Wednesday, September 15, 2010

Consequences of Traffic Pumping

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 and land line customers now have unlimited long-distance plans, and thus the entire inflated cost of using these services is borne by their long-distance carrier. Providers of traffic-pumped conference calling service assert that these long-distances carriers still profit when their customers use traffic-pumped services.
In 2007, AT&T estimated that it would spend an additional $250 million to connect such calls, 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.
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 forbidden common carriers from this kind of selective blocking, and so the long-distance carriers are essentially obligated to complete these calls.
Based upon an independent study of 50% of long distance calls originating on wireless networks in U.S., calls terminating to 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


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