AT&T is currently testing a free (advertising supported) directory assistance service. An upstart called Free 411 uses the same business model and recently surpassed the 100 million call milestone. AT&T currently charges between 35 cents and $3.50 for each call to its 1-800-YELLOWPAGES service. Depending on the outcome, AT&T may make the service free nationwide starting sometime next year.
Phone based lookup services are popular with mobile phone users, but there are other options like WAP that can be more cost effective.