Maintaining Profitability Proves Challenging in the Toll-free Services Market

Intense competition among service providers in the toll-free services market has been exerting a downward pressure on price for both switched and dedicated services. The entrance of regional bell operating companies (RBOCs), offering lower priced services has proved challenging for traditional toll-free providers, especially within the medium to large enterprise segment. Despite the impact on profit margins, a number of toll-free providers have been compelled to waive installation fees and/or monthly recurring charges and provide larger discounts in a bid to sustain market share. Service providers need to consider bundling voice and data services and migrating to IP-based toll-free service in order to remain competitive and maintain profitability. Consolidation of voice and data networks provides cost savings that can help service providers offset the impact of price erosion on their operating margins.

This Frost & Sullivan research offers a comprehensive analysis of current dynamics in the toll-free services market. The study identifies key market and technology trends, industry challenges, and factors that drive overall growth. It also includes toll-free minutes, revenue forecasts, and strategic recommendations that can assist service providers in capturing market share.

Toll-free Services to Sustain Demand in a Competitive Market

The ability of toll-free services to provide a virtual storefront that is independent of time and geographic boundaries is probably its most compelling value proposition. This has enabled the service to remain competitive despite the emergence of the Internet and other online communication channels such as e-mail. "While the Internet is reducing toll-free traffic in the retail and consumer goods segment, the insurance, finance, and healthcare transactions that require personalized information continue to prefer toll-free usage," says the analyst of this research.

Toll-free service providers are also using vanity toll-free numbers (usually spelling a person's or company's name) in a bid to differentiate themselves from their competitors. In the large enterprise and call center outsourcing segments, advanced toll-free features such as customized routing applications, disaster recovery, and call detailing reports are providing opportunities to increase revenue and traffic in a saturated market.

Falling Demand for Toll-free Services in the Residential Segment

The toll-free services market is expected to register declining minutes of use (MOU), particularly among residential customers that favor wireless services. "The rapid decline in prices for wireless plans and large buckets of minutes provided by wireless carriers are limiting the need for the relatively more expensive personal toll-free services," explains the analyst. Additionally, the utilization of advanced routing techniques will further reduce the average call length for inbound toll-free calls, thereby affecting traffic growth.

However, reduced demand from the residential segment is expected to be offset by growth in traffic in the international toll-free services market. Moreover, the call center industry, which is the largest customer segment for dedicated services, is also boosting growth in minutes and revenue. Adoption by relatively new segments such as regulatory bodies, federal associations, educational institutions, government sectors, and emerging applications such as unified communications is expected to ensure continued expansion in the toll-free services market.

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Strategic Recommendations to Help Target New Growth Opportunities

With the increasing maturation of the toll-free services market, vendors need to concentrate on specific products within their extensive portfolios. This study provides information on the key growth areas within the international and domestic toll-free services markets. It also provides recommendations that assist participants in maintaining a competitive edge and capturing market share.

Revenue Forecasts for Improved Accuracy in Business Planning

After a comprehensive analysis of the toll-free services market, this research service offers a revenue forecast model that utilizes market drivers and restraints. This enables participants to assess future growth patterns in the toll-free services market and chart out their business plans in accordance with the forecast changes in the market.

Toll-Free Market Forecasts Assist in Formulating Appropriate Sales Strategies

The study provides current and forecasted total toll-free minute usage, segmented by domestic and international minutes and by switched and dedicated toll-free minutes. It also includes forecasts for domestic origin toll-free calls and toll-free numbers. Vendors will be able to use this information to devise strategies in a timely manner to attain maximum growth. By providing various toll-free segment forecasts, vendors can anticipate demand and modify their sales strategies accordingly.

Extensive Market Insights into Current and Future Trends

This research service provides a detailed analysis of the market and technology trends. Such information is critical for toll-free service providers, especially for crafting future business development strategies.

Analysis of Critical End-User Segments Highlights Growth Opportunities

This study analyzes the potential of certain customer segments within the entire toll-free target market. This enables toll-free service providers to channelize their efforts and resources toward those segments that offer maximum growth. In addition to toll-free demand distribution among various verticals, contact center and non-contact center demand analysis is also included in this study.

Every Frost & Sullivan analyst thoroughly examine the following market sectors in this research:

• Toll-Free Services Markets
• Wireless Carrier Markets
• Business Toll-Free Services Markets
• International Toll-Free Services Markets
• Dedicated Toll-Free Services Markets
• Switched Toll-Free Services Markets
• Contact/Call Center Markets

The following technologies are covered in this research:

• Toll-free Services: This is a telecommunications service that enables the caller to transfer the responsibility of paying for the call to the recipient. This can be extended to local, long distance, and international calls.
• Switched Toll-free Services: In switched toll-free services, the public switched telephone network (PSTN), or in other words, the company or user’s local telephone line is used to terminate toll-free calls. The customer need not invest in any infrastructure other than the existing phone lines and merely purchase the toll-free service from the vendor.
• Dedicated Toll-free Services: Here, lines/connections dedicated to the toll-free subscriber are used to terminate toll-free calls. In general, T-1 or T-3 lines could be used as transport media. This kind of service would require the user to invest in infrastructure in addition to buying toll-free services from the provider. Usually, the lower per minute pricing compensates the extra cost incurred for investment in the infrastructure.
• Local/Regional Toll-free Services: These are services that limit toll-free access to a specific geographic boundary or region.
• Nationwide Toll-free Services: Customers from all over the nation are allowed to access these toll-free numbers. The large interexchange carriers (IXCs) usually provide these services.
• International Toll-free Services (ITFS): These include services that are used to enable calls from countries other than the Unites States. The toll-free calls can then terminate either in the United States or in other countries.