FCC Tariff Changes Mean No More Free Conference Calls 76
kgeiger writes "The FCC is changing the call termination tariffs that subsidized rural wireline service and coincidentally free conference calls. Free conference call services had located their dial-in centers in rural areas to scoop up FCC tariffs from its Universal Service Fund. USF monies will go to broadband deployment instead. Be prepared to put more nickels in the box." On the other hand, maybe ad-driven Internet services (whether free or "freemium") will step in to the free-conference gap with some good-enough options, as they have for many other services, like email and faxing.
IEEE Shameless Promotion for Speek (Score:4, Informative)
Sadly, the IEEE did not do its research when publishing this blatant promotion for Speek.
The free conference companies absolutely do NOT receive money from the Universal Service Fund, either directly or indirectly. In fact, they collect taxes from end users that contribute to this fund.
Free conference companies make money indirectly from access fees, which are paid to the rural telephone company via tariffs, the very mechanism that underpins our entire public switched telephone network. There is nothing nefarious, or even remotely illegal about this. In fact, in its recent ruling the FCC made it explicitly clear that this practice is legitimate.
The term “traffic pumping” is used by companies that compete with the free conference providers to attempt to put this practice in a negative light. In fact, anyone that hopes to receive a telephone call (e.g. almost every business that has a telephone number) engages in “traffic pumping”.
Who is opposed to the free conference providers? The long distance companies (who operate their own high-cost conference services), Speek (who offers a competing service), and anyone else who charges more money for less service. The simple fact is that if the free conference services have successfully commoditized what was once a high cost service.
How Termination Fees Work (Score:5, Informative)
The way termination fees used to work was that you paid your long distance carrier 10 cents a minute for a long distance phone call. The LD carrier shared that ten cents with the local phone companies on both sides of the call. The shared amount vary but a penny to each side was a common amount. The FCC granted a abnormally high fee to rural telephone companies of about five cents a minute. A call from a big city to the country was split 1 cent to the big city telco, 4 cents to the long distance carrier, and 5 cents to the rural telco. The long distance companies didn't make as much money on a call to or from a rural phone company but the amount of traffic was small.
There was also a termination fee for local calls, but it was much less than a penny. Various companies began to "exploit" the termination fees. The guys with lots of modems were some of the first (e.g. whoever AOL outsourced their modems to). The free conference guys figured out you could make good money as well. Remember that conference call companies charged 25 cents a minute, so it was cheaper to pay 10 cents a minute for a long distance call to a free conference service. If they were efficient, they could even make money at 1 cent per minute, but 5 cents was much better so they located in rural areas.
The large telcos started to change their models for long distance from per-minute to a block of minutes (e.g. 500 minutes for $$ per month). The local telcos mostly took over the long distance business so now the telcos were cutting checks to the free conference guys and not getting anything back. Telcos hate that. So they stopped paying or arbitrarily started paying 50 cents on the dollar. They also lobbied to change the rules. And here we are with the FCC tariff change.
(Universal Service Fees are different. They are one of many taxes on your phone bill. The taxes are used to subsidize the phone bills for the "poor".)
I do not run a free conference service (or free anything), but the death star and friends owe me about $50k and I'm very very small.