Playing the new 800 numbers game: some companies may find lower prices and higher levels of service now that 800 phone numbers are portable - opportunity to retain an 800 business number when changing telephone companies

Nation's Business, Dec, 1993 by Madeline Bodin

If your business uses an 800 number, competitors of your telephone company are probably offering you big savings to switch to them. Or your current carrier will give you a discount for staying.

The competition to provide 800-number service took off in May when such numbers became "portable" for the first time. In its simplest form, 800 "portability" means that you can retain your 800 number when you switch to a different phone company. Perhaps you've converted your number to letters that spell the name of your firm, a sales slogan, or a reference to the type of business you're in. Or the number might be one that you've been advertising extensively.

While the biggest benefits of the competition to switch carriers have gone to the 800-service users who spend more than $50,000 per month on their combined 800 and other long-distance services, smaller companies haven't been left out. Almost everyone can get a 10 percent to 30 percent discount in the competitive environment of portability.

Until last May, a business that wanted to move its 800 service to another phone company had to change 800 numbers when it changed carriers. Under the old system, carriers held exclusive rights to the first three digits after 800 in numbers they had assigned.

The Federal Communications Commission ruled in 1988 that carriers had to route calls using all seven digits after the 800 prefix.

The new system allows any phone company offering 800-number service to use any of the roughly 10 million 800-number combinations now available. No company has an exclusive right to any number, which enables businesses to take their 800 number from phone company to phone company.

This new system depends on two very sophisticated technologies. One is a central database that stores the carrier assignment for each of the 2.5 million 10-digit 800 numbers now in use. The other component is a network protocol that, among other things, lets the computers of the phone company originating the 800 call search the central database and transfer the call to the proper recipient.

Users of 800 numbers will reap a number of rewards from portable numbers. The biggest savings will probably go to companies that used one carrier for 800 calls and another for all other long-distance calls.

"If you are a company that has a substantial amount of long-distance traffic on one carrier and 800 numbers by another, you can get substantial reductions in costs" by moving both services to a single carrier for a larger combined-volume discount, says Jane Laino of Corporate Communications Consultants, in New York City.

Portability may also save businesses from failure during rare, long-term network outages, says William Church, CEO of Call Center Solutions, in Raleigh, N.C.

Another benefit comes from the ability to shop around. The 800 carriers have developed aggressive new marketing campaigns to attract customers. Businesses have been offered discounts of up to 30 percent for staying with their existing carrier. Those that switch have been offered similar discounts.

The FCC required phone companies to drop their usual installation fee for new 800 customers from May through July to avoid penalizing companies that switched carriers. Intense competition, however, has caused 800 carriers to extend the no-fee offer indefinitely.

Yet another benefit of portability is the inevitable increase in service that 800-number carriers will provide for business customers of all sizes. "Portability will force the carriers to be more customer-service-oriented," says Church. "You can demand better service and expect to get it, because if you don't like the service, you can take your business to another carrier."

Will these benefits tempt companies to switch carriers? A study last spring by Strategic TeleMedia, a market-research company in New York City, found that 40 percent of the companies that spend $100 to $9,999 a month on 800 service were considering switching carriers.

Generally, the study found, the higher the 800 volume (some companies spend millions each month), the more likely it is that the company is considering switching its 800 service, says Mark Plakias, managing director of Strategic TeleMedia.

For all the potential benefits of portability, it also brings at least one new problem, called "post-dial delay." Before 800 portability, it took about five seconds from the time an 800 number was dialed to the time the phone at the other end started ringing. Now, the post-dial delay can be longer than nine seconds if a carrier is not using the newest network technology.

The FCC says post-dial delay is not a major drawback, however. The agency estimates that less than 5 percent of all 800 calls will experience longer setup time, says Gary Phillips, an FCC attorney. These delays should be temporary, but Phillips could not say when the times would start to improve, only that it would vary with the carrier involved.

A part from the intense marketing efforts by the major 800 carriers, evaluating the pros and cons of switching 800 service can be a daunting and time-consuming task for many small-business owners.