Can A Telco Block Phone Calls To A Number They Don't Like?

from the they're-trying dept

If you're involved with startups these days, you've probably used FreeConference.com. It's become the de facto conference call system for many startups. Basically, it lets you create conference calls for just the cost of the long distance call to the number provided (usually in Iowa or Minnesota). Since many phone plans these days include unlimited long distance, there isn't even much of a cost for most users. I used to think that the business model behind FreeConference.com was to upsell people to more feature-complete conference calls (as well as ones that didn't provide a little jingle for FreeConference.com at the beginning -- for people who didn't want big name customers or partners knowing they were using a free service). However, many have suggested that the real business model was the same as those services that offered free international calls: arbitrage over termination fees. Since regulators put in place ridiculously high termination fees (the fees other telcos pay local telcos for connecting a call to that telco's end user) there was an arbitrage opportunity. These services could set up deals with the local telcos, drive many more calls to those local exchanges. The local telcos then get a ton of cash from the termination fees, and gives some of it back to the service that drove all that traffic. In the case of the free international calls, AT&T decided to sue the company for fraud.

However, it looks like the various telcos have taken a different strategy when it comes to FreeConference.com: they're simply blocking callers from calling that number. Think about that for a second, because it's quite troubling. The telco is deciding that they don't want you to be able to call certain numbers -- and then just blocking them, leaving no recourse. Apparently some people can still get through, but others are having trouble. It certainly has some similarities to the whole network neutrality debate. The FCC tends not to take kindly to telcos blocking anyone's ability to call anyone else -- though, in the past, it's usually smaller telcos doing the blocking, rather than the Kevin Martin's buddies at the big telcos. Either way, it seems pretty sleazy to suddenly block the ability to call certain numbers. The problem isn't with these services, but the bad regulations that allowed the small telcos to charge crazy termination fees in the first place. If the big telcos have a problem with it, they should take it up with whoever put those laws in place.

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  1. icon
    Derek Kerton (profile), 16 Mar 2007 @ 2:46pm

    There Is NO Good Guy

    FreeConf, which I've used for years, as it turns out is profiteering from loopholes in regulations, and that's a crappy way to run a business, and surely not one you'd want to invest in. It is a slimy way to make a buck, by taking advantage of another company's obligation to pay high termination fees.

    FreeConf is also slimy because of the email they sent me asking me to fight their battle for them with the FCC and big telcos. Their email suggests that the only reason that AT&T et al are attacking them is because they are afraid of competition in the conferencing market. By not mentioning the true reason (termination fee arbitrage), they are effectively lying to me, and urging me to contact the FCC on their behalf with false information. That makes them jerks in my books.

    But the telcos... Ah the telcos. Regulations not going in their favor for once? Sounds like a big can of "what comes around goes around" to me. Listen, I'm not the one responsible for the terrible telecom regulation, and the Gordian knot of business models they've built up over 100 years. They are. Tough beans if it's not working for you for once. Go use your armies of lobbyists to block the loopholes, and for once I'll even support you.

    But don't turn us customers into collateral damage in your little termination fee spat. Selectively blocking legit numbers that I dial is the surest way to get my hair standing up on end, and make me think that perhaps regulation on Net Neutrality isn't such a bad idea. If telcos think they can just block legit phone numbers (that just happen to be in Iowa) at their whim, citizens better watch their backs.

    Telcos offer free long distance, and make big ARPU on every account. Mobile phone carriers sell huge bundles of minutes that go unused every month. So suddenly, customers have a way to use those minutes and free long distance plans, and it doesn't suit the telcos. Tough, they still owe us the services we bought.

    So maybe we *should* complain to the FCC. But not just in the way FreeConf asked me to. Everybody is a bad guy here. The FCC for lousy regs, FreeConf for being dishonest about the issue and existing only in a loophole, and the telcos for heavy-handed reactions that show their true colors. I suppose the paying customers just get lost in the shuffle.

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