Phone Call Arbitrage Is All Fun And Games (And Profit) Until AT&T Hits You With A $2 Million Lawsuit
from the so-much-for-that-plan dept
It turns out that some of the regulations allow for excessively high termination fees for rural carriers in Iowa. So, all FuturePhone needed to do was either own or partner with one of these carriers to get all or a piece of the termination fee money -- and then route the calls over much cheaper VoIP lines to international destinations. That way, the users get a "free" (or just long distance) call, FuturePhone provides a service lots of people use at a relatively low cost... and AT&T foots the bill by paying the huge termination fees which were supposed to help develop more telco services in Iowa. For every phone call that went over FuturePhone's lines, they made much more money in termination fees than they spent in the costs to send the call overseas. Except, of course, AT&T didn't like that so much -- and is crying foul. Apparently, the bill they needed to pay the telco that FuturePhone was using jumped from about $2,000 a month to about $2 million a month -- and they're suing, claiming that it's fraud, noting that since the calls didn't really terminate in Iowa, they shouldn't be billed for the fees. FuturePhone has already discontinued the service and, if it received any money at all, is probably spending it on lawyers.
No matter what happens, this demonstrates the continued problems with these attempts to build up the Universal Service Fee, or other taxes designed to provide more telco services to rural places. They're almost always misused in a way that ends up in some telco's pocket -- rather than actually being invested in telco service improvements. Of course, AT&T has been the beneficiary of many of these regulations in the past -- but it brings out the legal guns when such a plan takes money out of its pocket instead of putting it in.