Verizon & AT&T complaining about rural Iowa Co. with conference calls

[Fire14]

AT&T, Verizon decry penny-pinchers

The Web site for Wayland, Iowa, boasts of "clean, well-kept homes," but the telephone lines running through town pulse with sultry talk on adult chat lines and a strange number of conference calls.

There's nothing particularly steamy or talkative about this city of fewer than 1,000 people, just a quirk in telecommunications law that gets certain large phone companies all hot and bothered -- so much so they've warned of higher phone bills for everyone.

Wayland is one of at least 25 mostly Midwestern towns, about half of them in remote corners of Iowa, where the volume of incoming calls from other area codes has surged to a level that would be hard to explain, even if every resident had taken to chatting long distance day and night.

Instead, the increase in long-distance calls can be traced to assorted dial-in services with local phone numbers, from providers of free conference calling to chat lines with names like "Alibi" and "Butt Monkey."

For reasons of economics -- not family values -- the nation's biggest phone companies are trying to put a stop to these calls, even going so far as to block their customers from dialing long distance to hundreds of numbers.

The blocking largely ceased after a stern prod by the Federal Communications Commission. The agency has been struggling for two years to overhaul the arcane system by which pennies per minute change hands between phone companies with every long-distance call. Similarly, this dispute is hardly resolved.

Long-distance providers such as AT&T and Verizon Communications are charging abuse of that system, which helps ensure phone service for every home in the most secluded parts of the country. They say customers everywhere could face rate hikes.

The Iowa companies, pleased with the revenue from these calls, accuse the long-distance providers of sour grapes and really bad business judgment. They warn that consumers could lose access to useful, affordable services.

"What AT&T and Sprint and Verizon may not like is the fact that it's successful," said Ronald Laudner, chief executive of Farmers Telephone Company of Riceville, Iowa.

Though the particular circumstances are unique, industry experts muse that spats of this sort are a predictable, time-honored tradition in the twisty realm of telecom regulation.

"As far as I can tell, it's not illegal, but it raises questions whether this is achieving what the policy was set out to do," said Blair Levin, an analyst at Stifel Nicolaus and a former FCC official. "These disputes have a history of rising up and being resolved" at the FCC or in court, but soon enough, "there will be a new approach that someone else will figure out."

Despite their differences, both sides agree on the basic facts in the escalating tussle. All agree, for example, that pennies add up quickly.

AT&T and Verizon typically get billed just thousands of dollars or less per month to connect long-distance calls with a sparsely populated town, paying 2 cents or more per minute in termination charges to the local phone company.

Since a growing number of consumers have regular phones and cell phones with unlimited long distance or large monthly buckets of minutes, it often costs them nothing to call rural area codes. The carriers swallow the charges as a cost of doing business.

But now some rural carriers are billing the big phone companies hundreds of thousands or even millions of dollars per month, sharing that revenue with partners that help drive long-distance calls onto their networks: Web sites promoting free services such as FreeConferenceCall.com and Talkee.com, a party line provider. Though usually based elsewhere, these services direct their customers to dial phone numbers in remote locales.

The bounty from these partnerships can be striking for rural phone companies, many of which would struggle to make ends meet without the supplemental income that the government steers their way from the universal service surcharges that urban dwellers pay on their phone bills.

Farmers Telephone of Riceville proudly reports that the long-distance traffic coming onto its local network for conference calls surged from less than 1.5 million minutes in April 2005 to nearly 25 million in October 2006.

But in recent months, incoming traffic slowed sharply. AT&T and Sprint Nextel began blocking their cell phone customers from calling some dial-in services. Qwest Communications International told other phone companies that use its long-distance network it wouldn't carry their calls to such numbers.

In Riceville, conferencing traffic fell 30 percent, totaling 18 million minutes in March. In Lake Park and Milford, also in northern Iowa, Great Lakes Communications says its long-distance traffic fell off 50 percent from the start of the year.

At least three long-distance companies also began withholding payment on invoices from rural carriers. A group of these companies from Iowa say they are collectively owed $40 million.

The obligatory lawsuits have been traded, and both sides have appealed for government intervention.

At issue is the system by which rural telephone companies with relatively few customers are compensated for keeping their distant corners of the nation connected.

Since the 1930s, when Congress set as public policy the goal of ensuring affordable phone service for every home, the government has allowed rural carriers to charge higher per-minute rates to long-distance companies for connecting their calls to the local network.

The rural rates typically range from 2 cents a minute to perhaps a nickel, though they occasionally exceed a dime. By contrast, AT&T, Verizon and Qwest get paid closer to half a cent per minute when they connect one of their local customers to a long-distance call from another provider.

The extra revenue enables the nation's smallest carriers -- there are roughly 500 companies with fewer than 2,000 phone lines -- to generate a profit without jacking up local rates.

Farmers Telephone of Riceville gets paid 5 cents per minute, which means the jump in conference call traffic alone was generating almost $1.25 million a month in revenue at the peak. The company passes on about half of that money to the conferencing providers.

Most small carriers get 2 cents per minute by participating in a pool run by NECA, the National Exchange Carrier Association. NECA proposes its rate by submitting data on operating costs and past call volume to the FCC. If no objections are raised by other carriers or the FCC, the rates take effect for one year.

But carriers are free to exit the NECA pool and propose their own rates with the FCC, and there's been a dramatic spike in the number doing so, suggesting that more rural phone companies may be looking to provide a home for free call-in services. While their motivations remain unknown, 41 companies have informed NECA they were leaving the pool to file their own rates for the two-year period starting in July.


http://www.nj.com/business/ledger/in...210.xml&coll=1

[hf1khal]

I am thinking if this is the case with the companies leaving the consortium, then it is time for the abolishment of the universal service surcharges. Once that is done then the wire and wireless companies could impose a recording informing the users of those free services if the call is to continue, then an X amount per minute will be charged to their account. I for sure would not be one who is supporting those calls that could result in further deterioration and me paying for their free access. I bet if the majority of the public are told you have a choice, use it but if you do you have to pay for the excess charge and we will see those companies go right out of business and I would also say those local companies will then have to answer to their local market as to why their own rates went sky high.

[Fire14]

Originally Posted by hf1khal I am thinking if this is the case with the companies leaving the consortium, then it is time for the abolishment of the universal service surcharges. Once that is done then the wire and wireless companies could impose a recording informing the users of those free services if the call is to continue, then an X amount per minute will be charged to their account. I for sure would not be one who is supporting those calls that could result in further deterioration and me paying for their free access. I bet if the majority of the public are told you have a choice, use it but if you do you have to pay for the excess charge and we will see those companies go right out of business and I would also say those local companies will then have to answer to their local market as to why their own rates went sky high.

I think it may get ugly if they start leaving the consurtum, since it will cause everyone higher rates when these companies try to get greedy with raising their connection fees.

I didn't realize there were so many regional carriers out there and maybe if most of them got bought out, it would reduce these problems. (or could create a bigger problem)

As for doing what you suggest, that may be hard to do & may cause companies to charge for LD calling again.

[hf1khal]

Originally Posted by Fire14 As for doing what you suggest, that may be hard to do & may cause companies to charge for LD calling again.

I was more being specific to the regions in question where a user makes a call to specific numbers then the user would have to also agree to pay the sdditional above normal charges. So lets say if a termination cost for dialing to a normal costs 2 cents and then calling one of those free calling numbers which costs, lets say, 10 cents then the user would have to pay the 8 cents difference.

[Fire14]

Originally Posted by hf1khal I was more being specific to the regions in question where a user makes a call to specific numbers then the user would have to also agree to pay the sdditional above normal charges. So lets say if a termination cost for dialing to a normal costs 2 cents and then calling one of those free calling numbers which costs, lets say, 10 cents then the user would have to pay the 8 cents difference.

That would go over well to the residents.

[bobolito]

It's funny to see Verizon and AT&T complain because they are now feeling the pain customers feel when they get a huge bill. Except that customers can't sue AT&T or Verizon for a huge bill.

I hope this is not the end of Phonecasting.com (Podlinez.net) which is a service I love to use.

[Fire14]

Sprint Nextel Files Suit Over Abuse Of Intercarrier Compensation Systems

Sprint Nextel filed a lawsuit against 14 companies it claims are abusing the intercarrier compensation system.

Sprint, Reston, Va., charged that at least 10 rural local exchange companies in Iowa have conspired with free conferencing and international calling services providers, as well as free adult chat lines, to defraud Sprint Nextel and other long distance companies by driving voice traffic to certain local phone companies that charge extremely high rates to Sprint Nextel.

Sprint Nextel's complaint was filed Thursday in Federal District Court for the Southern District of Iowa, Central Division.

www.cellular-news.com/story/23628.php