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First, there were "ZEnith" exchanges, the original toll-free numbers. Since there was no Z on the dial, you would call the operator and she would connect you to a business on its dime, making the connection by looking up the number associated with a ZEnith number.
Finally, the Bell System launched Wide Area Telephone Service in 1961, which became used for the first direct-dial toll-free 1-800 numbers in 1966 and 1967. Originally toll-free exchanges were tied to geographic areas, much like area codes, but, gradually, like everything else in the phone network, things soon loosened up and, today, the modern toll-free network remains a fixture of television advertisements, magazine inserts, and radio jingles. What better way to entice the customer than offer to pay for his call?
Toll-free numbers are often used today to make businesses look "big" by giving them a seemingly national presence not tied to any specific geographic location. (And, conversely, for this reason, many businesses now find it important to have local numbers in their customer's areas to maintain a "local presence" even if they are, in fact, not local.) But the original purpose of toll-free area codes was to function as, essentially, automatic collect calls. Collect calls, I will remind those of you who are too young or have forgotten, are when you place a call through the operator and reverse the charges. With traditional telephone service, the caller always incurs charges for a call, if there is any cost. The calling party never has to pay to receive a call, which is why the game continues of many people without flat-rate long-distance askings their family members and friends who do to call them instead, since it's completely free to receive a call (this is not necessarily true with other types of lines, such as mobiles). So, with a collect-call, instead of the caller paying for the call and it being free to the callee, the charges are reversed so that the caller doesn't have to pay and the callee foots the bill. Why would people want to do this? I can think of two primary applications for this today. First, college students generally don't have a lot of change sitting around, so they might phone home collect, or "call collect", so that their parents foot the bill instead. The other application is in prisons, where, in some cases, all calls must be placed collect. Of course, there are still people who call others collect these days, or even person-to-person, but long-distance rates have dropped enough that it is now significantly less common than it used to be.
ZEnith numbers were just collect calls with a bow on top. When you called the operator and asked for, say, ZEnith1-2000, she would look up the actual number with which that ZEnith number was associated and automatically connect the call. Automatically is important. With a regular collect call, you wouldn't want just anybody to be able to call somebody at the callee's cost, right? So the operator always informs the callee from whom the call is and asks him to confirm if he wishes to accept the charges. The callee can then either accept or deny, and if denies the operator cancels the call. Still, many people often used this to their advantage, often in "check-in" type situations where one person might place a collect-call to his wife using a phony name, and when his wife picks up and hears the operator ask if she wants to accept a collect call from the phony name upon which the two had agreed earlier, she can simply deny the charges and hangup, knowing her husband made it to his destination safely.
Many businesses allowed customers to call them collect, at first, but this was a cumbersome process, to manually agree to accept the charges to every call before it was put through. Thus, ZEnith numbers were born, whereby the operator automatically connected the call to the callee and charged him for it. In effect, this is still how toll-free numbers work, though operators and ZEnith numbers have been replaced with automatic switching equipment and numbers customers can dial directly themselves.
By the way, if you're wondering if ZEnith numbers are still around, some are. You can still call ZEnith1-1200 in California and reach the California Highway Patrol. The hard part might actually be reaching the live operator, but once you reach her, she will put you through!
With our modern toll-free numbers, with numerous toll-free area codes (or, since they are not geographically defined, more properly, "Numbering Plan Areas" or NPAs), it seems that toll-free telephoning is more a part of our phoning culture than ever. But here I will remind you that the original purpose of toll-free numbers, of ZEnith numbers, of collect calls, was to allow the callee to foot the bill to entice the caller to call, a business model that has works well for businesses for many decades.
Today, however, things have changed considerably. Many people have unlimited flat-rate long distance. Not everybody, but many people. And for such people, there is no technical reason to call a toll-free number. If it were a standard phone number, they wouldn't get charged anyways, so why call a toll-free number? Remember, even if the caller wouldn't have paid to call a standard number, the callee always gets charged when a toll-free number is called. In other words, everytime you call a business toll-free, you are costing them money. It doesn't matter whether it would have cost you money to call one of their standard local numbers.
As mentioned earlier, there is now also this new push for "locality" in the huge, distressing globalized world around us. In a world of "Made in China", people are making an effort to do business locally. We see this with food, crafts, and services. "Local to you" is now a selling point for many businesses. A toll-free number makes businesses appear large, monolithic, and distant; a local number the caller can dial with just 7 presses of a button or 7 twirls of a dial brings the customer closer to a business before they even converse.
Hence, there is a new toll-free culture today. And that means new norms and best practices to go with it.
First off, if you have flat-rate long-distance, don't you think it's a bit rude to call a business toll-free? You are costing them money when you could have called a regular local number that might have cost you had you not had a long-distance package but is free because of it. If you had called their non-toll-free number, the call would have been free to both of you! Now, now, you say, Microsoft doesn't lose any money when I call them toll-free on the phone. Yes, they do, but it's hardly significant in the grand scheme of things. But it's not just large business with toll-free numbers: many small mom-and-pop stores and sole-proprietorships also have toll-free numbers now. And don't forget about grassroots organizations and non-profits! By calling them on the phone, you are costing them money, and the impact for them is definitely noticeable! Do you really want to put an unnecessary burden on such organizations simply by calling them?
Now, you say, that's the whole point of a toll-free number! They want to be burdened by calls, that's why they have toll-free numbers.
But no, that's not quite the point. They have toll-free numbers to make their business accessible to people who otherwise would have difficulty getting in touch with them because of the cost. It eliminates the barrier between them and their customers. But if you have flat-rate long-distance, there is no barrier! From a standpoint of efficiency, the only thing you do by calling a business toll-free is you chip away at its bottom line and you enrich the phone companies and toll-free providers. If you had just called its regular numbers directly, then, in effect, the phone company fits the bill on account of your plan. When you call a toll-free number, the business or entity to whom that toll-free number is issued is the one who pays. When you call a non-toll-free number, you pay, but if you have a flat-rate plan, in effect, your phone company pays. Or perhaps you still pay, but you've already paid for the call anyways by signing up for the plan!
The long and short of it is it's just plain rude to call toll-free today, if you have a flat-rate long-distance plan. If you don't have a flat-rate long-distance plan, then don't smudge your conscience by calling toll-free: that's what they're there for! Toll-free numbers exist for people without flat-rate long-distance, not people with flat-rate long-distance. Keep in mind that toll-free numbers came about in an era when all long-distance calls cost an arm and a leg and there was no such thing as "flat-rate long-distance"!
Keep in mind that some businesses only advertise their toll-free numbers. While some small and mid-sized business might simply list their toll-free number in conjunction with their direct local number, some larger enterprises may choose to only advertise their toll-free numbers. In a way, this is good practice, because if you only list your direct numbers, then you cut off the people who don't have flat-rate long-distance by making them pay. If you're going to advertise one, and you have both, then listing the toll-free numbers is the way to go. But businesses can choose to list both, and many do. So if a business chooses to only list its toll-free numbers, then don't feel bad about calling them, even if you do have flat-rate long-distance! Why worry about it? They could have chosen to list a direct number so they could accept calls at no charge to them, but they chose not to. If a business doesn't list any direct numbers, then clearly they must be alright with anyone and everyone calling their toll-free number.
The telecom landscape has changed considerably since the Breakup of the Bell System (in many ways for the worse), and the recent change in the connotation of "toll-free" is only one such example. Direct numbers today are making an unexpected comeback as the glory days of toll-free numbers are now long past. Sure, they will continue to be essential for the foreseeable future, as flat-rate long-distance plans remain a luxury to many people, and to them, toll-free numbers are a vital necessity. But for the rest of us, many of whom have flat-rate long-distance plans, the way we telephone has changed considerably. Businesses everywhere recognize the importance of maintaining a friendly image and, while at one point, listing toll-free numbers was the way to do that, it is no longer. Direct numbers near to the customer have become even more enticing and, even to those without flat-rate long-distance, the call should not be long-distance to begin with if the business does its job correctly. In many cases, local calls to apparently "local" businesses are replacing toll-free calls and, while for some of us, toll-free numbers remain a vital necessity, for the rest of us, they are now simply an unnecessary luxury that has proven to be inefficient and wasteful in the 21st century.