Cingular, Qwest blocking ‘Free’ Calls

45 Comments

Looks like the empire is finding new ways to fight back — according to FreeConference.com, another rural-ISP free-calling operator, major carriers Cingular, Qwest and Sprint are actively blocking users trying to call FreeConference.com, claiming it might be a violation of those carriers’ acceptable use policies.

FreeConference.com, which offers “free” conference calls for the price of a long-distance call to numbers in Iowa or Minnesota, sent an email to its users saying that Cingular (aka AT&T Wireless) started blocking calls to FreeConference.com on March 9, with Qwest and Sprint following suit soon thereafter. FreeConference.com CEO Alex Cory told us in an email exchange today that the company “did not get prior notice [about the blocking], nor have our or our customers’ repeated attempts to get reasonable explanations gotten anywhere.” UPDATE: An AT&T spokesperson confirmed the company is blocking the calls.

While the blocking doesn’t seem to be a blanket move — we were able to get through to FreeConference.com this morning using a Cingular handset in California — Cory says that any blocking, even limited blocking, “is unacceptable.” Langauge from a Cingular user forum shows why Cingular may believe it is right to block such services:

We may block access to certain categories of numbers (e.g. 976, 900 and certain international destinations) or certain web sites if, in our sole discretion, we are experiencing excessive billing, collection, fraud problems or other misuse of our network.

AT&T spokesperson Mark Siegel said the company is blocking “certain numbers” for conferecing services, including FreeConferece.com’s, an action it feels appropriate under its wireless terms of service agreements. AT&T’s wireless service, he said, is for calls “between one person and another person, not between one person and many.”

Cory, who says that FreeConference.com’s regulatory-fee arbitrage compensation structure isn’t on the same level as the free international calling plans (he claims all FreeConference.com’s calls are actually terminated in the local area where they are connected), doesn’t agree with Cingular’s take but will not comment much further — “We believe they are violating [regulations], but it is probably best to leave this to the lawyers.”

Theoretically, AT&T could be on the hook for multiple call-termination charges for the conference calls, since each participant in the conference could count as another termination — so it’s pretty clear why they might try to use any method at their disposal to discourge such operations.

Typically, long-distance or cellular providers pay local telcos a termination fee for each call that is completed. In rural areas where regional telcos have higher-than-usual termination fees, telcos and free-calling concerns have partnered to build businesses where some amount of profit is based on the spread between what the call-completion costs and what they charge the long-distance provider.

Additional reporting by Katie Fehrenbacher.

45 Comments

Terri

I was wondering if this was still an active issue for anyone. I keep getting the random, one off, report of this from the students who take Teleclasses from us but can’t really find anymore data on the web that indicates a more recent, widespread ‘outbreak’. I’m only talking a handful of people on a bridge line and our folks do pay their own long distance charges but the bridge we use is reserved for us without a reservation charge, so to speak.

I’d love to be able to point our efforts and membership toward this if we can ‘do something’. First, I need to make sure we’re in an active ‘fight’ per se.

The most recent report I have is out of North Carolina. Anyone have anything more????

Thanks!

Skipper

Well, someone has moved this on to a different direction – of sorts. I’m not blocked and I can get into the free conferencing services with my unlimited minutes plan, but it’s amazing how the calls mysteriously drop at six minute intervals – without fail! Thank you AT&T.

Jim

Both sides in the dispute expect the FCC to issue an informal ruling this week on the matter. (Superior Telephone et al)

Last Tuesday an FCC spokesman made clear that blocking calls was forbidden, (calls are now flowing again) so it now comes down to recip comp money.

Will the local carriers be paid by ATT (et al) for monies owed and will they continued to be paid for future calls?

It seems the Iowa companies have made a pretty strong case for getting paid for calls made to, and terminating in Iowa. (Conference Calling)

The made a weaker case when calls are routed thru the Iowa companies and then sent elsewhere (ie) free international calling.

If the Iowa telcos win at the FCC, they will press for immediate payment, plus fines, plus interest, plus attorney fees. If they lose, they probably will not appeal.

If ATT (et al) lose at the FCC they have an interesting decision to make.

IF, they appeal the decision to the Federal Court —and they lose there— (likely since the Federal Courts usually defer to the govt.) ATT (et al) would be stuck paying high recip comp rates permanently.

If so, look for hundreds of the services to sprout. A true nightmare for the major carriers.

Right now neither side is ready to blink, which is dangerous for both sides.

Both sides made offers to each other to settle the issue, but they were not even in the same “state” never mind the same “ball park”

Possible Solutions:
IF, the local telcos were to accept payment ONLY for calls that terminated in Iowa, and were not routed overseas, perhaps ATT (et al) would ante up the money they owe.

But if the local telcos insists on every last dime, ATT (et al) may just sit tight and try to wait them out.

Either way, the local telcos did nothing illegal.
They read the tariff and went about their business.

ATT (et al) never, in their wildest dreams thought a few local telcos in Iowa would beat the giant carriers.

And with first quarter profits collectively over several-BILLION dollars, its hard to feel empathy for the giant telcos.
The amount of money they owe the local telcos is probably the amount of money they spend on “entertainment expenses” every year.

Perhaps the BEST solution would be for the giant carriers to point out to their customers, that in their TOS, the giant carriers CAN BLOCK calls due to excessive use. (in unlimited plans only)

When a customer exceeds 6,000 minutes per month to a certain number, the carrier can block access to the number and/or cancel the account.

Of course it is far more expensive to block individual customers than to prevent ALL customers from dialing a specific phone number.

I would bet the FCC will choose this route as an interim solution, with an eye toward examining the entire recip comp structure at a future date.

The FCC chairman has made it clear reexamining this issue is a priority.

So for the Iowa telcos, “let the good times roll, while they last!”

bill

thats bullcrap..the rep states ” he said, is for calls “between one person and another person, not between one person and many.”….then why do they offer phones with 3 way calling? hey hey..its still not just one person and another person..but a 3rd person..so tell their stupid ass’s that

Steve

What’s funny is that this type of “charge what the market will bear for termination” is EXACTLY what AT&T is trying to get by ending “net neutrality”

Leo Wrobel

I won’t be having a pity party for the new at&t any time soon. They are far from innocent victims. To Paul Kapustka: Can you put me in touch with Alex Corey? He needs to visit http://www.tlc-labs.com to get an idea of how at&t itself treats would-be competitors – even their own wholesale customers. Scroll down on the front page of the site to see what happens to at&t competitors’ call detail records. (The same kinds of records that measure the access charges at&t resents paying in this case) Guess who often ends up with someone else’s money?… I can’t tell you their name so I’ll just give you their initials…. A T T. (Paul you might find another interesting story on this site, it’s an eye opener) Alex, free to mine the web site for free and let me know if I can help either of you as I feel your pain.

By the way, just from an intellectual perspective, what’s the difference between Mr. Corey setting up shop in Iowa, and Citibank setting up in South Dakota, where there are liberal usury laws? If both are following the established rules I fail to see an issue. Given a choice however between free conference calls and 32% credit card interest rates, I think I know the lesser of the two problems. I guess it’s a great time to be big, and unfortunately Free Conference Calls is not. See: http://www.phoneplusmag.com/articles/671soap.html

Leo A. Wrobel

christian

Everyone takes advantage of the deals that are offered. For AT&T, Quest, Sprint, and I assume soon to follow Verizon to suddenly and might I add illegally restrict numbers as they see fit is only a sign of the end. That being the end of every user getting the “unlimited rate” plan. The savvy users have been exploiting this option from the beginning. The carriers were playing the law of averages, the average user would not reach his or her respective rate plan and those unused minutes would line the share holders’ pockets. Even if you did happen to go over your minutes the fee per minute ($0.35) covered another user being savvy. Now as the average user becomes more adept at using their minutes the profit margin begins to tighten.

Soon there will be a questionnaire about planned usage during 24 hour periods and careful monitoring of each persons usage. If you violate any of the new terms that will be set forth in all signed contracts the company will have the right to revoke your plan and start you on a new plan. All without the option of opting out of their service unless you are willing to pay the inflated termination charge.

I find Mr. Cory’s argument on the origination and termination fees associated with every call a sound one. Why can’t the large Telco be happy with their 3 cents per minute? I think it is because of the unlimited monster that they created. Their law of averages has started a downward spiral and the only way they can see to fight back is to with hold legitimate money due, file frivolous lawsuits, and block legitimate calls.

To conclude the gamble by the large carriers has undoubtedly fattened their wallets. They are trying to preemptively slow the trend of deceleration of profits. They have painted themselves into a corner. It might be time for them to let go of this marketing scheme and revert to the more ancient times of flat rate minutes. As I seem to recall they didn’t have any issues in stuffing money bags at that time.

A note to the long distance carriers: Pay your bills. You should have foreseen the consequences of your rate plan. It is not the fault of the free conference services that they are willing to provide a better value then you or your conferencing partners are willing to provide. You are collecting on minutes used by your customers and rather than being an upstanding business and paying your termination carriers, chose to use inflammatory words like “illegal”,” scheme”, and “sex chat”. You took a gamble that didn’t pay off. Admit your mistake and make this right with ALL your customers.

christian

Let’s examine the pricing structure of a conference call placed on one of the carrier’s partner’s conference lines. For simplicity’s sake the call is 60 minutes at $0.25 per minute per caller. We will assume that the cost to the carrier is $0.01 origination fee and $0.04 termination fee yielding a net profit of $0.20. I have one call monthly with 10 people. The total is $120 per month. As stated before with only 10 people I would be willing to make individual calls through out the month using my unlimited minutes to save money. However, if I were required to have a larger call say 100 people my bill will now be $1200.00 per month. Biweekly yields $2400.00 per month. Multiply that by the number of business and organizations who find it necessary to use conference call services and the dollar amount is in the billions.
One might argue that the pay for conferencing service has equipment to maintain and their cost of running their business eats at the majority of their profits. How can it be then that free conference services can provide their services for free? It is assumed that they are only collecting a portion of the termination fee. Maybe $0.02 per minute, my large biweekly call yields a gross of $240.00 vs. $2400 per month by the carrier partners. The idea that the large carriers are loosing money with the free conference model and forced to charge their rates per minute for their conferencing service is ludicrous. “Let’s see, Boardwalk with one hotel that will be …”

christian

Thanks “t” I needed a laugh after reading his post.

Is this the end of the “Unlimited Rate” plans?

While it might require the large carriers (AT&T, Qwest, Sprint, and Verizon) to do more monitoring of their users, it most likely is not the end of the attractive marketing of the “Unlimited Rate” plans, but maybe it should be.
How long did the large carriers think that even the average user wouldn’t find ways to exploit the free calling times and carefully monitor their allotted minutes per month provided by their service? When calls to loved ones reach the golden hours of after 9 pm in their respective time zones it has created cross generational beings of night owls. How many times has it been said “leave me a voicemail I’ll call you back”? Then even the average user waits until the call is “free” to either dial their voicemail or return the call.
Even without the free conference market forcing the issue this rate plan was doomed to fail. Would they rather I call the 10 people I was going to have the conference with individually? My 36 minute conference call (the average length of a conference call) on my free plan turns into 360 minutes of individual calls. Even the average user would realize the benefit of making these calls in the unlimited time. Are they going to block each individual because now I am using 360 minutes total? At least with the 36 minute conference call they get the chance that another caller is on another carrier and I only use 36 minutes. I feel I am a savvy small business owner and would perform the above action of making my 10 calls in the free time vs. paying $0.22-$0.50 per minute per caller as their conferencing partners charge. If I need to make a larger call I should be able to get a reduced rate from their conferencing partner right? Wrong, if the number of callers increase there is no reduction in cost per minute. …

t

Bob,

I forgot to add information about your comment of illegally filed tariffs. Don’t you think that if that were the issue then AT&T would have addressed it more thoroughly. As I have read in the suit they only accuse one such clec of illegaly filed tarrifs in item 72 of their suit.

Apparently you spent too much time pushing the shift key, rather than gathering facts.

I am being a little harsh I know. You do present some great arguements for both sides. I just don’t feel your statements are factual.

t

Bob,

I believe you might have went a little overboard with the CAPITAL letters.

Just an observation.

I like your ASSumptions.

Bob Blanchard

For many years the IOWA phone companies named in the ATT (et al) suit were paid 5-cents per minute by LD Carriers to terminate calls on the local Iowa Telephone networks.

While most local carriers in the USA get less than a penny a minute to terminate a call, IOWA, due to the rural nature of the state, was tariffed at/around 5-cents per minute.

In reality, since IOWA companies COMPLETE more calls than ORIGINATE, they earned a few thousand dollar a month (profit) on termination fees.

This was legal and everyone, including ATT played by these rules.

For most consumers, the rate they were charged to call IOWA was much, much less than the termination fee ATT and others were charged.

(eg) Boston to Iowa 3-Cents Per Minute to Customer, yet ATT and others have to pay 5-cents per minute to the local companies to COMPLETE the call.

Consumers with UNLIMITED FREE long distance (ie) cell phones were KILLING ATT, Cingular, Verizon, etc.

Last summer, the carriers named in the suit, (Dixon, Superior Telephone, et al) unilaterally (and without tariff approval) raised the rate they charge to 14-cents per minute.

They got very, very greedy.

Soon ATT, which regularly paid thousands of dollars a month in termination fees, was dishing out $2-Million in fees.

IF, the local carriers had stuck to their tariffed price, ATT would NOT have a leg to stand on.

The local telcos SHARED their termination fees with FreeConference.

There were two ways FreeConference and the local telcos made money.

-If the call terminated on Freedom equipment in Iowa, the telco and Freedom split the 14-cents per minute termination fee.

-If someone called FreeConference to place an INTERNATIONAL call, Freedom would transmit the call via VOIP at less than a penny a minute.

So, if FreeConference was getting paid 7-cents a minute and the cost of VOIP outbound call was a penny a minute, FreeConference was making 6-cents a minute profit.

The local telco was also making 7-cents per minute.

The plan fell apart when the owner of FreeConference went on the ABC Evening News and said his company would “beat AT&T at their own game”
He gave dozens of interviews with tv stations and newspapers.

ATT got mad and sued.

Everyone is now suing everyone else.

The IOWA companies expect to settle with ATT et al without going to trial.

The presumption is:
-IOWA companies will NOT admit guilt.
-They will NOT be paid the termination fees that ATT still owes them for calls made to FreeConference.
-They will AGREE to resume their tariffed rate of 5-cents per minute to terminate calls.

Of course it goes without saying, ATT and all the others, DO NOT WANT TO PAY ANYONE, ANYTHING, to terminate their calls.
They want a free ride on the local networks.

Both sides here have some dirt on their hands.

Of course, ANY local phone company in America, legally CAN lease out, their lines to chat services and earn tons of money on termination fees.

THIS IS TOTALLY LEGAL since the calls TERMINATE at the local level.

They can also SHARE the termination fees, with the chat service, PROVIDED the chat service does not INITIATE an outbound call to CIRCUMVENT the tariff.

In some states, California (eg) the chatlines must be placed on a block of numbers that the local telco can BLOCK if a customer requests.

North Nevada Telco has been earning millions a year running chat lines that TERMINATE at their facilities.

They also do NOT charge MORE than the tariff rate to terminate calls.
The long distance companies are powerless to stop them.

Vic

Looks like one of the big cell phone companies is throwing a speed bump at the growing VoIP market. I really don’t think blocking calls will work, and I don’t think they do, either. Cingular is clearly trying to buy some time while they figure out how to approach the approaching telecom fight for consumers.

Nationwide Long Distance
http://nationwideLD.com

Common sense

ATTENTION*
All Cingular users must not call their own Phone Voicemail. Nor can you call ~~~AMERICAN IDOL~~
OH MY GOD Cingular CHANGED THE USER AGREEMENT TO TRY TO STOP CONFERENCE CALLS AND JUST KILLED THEMSELVES.
LOOK AT THE NEW AGGREMENT

Unlimited Voice Services: Unlimited voice services are provided solely for live dialog between two individuals. Unlimited voice services may not be used for conference calling, call forwarding, monitoring services, data transmissions, transmission of broadcasts, transmission of recorded material, or other connections that do not consist of uninterrupted live dialog between two individuals. If Cingular finds that you are using an unlimited voice service offering for other than live dialog between two individuals, Cingular may at its option terminate your service or change your plan to one with no unlimited usage components. Cingular will provide notice that it intends to take any of the above actions, and you may terminate the agreement.

I GUESS YOU CANNOT VOTE FOR AMERICAN IDOL! It is not a person to person call. IF you check your voicemail they will shut you off. It is not a person to person call. But wait there is more!!!! It gets better.

Lets say you purchase one of their phones because for some reason (don’t know why) you like this monopoly. In fact you would like to see how their stock is doing? So as their web site states they have quarterly conference calls. See bellow:

From time to time, Cingular Wireless may provide earnings or other financial information to the public via Web casts or telephone conference call. Unauthorized recording or downloading of these events is not permitted. Any rebroadcast or re-Web cast of these events is prohibited without the express prior consent of Cingular Wireless. Information provided is only accurate as of the date of the event.

I GUESS YOU WILL HAVE TO CALL IN FROM A VONAGE PHONE! AND NOT YOUR CINGULAR PHONE.

Common sense should prevail. This is a monoply that should be stopped.

bryanus

I’m posting this everywhere I can find, btw:

I found a workaround to this problem! Hopefully someone will benefit from my solution.

If you use Vonage, or other VOIP service, you can Forward all of your calls to another number. I set my Vonage line to forward to FreeConference.com’s conference line and tested 5 people with Cingular lines to call my Vonage line at the same time. They were all forwarded to the FreeConference line instantly, and to them it was completely transparent. They were greeted with the FreeConference voice prompt and had no problem joining my conference! Up yours Cingular! ;-)

Please note: This method will use up minutes from your allotment in your Vonage plan unless you are on the Unlimited $24.99 plan (I’m on the 500 min plan).

Mr. Flair

I have Sprint in TX and I used Free Conf. for 45 minutes on 3/15. So, who is blocked?

Alex Cory

This is not a regulatory loophole. It is a fundamental feature of the telecom system. You can’t connect to everyone you want to without a way for one carrier to pay for using the network of another. Intercarrier exchange rates have been around for decades and will continue for the same.

So is the size of the exchange rate a loophole? You tell me. The average long distance rate is about 7 or 8 cents per minute. The Iowa telco’s being sued by AT&T have rates (set by the FCC) at 4 cents to 7 cents per minute according to the filing (except one outlier). If they attacked the highest rate companies, that means most of the companies collecting fees are less than 4 cents a minute.

How much profit should AT&T be able to make for long distance service? Since you can buy a calling card for a lot less than 3 or 4 cents a minute, don’t you think they are making money here?

So what else could this be about? Who dominates 800-service? That would be AT&T. If free conferencing were eliminated, what would people do? Go back to 800-service conferencing.

We offer consumers a choice at prices (including no charge from us) that create profits for us, our partners, and even AT&T. If a consumer wants 800 service, we offer that too.

We are not going to tolerate illegal blocking of our service. This is an unpleasant bump in the road for us, but does not threaten our service. We are offering alternative numbers to affected customers and business is continuing as usual.

This is not a creepy scheme but a normal feature of a regulated business. It doesn’t cost you more, it saves you. And it takes a lot of pressure off the pure subsidies being taken from you under the Universal Service Fund.

Jorge

This is much ado about nothing.

FreeConference is taking advantage of regulatory loopholes and is violating the spirit, and possibly, the letter of the laws.

The laws it uses are intended to support phone structures in underdeveloped states. Not profit one business at the expense of others.

Even though AT&T sucks, FreeConference is profiting by passing their costs onto my bill in the form of higher rates.

They can go **** themselves.

Clem

The theory mentioned above is totally inaccurate about multiple termination charges to the IXC. The call terminates once at the LEC and just because it’s a confernce call would not equate to multiple terminations.

If the carriers are alowed to block calls to any service that is competitive to theres, then we’ll be back to monopoly days. The FCC will not allow that to happen.

Clem

The telephone companies thought they were real smart when they came out with unlimited plans and nationwide long distance. Originally they made lots more many per customer on these type of plans. Now that services have popped up that make use of the minutes they don’t like it and have to pay. They created this system and will have to pay for these calls until it’s changed.

I guess the dinosaurs from the monopoly days at AT&T are still there and think they can get away with this. I will file a complaint with the FCC as well.

Alex Cory

Everyone is focusing on what AT&T pays rather than the balance between what they pay and what they collect. These conferencing services have created a large new market of conferencing users (who couldn’t afford the 30-40 cents per minute AT&T used to charge) that are primarily making toll calls to reach the conference bridges. This generates revenues to AT&T. What are they arguing? that since you bought a block of minutes on your cellphone, the fact that you used them caused them damage because they didn’t expect you would? On average, long distance carriers generate 7-8 cents a minute in revenues. Access fees are substantially less on average, and certainly with our partners. AT&T dominates the 800-service market and they would much rather push consumers back to 800 conferencing where they have full control over pricing and can continue to overbill you for your long distance minutes through a float and carry game.

Sandman

As soon as they ID each of of these new “free” access numbers, the carriers should forward the calls to the freeconferencecall.com toll-free number. Haha.

Beth McConnell

I don’t have an exhaustive understanding of Cingular’s policies, but I do know the company offers a conference call option as part of their services. You can conference in as many as five additional callers (if you have the right phone), and are billed minutes for all six participants (you and your five guests).
That doesn’t sound like a very good deal to me.

And it leaves me wondering why Cingular would have a policy against using cell phones for conference calls yet promote their own conference call option very prominently in the list of features.

Aldon Hynes

I can understand AT&T’s position. It does seem as if they are being taken advantage of by FCC regulations that are not benefitting them. Yet I don’t have a lot of sympathy for them. I think the operative phrase might be, “Payback’s a bitch”.

When I received the email from FreeConference.com, I set up a conference call and verified that Cingular is in fact blocking my calls to that number. One person has noted that Cingular does have policies against using cellphones to make conference calls. (You can see more about it in my blog post).

However, as I read the policy it does not apply to all Cingular phones (including mine in particular). It might be that there is some other policy that does apply, but I haven’t found it.

I guess, from my perspective, it is inappropriate for a large telecommuncation’s firm to try and change FCC policies that they don’t like by denying service to their customers.

I have filed a complaint with the Connecticut Attorney General’s office as well as with the FCC. I hope others consider doing the same. Customers should not be pawns in power struggles between different telecom companies.

Paul Kapustka

Ajay, AT&T reply and some background added to the post. Basically, such services could cost them a huge amount in termination fees (if you saw previous posts on this subject the Iowa telcos are claiming AT&T owes them $12 million so far for just a few months’ billing).

Ajay

I am sorry, but will the author or someone clarify, what in the world is att’s problem here…

Beth McConnell

AT&T/Cingular appear to be blocking new numbers as they learn of them, and I believe Free Conference Call.com is trying to stay ahead of them by adding new numbers.

Consumers should not be held hostage to AT&T’s disputes with local phone companies or free conference call services. AT&T’s anti-consumer action in this context has broad implications. It’s an example of what is at stake in the fight for Internet freedom — a corporation’s financial interests limiting consumer choice and access to legitimate, publicly available services. AT&T, of course, is one of the companies opposed to Internet freedom.

Paul Kapustka

Eric, the post does say it appears to be limited blocking. I was able to get through today as well.

Eric B

That’s strange. I’m a Cingular customer and I just used them for about 45 minutes on Tuesday, March 13th.

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