carriers, such as MCI Communications Corp. and Sprint Corp., then began to offer toll-free service, but AT&T retained the leading market share. In fact, vestiges of AT&T's toll-free monopoly continued into the late 1990s in the form of its lock-hold on toll-free directory assistance. Because the FCC has affirmed AT&T's ownership of the well-known information number 1-800-555-1212—even though FCC regulators have expressed the wish to open the service to competition—it receives virtually all such calls. Challengers began to emerge in the mid-1990s, however, notably Universal Directory Services, Inc. of Hurst, Texas.
After the limitations of the early system were overcome, businesses warmed to the public relations potential of offering free calls to their customers. This was coupled with a broader explosion in demand for telecommunications devices such as fax machines, pagers, and dial-up computer networking. A climate was set for tremendous growth in the use of toll-free numbers.
By 1990, toll-free service had also become affordable to consumers, who saw it as a alternative to expensive calling cards and collect calls. Small businesses sought the same cost savings for sales representatives and other personnel in the field. The numbers also made it relatively inexpensive for small businesses to implement national marketing efforts.
All of these factors converged to create a run on toll-free numbers in the 1990s. The 800 prefix could support 8 million numbers, and as of 1993 only 3 million were in use. By mid-1995, though, more than 90 percent of the numbers were taken and new requests were set to overtake the available numbers well before the planned expansion to 888 was in place. The FCC was forced to step in and mandate the rationing of numbers until 1996, when 888 was unveiled. In 1997 it was estimated that 11 million U.S. toll-free numbers were in use to support some 34 billion calls, two-thirds of which were handled by AT&T.
Such volume promised to rapidly consume all 888 numbers as well, particularly because companies that used their 800 numbers as trademarks—indeed, even their names in cases like 1-800 CONTACTS, Inc.—many sought to obtain the 888 version of their number as well. This hastened the introduction of the prefix 877 in 1998, while further expansions were planned for the following years.
Just as 800 numbers were drying up in the United States, the United Nations-affiliated International Telecommunication Union (ITU) launched in 1997 the first-ever "global 800" numbers. Looking identical to conventional toll-free numbers, these special numbers enabled callers in one participating country to dial an 11-digit number to reach a company in another country—eliminating the need for country codes and other hassles of international calling.
Engebretson, Joan. "What's That Number Again?" Telephony, 13 October 1997.
Fishman, Charles. "Inside the 1-800 Factory." Los Angeles Times, 3 August 1997, 14.