If you are wondering how free conference calling services work, this blog should hopefully help. It's a little complicated because of the way the laws are set up, but I'll try to explain how it works step by step.
1) The Federal government decided in 1996 to allow small rural phone companies to charge other larger phone companies to access their lines. So, if you had a small phone company in Iowa, for instance, you could charge AT&T or Sprint for any calls coming into your area. In other words, if you lived in New York City and used AT&T as a long distance carrier, and you called your cousin in rural Iowa, AT&T would have to pay the small phone company in Iowa a fee to put your call through. The reason the government allowed this to happen was because the smaller phone companies had higher costs putting up phone lines in remote places and much lower volume. It just cost more to operate a small phone company on a per call basis, than a phone company that had millions of customers.
2) The fees that AT&T and the larger companies pay the small companies are 10 to 20 times more than the normal fees, sometimes as much as 10 to 20 cents per minute. Needless to say, this was a sweet deal for the small phone companies. The more calls they had coming in, the more money they would make.
3) One way for the smaller phone companies to get more phone traffic, and make more money from the big phone companies, was to attract businesses that had a lot of incoming calls -- namely, conference call providers and phone sex operators. As an illustration, a small phone company would partner with the conference call services and share some of the fees that AT&T and the larger companies were paying. For instance, if AT&T was paying a small phone company 10 cents per minute to put a call to the rural area, the small phone company could say, "If you put your conference bridge here, we'll pay you 5 cents per minute for all the traffic you can generate. You could offer free service to your customers and still make 5 cents per minute. Millions of minutes will make you a lot of money." And so, many conference call companies set up shop in the rural areas and offered free service. Everyone is happy -- the conference customers, the small phone companies, and the conference call companies. Everyone that is, except AT&T and the large phone companies who have to pay the fees.
4) Moreover, most cell phone users and residential users have free long distance bundled with their local service, and the larger phone companies are losing twice. First, delivering the calls for free. And second, paying to have the calls delivered. The large companies are none too happy about the situation. In 2007, AT&T estimated this system, called "traffic pumping" or "access stimulation" cost an additional $250 million.
5) In order to stop this additional expense, some of the large companies have blocked calls going to the rural carriers. (This is the reason why many users of the free conference services have experienced difficulties getting through to a conference line.) The government has said that it is illegal to block calls to the rural carriers, but problems still exist.
6) Google Voice phone service has prevented its customers from dialing the rural phone companies. AT&T has objected, saying that if AT&T has to deliver the calls and pay the fees, then Google should too. AT&T uses Google's own argument that carriers should be neutral, and that a provider should not block "fair access." However, AT&T and Google both agree that the whole idea of "traffic pumping" and paying excessive fees to small phone companies is "patently unlawful."
7) Recently, the small phone companies lost a big decision made by the Iowa Utility Board. Qwest, a major long distance carrier, complained to the Iowa Board. The Board said the small companies would have to "pay back" millions of dollars they made from the traffic pumping schemes. Spokesmen at Qwest say that it will set a precedent for other pending cases, including those in front of the Federal Communications Commission, which could make a ruling in 2010.
With the Iowa setback, the days of free conference calling services may soon come to an end and the free conference companies will be competing toe-to-toe with paid services like ours.
The reason we have been able to compete is because we have excelled in quality and service -- the big companies aren't blocking our customers from getting into our conference bridges and we have a full time professional customer service center that provides ongoing operator assistance. Whatever happens, we're trying to stay above the fray and work on giving you the highest level of conferencing available for those of who you need and depend on reliable conferencing.
