A quantitative indicator of telephone service’s importance to the economy is the volume of toll-free calls. These calls are typically made from an individual to an organization that provides services to individuals across a wide geographic area. Offering toll-free calling encourages individuals to call and emphasizes a company’s willingness to provide services.
In the U.S. about the year 2000, every adult made on average roughly 250 toll-free (1-800) calls. That’s more than one call every other day. That indicates both that the cost of telephone calls was significant for a large number of calls, and that a large number of calls were directly related to economic transactions or service provision.
More recent data on U.S. 1-800 calls are more difficult to interpret. In the early 2000s, regional Bell Operating Companies (RBOCs), which provide the majority of U.S. local telephone lines, were authorized to provide calls between parties located anywhere. The RBOCs thus gained the opportunity to retail geographically comprehensive 1-800 service. In addition, the growth of mobile phone use has shifted 1-800 call origination from wireline local exchange companies to mobile phones. The 40% drop in BellSouth 1-800 queries (wholesale to other telephone service providers) from 1999 to 2008 thus isn’t surprising, but Pacific Bell’s nearly constant volume of 1-800 queries across that period is.
Falling telephone rates and changes in telephone addressing are likely to cause toll-free calling to contract in the future. If the marginal cost of calls are zero, such as in flat-rate service or large-bucket calling plans, toll-free service doesn’t lower the cost of calls. Moreover, toll-free calling through clicking on a hyperlink eliminates the need to have a single, brand-identified 1-800 number. Brand names have enduring value. Memorable 1-800 numbers have recently sold for millions of dollars. But if these numbers don’t need to be entered (“dialed”) to make the corresponding call, the value of 1-800 branded numbers will vanish.
A future decline in 1-800 calling will be associated with voice communication services being more tightly integrated with a wide range of economic transactions and services. eBay’s divesting from Skype doesn’t imply that the future of voice communications is a stand-alone service. More economic separation of Skype from eBay gives Skype a bigger field for play. Telephone service has broad economic importance. That fact will be an important determinant of future industry structure.
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Data: Online spreadsheets estimating total U.S 1-800 calls in 2000, along with Pacific Bell and BellSouth public tariff data on 1-800 calls and rates, 1993-2009 (also available as an Excel workbook).