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Summary:

Is AT&T’s decision to block some of its customers’ wireless calls a violation of the so-called net neutrality principles? If it is, the FCC isn’t saying so yet, at least not publicly. While both sides of the “free-calling” debate expect the commission to weigh in at […]

Is AT&T’s decision to block some of its customers’ wireless calls a violation of the so-called net neutrality principles? If it is, the FCC isn’t saying so yet, at least not publicly. While both sides of the “free-calling” debate expect the commission to weigh in at some point, neither has filed a formal statement there, which may in some part have to do with the FCC’s silence on the matter so far.

Jonathan Canis, an attorney representing Iowa-based telcos as well as some Internet-calling concerns in their legal battles with the big carriers, says that “informal actions” by the FCC, even at the staffer level, may be enough to halt AT&T’s admitted practice of selectively blocking access to free-calling numbers. The free-calling services have offered “free” international calls, podcasts, and conference calls for the price of a long-distance call to Iowa.

“If the FCC just says “stop it,” that can be very effective,” said Canis in a phone interview. Such a warning, Canis said, might come from one of the FCC’s enforcement bureaus and not require direct approval of the commissioners, typically a more lengthy process.

Canis said he has spoken with staff members in the FCC’s enforcement bureaus about the incident; sources at the FCC said the commission is aware of the matter, but has not considered it formally yet. AT&T has claimed that its call-blocking is a legal move under its terms of service agreements with wireless customers.

AT&T spokesman Michael Balmoris said his company has not formally contacted the FCC regarding the matter, but did say that the telco giant’s ultimate goal is to curb any “gaming” of the regulatory process that allows rural providers to set higher-than-average connection fees. AT&T filed an additional lawsuit last week that charged two Iowa telcos with falsifying their paperwork in order to qualify for the higher interconnect rates.

Typically, rural telcos can apply for higher than average rates by saying it costs more for them to bring service to their small, widely dispersed customer base. AT&T’s contention is that some of the current schemes “exploit” the regulatory structure in order to gain profits, not to service rural communities.

“We can’t let out what all our legal strategies will be, but the ultimate goal is to address the serious regulatory problem,” Balmoris said in a phone interview. “At the end of the day, these [free-calling plans] harm consumers because they are a threat to our ability to offer all-you-can-eat [wireless] dialing plans.”

  1. “At the end of the day, these [free-calling plans] harm consumers because they are a threat to our ability to offer all-you-can-eat [wireless] dialing plans.”

    I love it when AT&T disguises revenue worries as consumer advocacy. I mean it’s just so SEXY.

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  2. Also when these big telco’s try to tell you that they can only offer services that you need. I really enjoyed conferece features of these smaller players

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  3. β€œAt the end of the day, these [free-calling plans] harm consumers because they are a threat to our ability to offer all-you-can-eat [wireless] dialing plans.”

    Sorry, I don’t think that your editorial comments in the brackets are accurate. I think you might be badly distorting the interview. It affects their ability to offer “all-you-can-eat” landline plans as well. Namely, it interferes with their ability to offer landline packages with one monthly rate and free long distance, because those plans are predicated on normal termination charges. They can absorb a normal amount of calls to the rural areas, but if there are suddenly tons of them, then free long distance “all-you-can-eat” plans become unprofitable.

    They could, of course, institute plans that simply charge consumers more for calling these rural areas with high termination fees, instead of absorbing the costs and spreading them out to all calls.

    All that said, while they have a point on the termination fees, blocking calls is a really bad thing. There needs to be a regulatory fix.

    I imagine that some of these “free” call companies are reluctant to go to the FCC commissioners, because the FCC commissioners will roll it into already existing proposals to reform those rates.

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  4. Paul Kapustka Tuesday, March 27, 2007

    John, think you are correct in noting there are two separate worries for AT&T here — landline plans and wireless plans — but the spokesperson was specifically commenting on wireless plans, hence the bracketed adds (which are just clarification of quotes, not an editorial comment). On the wireline side, AT&T (and Qwest’s) strategy seems to be not paying their termination-fee bills to the rural telcos.

    Not sure if the free call companies are shy about going to the FCC — their attorneys say they have already had informal talks. And one, FreeConference.com, filed an antitrust suit against AT&T Friday (see new post today).

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  5. Not sure if the free call companies are shy about going to the FCC β€” their attorneys say they have already had informal talks.

    Right. The thing is, I also know that there’s a reform plan floating around the FCC (that they’ve already asked for comments on) involving competitive bidding for these rural areas with subsidized higher termination fees. It’s an interesting idea for a solution, though there’s lots of details to work out. Formal complaints to the FCC might simply hasten the day when the fee structure is reformed or that plan is adopted– I assume that’s part of why these companies haven’t complained more strongly to the FCC formally.

    Filing a lawsuit is a no-brainer for FreeConference. I believe that they are certainly in the legal right. Morally, though, the regulations should be reformed– but that’ll take some time.

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  6. Agreed! But probably less time than before since AT&T, Qwest etc. now have a reason to pressure regulators to move faster… interesting to see if this bleeds into USF reform discussions as well.

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