877 code answers toll-free demand Additional prefix in effect Sunday

2 more could follow

Telecommunications

Once again, America is running out of toll-free numbers.

And so, once again, a new toll-free code is about to be launched. Starting on Sunday, 877 will join 800 and 888 as the prefixes for nationwide free calling.

The new code is the result of steeply rising demand. According to the MultiMedia Telecommunications Association, the number of working toll-free numbers zoomed from 2.4 million in May 1993 to 11.4 million in August 1997. The Federal Communications Commission said there were 13.6 million working toll-free numbers by the end of last month.

The venerable 800 number stood on its own for nearly three decades before it was supplemented by 888. It has taken only two years for eligible 888 numbers to reach the brink of extinction.

And there's more to come. While the addition of a new toll-free code makes nearly 8 million new numbers available, it won't be long before even more numbers are needed. According to those who roll out new toll-free codes, two additional prefixes -- 866 and 855 -- may be introduced simultaneously within 18 months in order to meet demand.

AT&T Corp. spokeswoman Janet Wyles said the market has changed immensely since 1967, when her company introduced the 800 number.

"Toll-free today is being used in completely different ways," she said. "Before, it was simply a way for large companies to let their vendors call in. What we've seen today is that whole industries, like direct marketing, have grown up around toll-free calling. Now the fastest-growing area is paging and personal numbers."

One reason for toll-free's growth was the 1993 introduction of number portability, which allows a subscriber to keep its toll-free number after changing phone companies. This development boosted competition and brought down prices.

Industry analyst Arthur Gruen of Wilkofsky, Gruen and Associates in New York said that while toll-free services have become more accessible to residential customers, businesses are still the primary users. "There are more businesses being formed, which gives a natural boost to the overall phone-line market," he said.

Gruen added that the increasingly competitive nature of the economy has made toll-free numbers a must for many businesses. "In any area involving customer service and selling, it's very important to have a toll-free number. You have to compete on service now, because it's very hard to raise prices," he said.

Many businesses have sought an edge over their competitors by using "vanity" numbers. One company that has used this strategy is 1-800-FLOWERS Inc. of Westbury, N.Y. Last year, the florist had $300 million in revenue. "It's been an incredible success," said company spokeswoman Sam Mattingly. "To have your name be your phone number, you couldn't go wrong."

One local business that agrees with this philosophy is Bob's BMW, a Jessup dealer of BMW motorcycles and parts. The new toll-free number the shop went after was 877-BOBS-BMW.

Lex O'Brien, the advertising manager at Bob's, said toll-free numbers have proven useful for reaching customers in the Washington and Baltimore areas. "People are a lot more willing to pick up the phone if it's not going to cost them anything," he said.

This week, the FCC ruled that the 877 vanity numbers will be given out on a first-come, first-served basis. The FCC said this approach is to ensure the fair and efficient distribution of new numbers.

Jeffrey Kagan, an Atlanta-based telecommunications consultant, said the regulators are not paying enough heed to the economic importance of vanity numbers. "They're significantly affecting investments these companies have made to build brand recognition in the marketplace," he said.

Besides the potential impact on businesses, there is the question of how a new toll-free number will affect consumers, who have increasingly used toll-free services. The number of toll-free calls grew from 11.57 billion in 1992 to just over 34 billion in 1997.

Kagan said the array of new toll-free prefixes and area codes could cause some confusion. For example, 866 is a future toll-free code, while 864 is an area code for part of South Carolina.

To AT&T's Wyles, there's little reason to worry. She said that when 888 was launched in March 1996, "there was great concern that people wouldn't understand it. Just by the evidence that 888 filled up in half the time we expected it to last, it's obvious that people got it. If you tell people once that something is free, you don't have to tell them again."

Pub Date: 4/03/98