Todd Johnston's AT&T (Cingular) blocking calls over business dispute, bypassing FCC digs into the facts behind several of the larger telephone companies (telecom) new strategy of blocking calls to small entrepeneurs in the internet phone conferencing business.
AT&T (Cingular) blocking calls over business dispute, bypassing FCC Cingular Wireless is selectively blocking calls placed to numbers in Iowa run by local phone companies currently involved in multiple suits with its parent company AT&T Inc. The dispute is over "termination fees" -- rates long distance carriers pay the local phone company at a call's destination -- relating to third-party conference and international call services who are increasing traffic to states where these fees are relatively high.
But the FCC has made clear that long distance carriers may not block traffic to local companies as a "bargaining tool" based solely on the carrier's perception that fees are "excessive," in previous rulings that explicitly cite AT&T's use of the tactic.
Despite this, the nation's largest wireless provider is justifying its actions by claiming it may block certain "categories of number," if, in Cingular's sole discretion, the company is "experiencing excessive billing," referring to a clause in their customer service agreement that uses 900 and 976 numbers as examples.
Cingular began blocking the local exchanges in Iowa during the weekend of March 9.
AT&T Inc., the sole owner of Cingular Wireless, says it is losing millions of dollars because local telephone companies are partnering with businesses that offer services like free teleconferencing, and using the arrangement to exploit a "loophole" in the way network connect fees are set by the FCC.
Long distance companies like AT&T, Sprint and Qwest are called "interexchange carriers" (IXC) because they relay traffic between "local exchange carriers" (LEC) in different states. LECs are local phone company networks on which customers place and receive calls.
IXCs pay "origination" and "termination" fees -- more accurately rates -- to the LECs on either end of the call for the right to use their networks. These interstate rates are overseen by the Federal Communications Commission and vary from about a penny to a dime per minute.
Certain LECs are allowed to charge IXCs like AT&T higher access rates due to a differential rate structure heatedly debated, litigated and consecrated by the FCC before being adopted industry-wide. Generally, rates are higher in sparsely populated areas, and where environmental factors drive up costs.
The logic is fairly straightforward: if a phone company can't make a profit in Iowa, no one in Iowa will have a phone. Also, part of the FCC's mandate is to ensure that reliable telecommunications are available to everyone, even in "rural, insular, and high-cost areas."
But when some of Iowa's rural LECs figured out a way to substantially boost their traffic -- and revenues by collecting more access fees from IXCs -- they attracted AT&T's considerable ire in addition to more incoming calls.
By offering, in essence, a percentage of their network access rate -- a penny or two per minute -- paid as a commission on new traffic, entrepreneurs soon discovered an untapped market: consumers who needed but couldn't afford typically pricey conference call services.
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About the Author: Todd Johnston is currently finishing his Ph.D. in glaciology, focusing
on rapidly melting Alaskan glaciers and more broadly on Earth systems related to global climate change. Johnston received a B.Sc. with High Distinction in meteorology and Honors in Geosciences, and a minor degree in mathematics from the Pennsylvania State University. Prior to that, he enjoyed a 15-year career as a musician.
Contributors: Aaron Barlow, wanderindiana, roxy, cho, avahome, standingup
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