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It's a potent image: thousands of letters from consumers, complaining about unwanted telemarketing or prize draw calls, crammed into boxes at the offices of the Telephone Preference Service (TPS) and awaiting transfer to the Information Commissioner. These irate letters, two to three thousand of them a week, are one measure of how strong the tide of feeling is against outbound telemarketing.

The ultimate indicator, though, is the volume of registrants on the TPS itself and the rate at which people are registering. The file, established six years ago in response to an EU directive, stands at 7.7 million individuals and is growing by 440,000 a month. For this month's Think Tank panel, it begs the question of whether the tide of registrations can be stemmed and what can be done to rectify the damage done to outbound telemarketing.

In the words of Colin Lloyd, chairman of the TPS, the momentum driving registrations is "scary". "When we started, we were receiving 100,000 a month," he says. "Now it's 440,000 a month and at this rate we'll hit 16 million next year. We've plotted this on a curve: normally curves are hockey stick-shaped, but this one just goes straight up."

The arithmetic is frightening enough but so too is the profile of those opting out of telemarketing calls. A recent consumer survey commissioned by the Direct Marketing Association (DMA) and the TPS and carried out by the Brookmead Consultancy, found that those registering tend to be ABC1s - the most desirable consumers from a direct marketing point of view.

Paradoxically, the practitioners on this month's panel report that outbound business is healthy - for now. "More predictive dialling equipment is being sold than ever before, and that's because outbound is working," says Peter Gale, contact centre business development manager at Broadsystem.

Jeff Smith, chairman and chief executive of MM Teleperformance, characterises the state of outbound business as similar to the South Sea Bubble of 1720, a catastrophic financial crash that followed high-risk speculation in trade in the South Seas.

"That's where we're at," he says. "We need to recognise that what's expanding isn't based on solid foundations. The rise in TPS registrations tells us that we need to do something about outbound telemarketing now."

What's behind opt-out trend?

But first comes the question of what exactly is causing the rise in registrations. The DMA study explored the reasons. John Price, managing director of B2B telemarketing agency Price Direct and chairman of the DMA contact centre council, says silent calls and predictive diallers are to blame.

"As part of the study we went to the BT Nuisance Call Bureau and I listened into calls from consumers complaining about silent calls. They don't know what silent calls are and jump to all sorts of conclusions. They think they're being stalked or about to be burgled. To cause this level of distress as an industry is embarrassing."

There's an element of the TPS being a victim of its own success. The service recently undertook research with NOP into both industry and consumer satisfaction with TPS. More than 95 per cent of TPS registrants said they were very satisfied with the service, in terms of the ease and speed at which they could register and have calls blocked. The panel experts agree that this has created a word-of-mouth promotional effect among consumers.

Phone retailer Carphone Warehouse has even made a virtue out of TPS registration, automatically signing up new TalkTalk landline service customers to the TPS. "It flies in the face of the regulations, which say it's up to consumers as to whether they want to receive telemarketing calls," Lloyd says.

Are the 7.7 million registrants lost to telemarketing for ever? The panelists agree that they are, given that registrants stay on the file for life unless they ask to be removed (a feature that the UK industry fought against at the time of the TPS's inception).

The US situation seems more favourable, where those signed up to the national Do Not Call list must re-register after a period. Lloyd bemoans the fact that the UK didn't learn from another US experience, where certain industry sectors such as charities were granted a grace period before having to apply the country's Do Not Call register. "This allowed them to build a dialogue with certain consumers," he points out.

The best the UK industry can hope for, it seems, is to slow down the rate of registration and to avoid a statutory opt-in for telemarketing.

One worry for suppliers such as MM Teleperformance, whose contracts for clients such as the National Blood Service require proactive calling of donors, is that the consumer is failing to distinguish between different types of telemarketing call. The TPS, after all, was set up as a central opt-out register to bar sales and telemarketing calls, and not the customer service type.

Fine-tuning the TPS

"We as an industry need to stimulate the consumer's understanding of the differences," Smith says. "At the moment, people seem to think that all outbound calling is bad per se."

One solution, Smith and Gale believe, would be to have a TPS registration that is "less of a blunt instrument," one that offers a selective opt-in to receiving certain types of calls. Price shakes his head at the suggestion. "We did ask consumers this in our research but they didn't want to know. They said they just didn't want calls." Lloyd adds that the logistics of selectivity would prove "prohibitively expensive" for the call centres whose licence fees fund the running of the TPS.

Though a selective opt-in to TPS may be a wish too far, Smith argues that consumers would take calls from organisations with whom they have an affinity. Lloyd agrees, but notes that a "belt and braces" approach by clients eager to comply with the regulations has led to over-suppressing of calls to consumers with whom they may have already have a relationship.

"Many companies have implied consent to be able to telemarket to their customers, which I think the Information Commissioner is sympathetic to," he says. And it's likely that a company's customers registered on the TPS will have a higher propensity to respond, given that they aren't being pestered.

There's general agreement around the table that the future of a certain type of outbound call, the quick-hit cold variety, isn't rosy. While the economics of low cost, principally offshore calling continue to seduce clients, what's needed now is a shift in the mindset away from price towards a longer term view of benefits of outbound calling.

"Ten years ago we tried to get the short-term, cost-per-conversion mentality out of direct mail and mail order and replace it with notions of brand value, and now those sectors are paying attention," says Price. "Unless we do likewise in telemarketing, all the consumer has to say is 'don't phone me' once, and you've lost them forever."

Changing opinions

It's falling to suppliers to shift client opinion. Broadsystem proved the value of profiling recently when The Times was looking to get more subscribers using telemarketing. It asked four telemarketing suppliers to bid and gave them 20,000 names each to work with.

"We profiled the typical Times subscriber using geodemographic systems and matched them to the data set," says Gale. "We didn't actually load the 11,000 that showed a high propensity not to subscribe."

It was a gamble that paid off, when following a two-week trial, the Broadsystem conversion rate was the best, the cost the lowest and "arguably we'd upset the fewest," Gale says.

In the US, there's already acceptance that cold outbound calling is drinking in the last chance saloon. Smith highlights the experience of Teleperformance USA and how it's working around a dramatically shrinking universe of consumers to call.

"We relied very heavily on non-selective predictive diallers," he says.

"Now that their nominal calling base is less, it has forced them to be more targeted and the conversion rate is better. For instance, we're now using a greater ethnic match in calling various groups. All our calls to the Hispanic population are in Spanish, calling from South American countries such as Argentina."

Are clients willing to consider alternative approaches? Chris McIlduff, IT director at Response Handling, believes they are. Outbound forms a large part of his company's business for such clients as Scottish Power and ntl.

"What clients are asking us to do today is dramatically different to what they asked three or four years ago," he says. "They're looking for a more balanced appraisal of what you're doing on their behalf. Sales-per-hour figures are now associated with other measures within and outside the call centre."

Of all the causes of the rise in TPS registrations, the panel considers the silent call to be the worst offender. How well the transgressors are policed is a moot point, given that the DMA can only enforce good practice on its own members and the Call Centre Association (CCA) is seen to be representative largely of in-bound practitioners.

There have been high-profile cases where offenders were brought to book, such as that of Kitchens Direct. Between November 2003 and February 2004, its parent company MKD Holdings clocked up a staggering 1.5 million silent calls out of a total of 11 million. The DMA submitted a complaint to Ofcom last year and MKD had to give written undertakings about future practices.

This case aside, Price believes UK telemarketing to be "relatively unpoliced".

Lloyd believes the relevant organisations - be they the DMA, the CCA or others - have to up their game. He calls for an industry manifesto "to protect what's left" of the consumer calling base. "If outbound telemarketing is left to its own devices, it may not be dead yet, but it's certainly moving into the emergency room."

THE PANELIST LINE UP

Colin Lloyd, chairman, Telephone Preference Service

Lloyd co-founded promotional marketing company KLP. After it was acquired by RSCG in 1990, he went on to chair the DMA for nine years. He now combines running the TPS with various directorships at businesses including The REaD Group and IPT.

Chris McIlduff, IT director, Response Handling

With a background in software development within the defence industry, McIlduff oversees RHL's technological capability and business strategy. He is an executive board member of RHL and is completing an MBA at the University of Strathclyde Graduate School of Business.

John Price, managing director, Price Direct

Price founded Price Direct as a B2B telemarketing agency back in 1982. He combines running the business with chairing the DMA contact centre council. He is also a DMA board member.

Jeff Smith, chairman and chief executive, MM Teleperformance UK

Smith joined MM Group as chief executive and has steered its growth through new business wins and acquisitions. Clients include The Army and Volvo. The company acquired by SR Teleperformance in 2004. Smith worked with the DMA and Ofcom on guidelines for outbound calling and use of dialling.

Peter Gale, contact centre business development manager, Broadsystem

Gale has extensive experience in UK outsourced contact centre marketing, having previously worked for Data Global Communications and TeleDynamics. He is also a member of the DMA contact centre council.