Comments on: AT&T: Free calls may cost $250 M http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/ Trusted Insights and Conversations on the Next Wave of Technology Wed, 25 Nov 2009 09:35:15 +0000 http://wordpress.com/ hourly 1 By: Futurephone at Roam4free http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-124641 Futurephone at Roam4free Wed, 30 May 2007 18:43:19 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-124641 <p>[...] telecoms conglomerates as was allfreecalls ( now back up) and which is explained in detail here and here have put an interesting post on their site. I wish them all the best in their [...]</p> [...] telecoms conglomerates as was allfreecalls ( now back up) and which is explained in detail here and here have put an interesting post on their site. I wish them all the best in their [...]

]]> By: GigaOM » Iowa Telcos: Fight the FUD http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96268 GigaOM » Iowa Telcos: Fight the FUD Wed, 09 May 2007 20:07:42 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96268 <p>[...] — brought more urgency to their task, given the widespread reach of the wire service. In a previous letter to the FCC, AT&T had also emphasized the adult-themed services. While such services are not in violation [...]</p> [...] — brought more urgency to their task, given the widespread reach of the wire service. In a previous letter to the FCC, AT&T had also emphasized the adult-themed services. While such services are not in violation [...]

]]> By: GigaOM » ‘Free Calling’ Fight now at the FCC http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96267 GigaOM » ‘Free Calling’ Fight now at the FCC Wed, 18 Apr 2007 07:22:48 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96267 <p>[...] Instead, so far AT&T has sought legal action in venues outside the FCC, while also sending Martin an open letter asking for a meeting to “discuss potential solutions” to what it calls “a rapidly proliferating scam.” But opponents say AT&T representatives have yet to fully explain some of the claims made in the company’s letter, including an “estimated 2007 impact” on AT&T of $250 million or more. [...]</p> [...] Instead, so far AT&T has sought legal action in venues outside the FCC, while also sending Martin an open letter asking for a meeting to “discuss potential solutions” to what it calls “a rapidly proliferating scam.” But opponents say AT&T representatives have yet to fully explain some of the claims made in the company’s letter, including an “estimated 2007 impact” on AT&T of $250 million or more. [...]

]]> By: Anonymous http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96266 Anonymous Fri, 13 Apr 2007 04:12:21 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96266 <p>The 3.78 cpm NECA rate that Josh mentions is only a portion of the revenue: you also have to add on the terminating access the telco charges the IXC. Remember, it's only if the exchange steps out of the NECA pool that the telco charges the IXC a different but usually price for terminating access.</p> The 3.78 cpm NECA rate that Josh mentions is only a portion of the revenue: you also have to add on the terminating access the telco charges the IXC. Remember, it’s only if the exchange steps out of the NECA pool that the telco charges the IXC a different but usually price for terminating access.

]]> By: charlie charleson http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96265 charlie charleson Fri, 13 Apr 2007 00:17:12 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96265 <p>AT & T wants to offer flat rate pricing but ONLY if it works in their favor. If it works against them, then..achemmm...they want to change the rules---but only in cases where it works against them.</p> AT & T wants to offer flat rate pricing but ONLY if it works in their favor. If it works against them, then..achemmm…they want to change the rules—but only in cases where it works against them.

]]> By: GigaOM » Iowa Telcos get date with FCC http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96263 GigaOM » Iowa Telcos get date with FCC Wed, 11 Apr 2007 18:18:38 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96263 <p>[...] Iowa telcos embroiled in a legal tussle with AT&T over the so-called Free Calling services will get a chance to air their grievances with FCC chairman Kevin Martin next week, according to [...]</p> [...] Iowa telcos embroiled in a legal tussle with AT&T over the so-called Free Calling services will get a chance to air their grievances with FCC chairman Kevin Martin next week, according to [...]

]]> By: Peter Brockmann http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96264 Peter Brockmann Wed, 11 Apr 2007 15:31:00 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96264 <p>Wasn't it AT&T that drove the long distance calling business to the all-included pricing standard that we now enjoy?</p> <p>So, should they really be surprised that folks have figured out how to solve a business problem and use AT&T's own marketing gimic to compete with AT&T's conferencing services?</p> <p>Given that this is a problem of AT&T's own making, I would expect that their real goal is to get back to charging users something for LD on a per minute basis.</p> Wasn’t it AT&T that drove the long distance calling business to the all-included pricing standard that we now enjoy?

So, should they really be surprised that folks have figured out how to solve a business problem and use AT&T’s own marketing gimic to compete with AT&T’s conferencing services?

Given that this is a problem of AT&T’s own making, I would expect that their real goal is to get back to charging users something for LD on a per minute basis.

]]> By: Benz http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96262 Benz Wed, 11 Apr 2007 14:32:46 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96262 <p>Regarding the revenue side: on the retail side, maybe the LECs charge you guys $0.08/min, but at wholesale the cost of a terminating minute is only about $0.008 (yes, that's 8 thousandths of a dollar). The difference goes into the retailer's (LEC, calling card operator) pocket, not the LD carrier's.</p> Regarding the revenue side: on the retail side, maybe the LECs charge you guys $0.08/min, but at wholesale the cost of a terminating minute is only about $0.008 (yes, that’s 8 thousandths of a dollar). The difference goes into the retailer’s (LEC, calling card operator) pocket, not the LD carrier’s.

]]> By: Alex Cory http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96259 Alex Cory Tue, 10 Apr 2007 19:05:57 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96259 <p>You can't just look up the rates of those companies in AT&T's lawsuit, as they represent only a portion of those supporting conferencing businesses. FreeConference operates in 7 states and the suit only names companies in Iowa. But even if you did, the seven companies in the AT&T suit are described by AT&T as Superior at 12 cents and the rest between 4 and 7 cents, so clearly using 11 cents is way off the mark. And if conferencing is collectively doing 2.2 billion minutes, AT&T is only doing about 40% of that (it's share of the long distance market). At 4 cents and 880 million minutes, I get $35 million. The FCC analysis shows average toll collections at about 6.3 cents and average payments at about 1.2 cents. If we just use the 6.3 cents (which I believe understates the impact of cellphone revenues per minute), that is $55 million in revenues. Even if you quibble with how AT&T has chosen to design rate plans, there is a big revenue number that they are ignoring. And conference calls are made for business purposes, which place them largely in the weekday and daytime, rather than being in the so-called "free" nights and weekends arena.</p> You can’t just look up the rates of those companies in AT&T’s lawsuit, as they represent only a portion of those supporting conferencing businesses. FreeConference operates in 7 states and the suit only names companies in Iowa. But even if you did, the seven companies in the AT&T suit are described by AT&T as Superior at 12 cents and the rest between 4 and 7 cents, so clearly using 11 cents is way off the mark. And if conferencing is collectively doing 2.2 billion minutes, AT&T is only doing about 40% of that (it’s share of the long distance market). At 4 cents and 880 million minutes, I get $35 million. The FCC analysis shows average toll collections at about 6.3 cents and average payments at about 1.2 cents. If we just use the 6.3 cents (which I believe understates the impact of cellphone revenues per minute), that is $55 million in revenues. Even if you quibble with how AT&T has chosen to design rate plans, there is a big revenue number that they are ignoring. And conference calls are made for business purposes, which place them largely in the weekday and daytime, rather than being in the so-called “free” nights and weekends arena.

]]> By: DG Lewis http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96256 DG Lewis Tue, 10 Apr 2007 18:48:16 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96256 <p>Josh:</p> <p>I said, "I don’t know if 11 cpm is a reasonable number." That's just the number that came out when I divided AT&T's $250M by Alex's 10% of 22B minutes.</p> <p>I would caution, though, that averages can be deceiving on the access charge side as well. The only way to know the rates for sure is for someone to look up the switched access tariffs for Superior Telephone Coop., Farmer's Telephone Co., All American Telco Co., and the other LECs involved.</p> Josh:

I said, “I don’t know if 11 cpm is a reasonable number.” That’s just the number that came out when I divided AT&T’s $250M by Alex’s 10% of 22B minutes.

I would caution, though, that averages can be deceiving on the access charge side as well. The only way to know the rates for sure is for someone to look up the switched access tariffs for Superior Telephone Coop., Farmer’s Telephone Co., All American Telco Co., and the other LECs involved.

]]> By: Josh Nelson http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96260 Josh Nelson Tue, 10 Apr 2007 15:54:23 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96260 <p>DG The average NECA member company charge for interstate is 3.78 cents not 11 cents. Using a 4 cent average would be more appropriate for your figuring. Table 1.2 of the FCC report.</p> DG The average NECA member company charge for interstate is 3.78 cents not 11 cents. Using a 4 cent average would be more appropriate for your figuring. Table 1.2 of the FCC report.

]]> By: Clem http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96258 Clem Tue, 10 Apr 2007 15:31:51 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96258 <p>AT&T and all the other carriers originally were making way more money per account oferring flat rate plans. Now that people have found ways to utilize there phones, they don't like it. AT&T and all the other carriers created the opportunity themsleves.</p> AT&T and all the other carriers originally were making way more money per account oferring flat rate plans. Now that people have found ways to utilize there phones, they don’t like it. AT&T and all the other carriers created the opportunity themsleves.

]]> By: DG Lewis http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96257 DG Lewis Tue, 10 Apr 2007 14:44:59 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96257 <p>If I had to guess, I'd guess that AT&T measured the minutes terminating to the free conference calling services over a period of time (either a month or year-to-date), annualized it, and multiplied by the access charge per minute they're paying to those terminating telcos. All that data's available in their billing records; it's not rocket science.</p> <p>If the free conference services have about a 10% market share of the 22B annual MOU as Alex says, an average access cost of 11 cents per minute would result in a cost to AT&T of $250M.</p> <p>I don't know what LECs the free conferencing services are using, nor do I have access to an access charge database (though given the LEC names, an intrepid reporter could dig through tariff filings), so I don't know if 11 cpm is a reasonable number.</p> <p>On the revenue side, ARPM for wireline interstate LD was 6.3 cents in 2004 and trending downward; I'd expect it to be around 5 cents now. ARPM for wireless was 7 cents in 2005 and trending downward; I'd expect it to be somewhere around 6 cents now. (Both numbers from FCC reports.) Average figures can be deceiving, though, as users savvy enough to use the free conferencing services are more likely to be those with large bundles of minutes who are careful not to exceed their limit, or with unlimited usage plans; ARPM for those users is much smaller.</p> If I had to guess, I’d guess that AT&T measured the minutes terminating to the free conference calling services over a period of time (either a month or year-to-date), annualized it, and multiplied by the access charge per minute they’re paying to those terminating telcos. All that data’s available in their billing records; it’s not rocket science.

If the free conference services have about a 10% market share of the 22B annual MOU as Alex says, an average access cost of 11 cents per minute would result in a cost to AT&T of $250M.

I don’t know what LECs the free conferencing services are using, nor do I have access to an access charge database (though given the LEC names, an intrepid reporter could dig through tariff filings), so I don’t know if 11 cpm is a reasonable number.

On the revenue side, ARPM for wireline interstate LD was 6.3 cents in 2004 and trending downward; I’d expect it to be around 5 cents now. ARPM for wireless was 7 cents in 2005 and trending downward; I’d expect it to be somewhere around 6 cents now. (Both numbers from FCC reports.) Average figures can be deceiving, though, as users savvy enough to use the free conferencing services are more likely to be those with large bundles of minutes who are careful not to exceed their limit, or with unlimited usage plans; ARPM for those users is much smaller.

]]> By: Josh Nelson http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96261 Josh Nelson Tue, 10 Apr 2007 13:58:42 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96261 <p>Paul</p> <p>Alex is correct they always talk about cost, but don’t account for revenue. According to the FCC reports the average consumer uses around 170 minutes a month on the phone. Lets use that average for a minute. With AT&T 39.99 a month plan you get 450 minutes, not counting night and weekends. The 450 run you around 8.8 cents per minute. If you go over the 450 minutes the rate is 45 cents a minute. If the average consumer uses 170 minutes per month the rate is now 23.5 cents per minute. These are averages of course and some people use thousands of minutes while others use very few.</p> Paul

Alex is correct they always talk about cost, but don’t account for revenue. According to the FCC reports the average consumer uses around 170 minutes a month on the phone. Lets use that average for a minute. With AT&T 39.99 a month plan you get 450 minutes, not counting night and weekends. The 450 run you around 8.8 cents per minute. If you go over the 450 minutes the rate is 45 cents a minute. If the average consumer uses 170 minutes per month the rate is now 23.5 cents per minute. These are averages of course and some people use thousands of minutes while others use very few.

]]> By: Raindeer http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96252 Raindeer Tue, 10 Apr 2007 08:17:49 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96252 <p>There seems to be nothing illegal in what these companies are doing. They are getting their legal termination fee and they are more efficient then their competitors, so they can finance their entire business out of it. We could ofcourse just end the Calling Party Pays system. This way there are no terminating fees to be paid.</p> <p>Cut termination fees, move to a bill and keep system for all networks and voila, no debates anymore.</p> There seems to be nothing illegal in what these companies are doing. They are getting their legal termination fee and they are more efficient then their competitors, so they can finance their entire business out of it. We could ofcourse just end the Calling Party Pays system. This way there are no terminating fees to be paid.

Cut termination fees, move to a bill and keep system for all networks and voila, no debates anymore.

]]> By: Paul Kapustka http://gigaom.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96255 Paul Kapustka Tue, 10 Apr 2007 05:43:04 +0000 http://gigaom.wordpress.com/2007/04/09/att-free-calls-may-cost-250-m/#comment-96255 <p>Alex, no idea how they came to the number. Hoping that the FCC will post the letter so everyone can determine if there is more context. I have asked for interviews with AT&T execs as well as the FCC, so will ask those questions if I get the chance.</p> Alex, no idea how they came to the number. Hoping that the FCC will post the letter so everyone can determine if there is more context. I have asked for interviews with AT&T execs as well as the FCC, so will ask those questions if I get the chance.

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