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Summary:

Up from the canvas… it’s Futurephone! The international free-calling service that was shut down due to legal pressure from AT&T is readying a formal complaint with the FCC to get its Internet-based service back online. “We feel we have a very strong legal position,” said Futurephone […]

Up from the canvas… it’s Futurephone! The international free-calling service that was shut down due to legal pressure from AT&T is readying a formal complaint with the FCC to get its Internet-based service back online.

“We feel we have a very strong legal position,” said Futurephone principal Tom Doolin, in a phone call Tuesday evening. Doolin, who said Futurephone spent most of the last three months keeping quiet while it sought legal help, is now asking for an accelerated judgement from the FCC to force AT&T and Qwest to pay their outstanding bills, and to allow Futurephone’s service to operate once again.

To recap, quickly: Futurephone was the poster child for the so-called Iowa free calling plans, where Internet service concerns (like Futurephone) partnered with rural telcos in Iowa to offer services like international calls or conference calls for just the price of a long-distance call to Iowa. The Iowa telcos, who had obtained higher-than-average termination fees — the amount a long-distance carrier like AT&T would pay to complete a call — stood to reap huge rewards from the delta between the cost of the service and the amount they charged the long-distance provider.

After becoming explosively popular last fall, the free-calling schemes came to a grinding halt early this year when AT&T and then Qwest filed lawsuits against the rural telcos and some of the providers, and refused to pay bills totaling in the tens of millions. So far the legal pressure has worked in the big telcos’ favor, as the smaller firms and telcos were forced to discontinue services; but now the providers are starting to fight back, and Futurephone’s formal complaint may finally force the FCC to break its silence on the matter.

“From what we hear, this whole situation is the buzz at the FCC,” said Doolin. “They’ve been waiting for an opportunity to look into it, and we’re going to give them that opportunity.”

While Futurephone goes through the steps of the formal complaint process — which includes a meeting with AT&T and Qwest to ask if they will drop their lawsuits — the company is soliciting public support at its website, which has shed its previous “This Service is no longer available” banner and now carries a brief explanation and a plea for the public to file informal complaints.

More soon, but first this final bit from Doolin: “We’re confident, from what our attorneys have told us, that nothing we did was illegal or improper. AT&T has been out there playing cowboy. We don’t think that’s right.”

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  1. As the calls don’t really terminate in Iowa, I don’t see why they should be entitled to the high termination rate. Furthermore it’s stupid of an Iowa telco to partner in offering such a service as this will eventually lead to the termination rates being adjusted to discourage abuse.

    This is nothing less than stealing subsidies by wrongfully declaring goods. Certainly not heroic in any way.

  2. Paul Kapustka Tuesday, April 3, 2007

    Stefan, Futurephone’s Doolin raised an interesting point in our phone call (this was not in the post above): If AT&T billed its customer for a long-distance call to Iowa — which it did — how can it claim the call was not terminated there? Can you have it both ways, getting paid for the call to Iowa but not paying for its completion? Something the FCC needs to answer, I think.

  3. Good point, but as far as I know, retail billing has absolutely nothing to do with intercarrier settlement. I’m anxious to see how the FCC is going to handle it. However I expect the interpretation of “termination” neither to be based on common sense, nor on a technical view or indications like what’s showing up on the users’s bill. It’ll be a legal interpretation, and in my amateur legal view it’s rather obvious that those international calls are not terminated in Iowa, no matter if they went there in the first place.

  4. At best this seems like it will end up with some sort of agreement like the Payphone/DAC settlements that the prepaid calling card industry supports.

    At worst, the access charge/rural subsidies get blown away (unlikely).

    As a Verizon subscriber, I’m on AT&T’s side – I do not like the idea of funding these ridiculous business plans through the tax and fee lines on my phone bill.

  5. Jake, the Iowa telco’s are not susidized by the Universal service fund, they were not in NECA. So no taxes were recieved by these telco’s nad they were not a part of those fee’s on your bill.

  6. Regarding the call termination to Iowa. The service futurephone offered was an internet connection. All the calls were sent over the internet and the FCC has ruled many times on this, the call terminates to the dialed number and whatever happens once on the internet is none of AT&T’s bsiness.

  7. Wouldn’t the FCC use its “quacks like a duck” argument to say this is a dial around service? That’s the argument to hit AT&T on access charges for its calling cards.

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