The Falcon's View

More on that in a minute, first the email letter from FreeConference titled "FreeConference Needs Your Help":

As a user of FreeConference, we need your immediate help to save free teleconferencing services. Under pressure from the major phone companies, the House of Representatives’ Energy and Commerce Committee is collecting information that may end all free teleconferencing services, ultimately forcing you to pay for services that you currently enjoy for free. Together and through quick action, we can prevent this from happening.

We need you and your colleagues that use FreeConference to contact your Member of Congress right away to voice your opposition to this potential change that, if enacted, will increase your costs of conducting conference calls.

Your Congressman needs to understand that eliminating your ability to communicate with your business and non-profit colleagues through free teleconferencing services is unfair, unacceptable and anti-competitive. Additionally, large telephone companies are alleging that customers of free teleconferencing services are using these services for pornographic and controversial activities. We need you to tell Congress that this is simply not true.

I spoke with a staffer in Representative Waxman's office, who went and did some research and called me back. It turns out that the issue being investigated (mind you, this is info-gathering at this point, not a proposed bill) is the old access pumping game. Remember, if you will, viruses from the late 90s that would break your dialer and cause your PC to make calls through places like Vanuatu, causing your next phone bill to be $800? The same principle is a play here. In fact, here's a great article from 2007 on this precise subject.

In a nutshell, the problem is this: In the day of "unlimited long distance calling" and mobile phones, the consumer sees the same usage costs every month, regardless of whether they're call toll or toll-free numbers. However, the main telecom providers still have to pay interchange fees, which are particularly expensive in these small exchanges that are allowed, under federal protection, to charge high prices to compensate for their low usage and volume. Companies like FreeConference have partnered with these small rural carriers to take a cut of their high-priced connection fees. At the same time, they're driving up call volume to these rural carriers, completely throwing things out of balance, which is obviously not what the original federal protection intended. It is, in fact, a loophole being exploited for the profit of some, but at the expense of others.

Energy and Commerce is looking into these practices to see if they, via FCC and similar, should make a change. They've apparently sent out an informational letter on the matter to companies like FreeConference simply inquiring about their practices and profitability. FreeConference has - to a degree understandably - jumped off the cliff and gone into freak-out mode. My comment to Rep. Waxman's office was that they need to bear in mind that this service is heavily used these days, in particular by SMBs. They rightly pointed out that the Committee somewhat wonders if this problem won't largely self-resolve in the next few years as business move to VoIP-based conferencing solutions that eliminate use of dialed numbers altogether,

So, there you have it. Is there reason to freak out? Probably not. If you're interested, you should certainly feel free to call your own Rep. or Rep. Waxman's office, but for the most part this seems to be a premature panic by FreeConference. Given that their business could be threatened as a result of closing the loophole, it's then understandable, but perhaps not to the degree of rhetoric exposed above.