‘Free Calling’ Fight now at the FCC

Sometime Wednesday afternoon, if all goes as scheduled, representatives and lawyers for a group of Iowa rural telcos and their Internet Free-Calling partners will meet with FCC chairman Kevin Martin, to present their side of an ongoing battle with AT&T and other large telcos.

What do the rural telcos want? Quite simply, they say they want Martin and the FCC to “uphold the law,” and force AT&T, Qwest and other large carriers to stop blocking calls into the free-calling services, and to write some big checks for unpaid bills totaling in the tens of millions of dollars.

Jonathan Canis, the lead attorney for the Iowa group, says it’s not important if the FCC acts formally or informally (ed. note: or perhaps even in mime), as long as the big telcos stop blocking calls and cough up the dough. If AT&T and others simply heeded what Canis called a “jawboning” directive — informal advice to stop a certain action — the Iowa group would be delighted.

“If the Bells chose to take the FCC’s advice, and stop blocking and nonpayment, it would obviate the need for an investigation,” said Canis in an email exchange Tuesday night. “If the Bells had any legitimate concerns that remained,” Canis added, “they could seek lawful forms of relief that have always been available at the FCC.”

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.

AT&T spokesman Michael Balmoris said in an email that “the term ‘impact’ simply means that would be the cost to AT&T and its customers, if these services continue under the current rate.” Balmoris went on to write that “AT&T receives no additional revenue from the increased call volume, since the customer is typically using an unlimited calling plan.”

But another free-calling executive says claims like Balmoris’ are groundless, since every minute used to call somewhere in Iowa is paid for, whether or not it’s part of a plan advertised as “free” or “unlimited.”

“It’s very frustrating for me when the press lets AT&T get away with absurd statements like they’re going to lose $250 million,” said Alex Cory, CEO of Global Conference Partners, parent company of FreeConference.com, in a phone interview Tuesday night. Cory, who will meet with the FCC separately later this week, says on average long-distance carriers like AT&T and Qwest earn 8 cents per minute for long-distance calls, so for businesses like his — which Cory says uses an Iowa telco who charges long-distance termination fees of only 4 cents per minute — AT&T actually makes money off a FreeConference.com call, albeit perhaps much less than Ma Bell’s own teleconferencing services.

“The callers didn’t get those minutes for free, since they bought a plan that they might not otherwise have bought,” said Cory, whose firm has also filed an antitrust lawsuit against AT&T.

While the Iowa group cites several legal precedent cases in its own open letter to the FCC, including the infamous Madison River vs. Vonage incident, the case may not have a clear and simple resolution at the FCC, especially since Martin’s actions atop the commission have generally been in lockstep with big-telco strategic thinking. If not, Canis’ backup plan includes meetings this week with members of Congress (who are, ultimately, the FCC’s bosses) to increase the pressure on the big telcos.

While AT&T has said it is no longer blocking calls to the Iowa concerns, a Qwest spokesman said last week that Qwest is still limiting wholesale access to numbers it deems “inappropriate,” while the Iowa group appearing before the FCC today said in its letter that as of April 16, “call blocking is still occurring.” Neither AT&T nor Qwest has paid any of their outstanding contested bills.