North American Toll-Free Services Markets

Inventive Pricing Strategies and Niche Marketing to Boost Revenues of North American Toll-free Service Providers

Intense competition in the North American domestic long distance (LD) services market has adversely influenced the toll-free service market revenues. The entry of regional bell operating companies (RBOCs) and incumbent local exchange carriers (ILECs) in the inter-local access and transport area (LATA) LD services market has also seen the per-minute prices for toll-free services tumble. Many service providers are also offering waivers or discounts on monthly recurring and installation charges for toll-free services, which cut heavily into their profit margins. In addition, entrants are bundling toll-free services with LD to stay afloat. To buck this trend, carriers have to experiment with pricing models and schemes such as offering services at flat rates instead of bundling them. Nevertheless, the attractive prices offered by entrants have drawn in many customers from the small- and medium-sized enterprise (SME) segment. In fact, many SMEs are moving from switched toll-free to dedicated toll-free services to take advantage of the low-priced, no-frills offerings.

This Frost & Sullivan research service examines the North American toll-free services market and segments toll-free demand by the type of end-users and industry verticals. It analyzes the challenges that toll-free service providers and carriers face and helps them develop strategies for revenue growth and profitability in the dynamic market. The study also discusses market drivers and restraints and provides recommendations to compete successfully in this market.

Profit Margins Expand as Premium, Advanced Toll-free Features Gain Popularity among Large Enterprises

The enterprise customer segment has greatly helped to buoy revenue in the toll-free services market by adopting advanced, premium toll-free features. Some of these include customized routing capabilities, disaster recovery, custom announcements for callers, call monitoring, advanced traffic reports, and the ability to control addition/deletion of features by the subscriber.

These features bring in revenues in the form of monthly recurring charges and installation fees and offset the decline in profits from falling per-minute prices to some extent. "Many of these features are premium priced at extra monthly charges and add to the revenues from basic toll-free service and usage," says the analyst of this research service. "Besides, these features and functionalities improve the overall delivery of toll-free services and keep the enterprise customers interested in them."

Constant Access without Geographical or Time Restraints Continue to Drive Toll-free Services Market

Despite the Internet and online applications, such as e-mail and instant messaging lowering end users’ reliance on toll-free calling, it remains an integral tool for businesses, both small and large. Customers have grown accustomed to obtaining free information in real time. This ease of use makes toll-free services an unparalleled customer service tool without geographical or time restraints for enterprises across various industries.

"For most businesses, toll-free phone services and Web-based applications are complimentary services that enable them to establish multiple points of contact with customers," notes the analyst. "In fact, the public and non-profit sectors have also embraced toll-free calling over the years and are likely to persist with this service in future."