North American Toll-Free Services Markets

Research Overview

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."

Frost & Sullivan Growth Partnership Service

Based on extensive and in-depth research, real-world consulting work, and new theories tested in hundreds of companies across many industries, Frost & Sullivan has evolved its Growth Partnership Services (GPS) program that provides established and emerging firms with powerful growth visions. Moving beyond token mission statements, GPS provides an actionable vision to growth consulting partners by illustrating how key intelligence and strategic research based on defined goals can guide day-to-day behavior and overall company direction. The foundation of Frost & Sullivan's GPS includes:

• Assisting companies to reach their full potential in the core business
• Providing growth strategies to help companies expand into related businesses
• Preemptively redefining the core business during market turbulence
• Applying the Frost & Sullivan framework to identify and address common mistakes resulting from misaligned corporate strategies
• Recommending growth management strategies through continuous partnership

To maximize the potential for growth within a firm's internal and external environment, Frost & Sullivan consultants can facilitate the creation of strategic programs that deliver improved market success. Frost & Sullivan's strengths lie in combining strategic understanding with market expertise and applying these with absolute commitment to its clients' growth.

Benefits of this Service

Provides Insights into the Business Issues and Challenges Faced by Toll-free Service Providers and Carriers

Toll-free service providers and carriers can formulate strategies to tackle the current market by having a better understanding of the issues and challenges that exist in the market.

Market Demand and Revenue Analysis are designed to Help Toll-free Providers Plan their Marketing and Product Development Strategies

The study provides detailed revenue and demand analyses of the toll-free services market. Knowing the direction of the market can help carriers and toll-free service providers in product development planning to better sell their services in the future.

Helps Understand the Key Market Trends in the Market

Knowing the key competitive and regulatory trends can help toll-free service providers and carriers gauge the external factors that are impacting the market and help them take a proactive approach to respond to these environmental factors in a timely and effective manner. This can help incumbents defend their position and new participants to gain a foothold in the evolving market.

End-user Demand Analysis and Segmentation Help Service Providers Identify the Growth Segments

The study provides analysis of demand distribution by type of end users and industry verticals. This helps established participants as well as entrants identify the customer segments that have good potential for growth.

Discussion of Market Drivers and Restraints Can Enable Service Providers to Develop New Revenue Strategies

The study identifies key factors that are promoting or inhibiting demand for toll-free services. Understanding the impact of key technology trends, market factors, and consumer behavior can help carriers and toll-free service providers become more effective and efficient in delivering their services.

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:

• Enterprise telephony services
• Long distance (LD) services
• Voice over IP (VoIP)

Technologies

The following technologies are covered in this research:

• Toll-free Service: This is a telecommunication service, wherein the call recipient pays the charge for a call instead of the caller. Call recipients subscribe to toll-free services from service providers and pay installation, monthly recurring, and per-minute charges. The scope of toll-free services can be extended to local, national, or international calls.
• Switched Toll-free Service: This is a toll-free service that utilizes a public switched telephone network (PSTN) and terminates calls on a user's local phone line.
• Dedicated Toll-free Service: This toll-free service utilizes dedicated connections (T1, T3, ISDN) or lines for terminating calls.
• International Toll-free Service (ITFS/UIFN): This toll-free service is used to make calls from foreign countries and includes international toll-free services (ITFS) and universal international free phone numbers (UIFN). The calls are made from outside the United States (Canada) and can terminate both within the United States as well as in other countries.
• Domestic Toll-free Service: These are all toll-free services for which the calls originate within the United States (Canada) including local, regional, and nationwide toll-free services. The call termination can be both within the United States (Canada) or overseas.
• Responsible Organization (Resp. Org): These are the organizations designated to manage and administer customers' SMS/800 records.

What's Included

• Detailed insights into the North American toll-free services markets
• Drivers, restraints, challenges, and strategic recommendations
• Identification and analysis of top industry participants and competitive factors
• Market forecasts and opportunity analysis by end-user type and industry verticals
• Aggregate industry revenues