Traffic pumping, also known asaccess stimulation,[1] is a controversial practice by which somelocal exchange telephonecarriers in rural areas of theUnited States inflate the volume of incoming calls to their networks over what would naturally occur, and profit from the greatly increased intercarrier compensation fees to which they are entitled by theTelecommunications Act of 1996.[2]
Under the regulatory mechanisms of theTelecommunications Act of 1996,wireless, andlong-distance carriers includingAT&T,Sprint,T-Mobile US, andVerizon, pay access fees tolocal exchange carriers (LECs) for calls to those carriers' subscribers. TheFCC permits rural carriers to charge substantially higher access fees than carriers in urban areas, based on the rationale that they must pay for substantialfixed infrastructure costs while handling lower call volume.[2][3][4]
Increasing the incoming call volume to those rural areas, and thereby their earnings from fees, rural carriers partner with certain telephone service providers to route their calls through the rural carrier. These services typically includephone sex andconference call providers, which expect a high volume of incoming calls. Notably these service providers do not need to establish a physical, local presence for routing these calls.[2][5][3] As a result of this arrangement, the rural carriers can receive millions of dollars in fees, which they share with the service providers.[2]
Payment for inbound long-distance calls to small rural telephone companies is normally handled through a shared pool, the National Exchange Carrier Association ("NECA"). Individual telcos are free to opt out of this process. For two years after opting out, they may billinterexchange carriers directly at a (comparatively high) rate of five to thirteen cents per minute.[6] After two years the carrier must either rejoin the NECA pool, provide evidence to support continuing to charge the high rate, or reduce rates to a level that can be supported.[7] An increase in inbound calling volume at about the same time as a telephone company leaves the NECA pool can therefore represent a profitable two years for that firm.
The numbers used for the service belong to acompetitive local exchange carrier orindependent telephone company and may be located in a rural numbering plan area in a sparsely populated state, such asarea code 218 in northernMinnesota orarea code 712 in western Iowa.[8]
In 2006, various startup companies began to offervoice over IP orInternet fax services which purported to be "free"; the companies operated fromIowa or used Iowa local numbers.[9] One such service,callchinaforfree.com invited users to call a number in Iowa'sarea code 641 to reach a voice-over-Internet gateway from which calls could be made toChina (country code+86) at no additional cost.[10] Another,talkdigits.com, operated under multiple names (FreeDigits, TalkDigits, OfficeDigits, FaxDigits, ClickDigits, and SIPnumber) to offer a "free US phone number" to receive "free inbound calls" and voicemail[11] or "free fax service" with "unlimited incoming faxes"[12] which would then be delivered outside the region viabroadband Internet.
By 2007, calls ceased being placed to China for the price of a call to rural Iowa[13] as AT&T disputed millions of dollars' worth of calls.[14] By 2008, the offer of a free Iowa number for inbound Internet voice and fax calls had also been withdrawn.[15]
End-users of traffic-pumped phone services often do not pay directly for the high fees collected by rural local carriers and service providers. Many wireless andland line customers now have unlimited long-distance plans, and thus the entire cost of using these services is borne by their long-distance carrier.[2][5][3] Providers of traffic-pumped conference calling services assert that these long-distance carriers still profit when their customers use the services.[16]
In 2007, AT&T estimated that it would spend an additional $250 million to connect such calls,[2][5] and has warned that it may have to raise its customers' calling plan prices unless regulators address the issue of traffic pumping. However, providers of traffic-pumped conference calls claim that AT&T has refused to provide evidence of these costs, and that it is a ploy by AT&T to leverage its market power to put competing conference calling providers out of business.[16]
AT&T and other long-distance carriers have in some cases attempted to avoid these costs by blocking their customers from calling the phone numbers of traffic-pumping services. However the FCC has forbiddencommon carriers from using this kind of selective blocking,[17] and so the long-distance carriers are essentially obligated to complete these calls.[2]
Based upon an independent study of 50% of long-distance calls originating on wireless networks in the US, calls terminating to local carriers meeting a traffic pumping profile were estimated to cost $95 million annually, representing 11% of all long-distance costs in the study. Extending to all wireless service providers, the cost is estimated to be more than $190 million annually.[18]
 | This article needs to beupdated. Please help update this article to reflect recent events or newly available information.(October 2017) |
TheGoogle Voice telecommunications service offers a service similar to long-distance telephone calling at no cost, usingVoIP to connect users with their calling destinations. In order to avoid paying high connection fees to traffic-pumping carriers, Google Voice blocked calls to some of these carriers.[1] As of 2014[update], Google Voice no longer blocks calls to these carriers, but charges its users a fee to reach them (while not charging for other calls to US phone numbers).[19]
AT&T has appealed to the FCC to intervene,[5][20] charging that Google Voice ought to be required to connect these calls just asplain old telephone service (POTS) carriers are required to do so.[4] Google has responded[21][22] that its service, and those of VoIP providers such asSkype, is distinct from those of a traditional POTScommon carrier, and that it should not be obligated to complete these calls.[1] Google further charges that AT&T is trying to distract the FCC from concerns regardingnetwork neutrality, and accuses AT&T of conductingregulatory capitalism, in which businesses exploit laws and regulations to stifle competition and slow innovation. Finally, Google urged the FCC to revise "outdated carrier compensation rules" to end the practice of traffic pumping.[1]
AT&T has written to the FCC, saying that Google's blocking of calls to traffic pumping numbers gives it a substantial cost advantage over traditional carriers.[23] AT&T further argued that the issue of network neutrality is highly relevant, since Google is violating its own statement of the principle of non-discrimination, that "a provider 'cannot block fair access' to another provider."[23][24] AT&T agrees with Google that the FCC should act to forbid traffic pumping schemes in the first place, calling them "patently unlawful", but asks that Google be required to accept the same common carrier requirements even if they are not shut down.[23]
Abipartisan group ofU.S. Representatives has joined in AT&T's complaint, urging the FCC to investigate Google Voice's practice of blocking calls to high-fee rural local exchange carriers.[25] Some of the legislators have received significantcampaign contributions from AT&T, and represent districts where rural carriers profit from traffic pumping. Sam Gustin of DailyFinance suggests that there may be issues ofconflict of interest andpork barrel politics involved in these legislators' efforts.[5]
| This article needs to beupdated. Please help update this article to reflect recent events or newly available information.(October 2017) |
TheIowa Utilities Board issued a final order in 2009 in a complaint proceeding brought byQwest and intervened in by AT&T andSprint Nextel against eight rural telephone companies in Iowa. Except for one call blocking finding against Sprint, the decision was unfavorable for the rural carriers, which may have to return the fees they received for calls directed to traffic-pumped services by Iowa residents.[26][27] However damages were not assessed and the Iowa Utilities Board does not have jurisdiction over the vast majority of disputed calls—those that were directed to Iowa from callers in other states—so the reach of its decision is limited. Moreover, the Board has indicated that it is reconsidering its decision and several appeals have been filed challenging the lawfulness of the Board's order, thus it is not yet a final decision.
The FCC subsequently issued a ruling in 2009 on this case.[6]
In 1996, AT&T filed a Section 208 complaint with the FCC against Jefferson Telephone Company, a ruralincumbent local exchange carrier (ILEC) based in Iowa, which entered into a commercial agreement with achat line provider.[28] AT&T's complaint alleged that Jefferson violated Section 201(b) of theCommunications Act of 1934 because it "acquired a direct interest in promoting the delivery of calls to specific telephone numbers." AT&T also argued that the access revenue-sharing arrangement with the chat-line provider was unreasonably discriminatory in violation of Section 202(a) of the Act, because Jefferson did not share revenues with all its customers. The FCC rejected both these arguments and denied AT&T's complaint.
In 2002, the FCC issued two more orders denying similar complaints by AT&T directed at LECs that shared access revenues with chat-line providers. InAT&T v. Frontier Communications, the Commission rejected AT&T's allegations that revenue-sharing arrangements constituted unreasonable discrimination in violation of Section 202(a) or violations of the ILECs' common carrier duties under Section 201(b).[29] InAT&T v. Beehive Telephone, the FCC again denied AT&T's complaint against a LEC that engaged in a commercial relationship with a chat-line provider for the same reasons.[30]
The FCC has more recently issued an order in a case involving an Iowa carrier relating to interstate calls (calls made from any state other than Iowa to an Iowa telephone number).[6] In the order, the FCC determined that the Iowa carrier was not entitled to collect the entire amounts it billed to the long-distance carrier, but that it was nevertheless entitled to some compensation. The exact amount of payment has not yet been fixed by the FCC.[when?]
Several long-distance carriers lobbied[citation needed] theSouth Dakota legislature to propose legislation forbidding rural telephone carriers from entering into revenue-sharing agreements with traffic-pumped services.[31] However the legislation was defeated.[32]
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