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Can AT&T Block Access To Numbers It Doesn't Like?
Scuff up over AT&T, Qwest blocking of FreeConference.com
Techdirt, GigaOM and Consumer Affairs offer thoughts about AT&T and Qwest's decision to block calls made to FreeConference.com. The service is used by many companies on a budget, and only charges users the long distance fee to reach their numbers (usually in the midwest). In their FAQ the company says AT&T & Qwest "are violating the public trust as well as abusing their market power" by determining their customers cannot call certain phone numbers. AT&T justifies the move as such:
"We may block access to certain categories of numbers (e.g. 976, 900 and certain international destinations) or certain web sites if, in our sole discretion, we are experiencing excessive billing, collection, fraud problems or other misuse of our network."
An AT&T Spokesman insists that their service is for calls "between one person and another person, not between one person and many." But AT&T dominates 800-service, notes FreeConference.com CEO Alex Cory in the GigaOM comment section. "If free conferencing were eliminated, what would people do? Go back to 800-service conferencing."

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John T
@northgrum.com

2 recommendations

John T

Anon

Ugh. The worst possible solution

My understanding of FreeConference.com is that their scheme, while it does take somewhat advantage of the regulatory arbitrage available in the USF, is not quite as bad as the free international calling schemes. Both of them, however, do take advantage of entirely unintended consequences of the Universal Service Fund:

1) Local phone companies in rural areas are subsidized by regulated high termination fees paid per minute from the originating caller's local phone company.

2) This tends to cause the originating caller's company to lose money on each phone call, but it doesn't matter too much in the long run because there's a small volume of calls to these rural areas.

3) To some degree, the rural phone company passes on savings to their customers, and similarly, to some degree the originating caller's phone company passes on the additional charges to their customers. (These rates should be roughly similar.)

4) Some rural phone companies, or companies in partnership with them, have found ways to encourage people to call these numbers, since they actually make a profit on each call, essentially causing the big phone companies to subsidize them and people who use their services. (And, in the end, some portion of this will be passed on to everyone else.)

5) One method is the "free international calling" sites, since Iowa rural phone companies have an impressive fiber backbone, and can reroute incoming domestic calls over VoIP (using Skype or some such) for less than the termination fee, making a profit while still having the calls be free to the end user.

6) Another method is the free conference call service offered here.

7) Both methods take advantage of regulation, and show that the subsidies granted to the rural phone companies are probably too high.

8) One acceptable solution is better regulation decreasing those high termination fees.

9) Another solution is one that the FCC is proposing, whereby phone companies would bid for the right to operate rural phone companies. (I can connect those calls for x cents/minute.) The idea is that the auction would do a better job of finding the optimum subsidized rates than the current obviously inefficient regulation.

10) The worst possible solution is allowing the phone companies to block these calls, or sue them out of business for spurious reasons. Yes, they're taking advantage of regulation. Yes, the regulation should be changed. But it on first blush all appears legal to me, and giving phone companies the right to sue based on "the calls aren't really terminated" or the right to not connect to some numbers has enormous downsides. Real, legitimate arbitrage and competition (not dependent on taking advantage of subsidies and regulation) would be blocked.

Blocking is unacceptable.