WATS is an abbreviation for wide area telephone service. WATS lines come in two flavors: in-WATS and out-WATS. Another name for in-WATS is 800 service. When most people refer to a WATS line, they mean an out-WATS facility. Both services are merely billing arrangements for reduced billing of long-distance calls based on a fixed monthly fee and discounts for larger calling volumes. 800 service also has the characteristic of reversing the charges to the called party.

Historically, WATS lines have been separate facilities (physically identical to local PBX trunks or private lines). Their geographic coverage was also banded; thus, one might have had a WATS line that only reached adjacent states (band 1), or all of the lower 48 United States (band 5), or some intermediate variation. For out-WATS, either one’s PBX had to be smart enough to recognize the dialed area and choose the correct outgoing facility, or users had to dial special codes to select the right WATS line. Any given band included all closer bands (but, of course, billed the calls at the higher rate for the wider band), and this caused a certain amount of difficulty in either configuration or training. Because different physical facilities went to different regions, this also resulted in a traffic engineering nightmare. This complication was all the more unreasonable because WATS calls (both in and out) are handled identically to all non-WATS calls; WATS is really only a bulk billing arrangement for calls that would otherwise be considered direct distance dialing (DDD or toll calls).

WATS service has never been free, although some of the older tariffs did have points where all calls above a certain (rather large) volume were free. Those tariffs are long gone; all calls now cost on a per-minute basis. The only variable is the per-minute charge, which does decrease as the calling volume increases. One significant improvement is that WATS-type volume discount billing can now be set up on existing trunks; no longer is it required to have separate facilities into the local CO to have such an arrangement.