We are pleased to offer our customers whatever services they want, as long as they don't help competitors . . . .

As some of you may have heard, carriers Cingular, Qwest and possibly other carriers are refusing to allow their subscribers to call freeconferencecall.com. Expect a number of other services to suffer similar fates — barring regulatory action or other legal steps.

What’s going on? It’s actually not a net neutrality issue (although as Bitchslappin Blog points out, it does serve as a rather nasty reminder of what is likely to happen in a non-neutral network). The issue here stems from a rather complex bit of regulatory arbitrage that I don’t fully understand myself. The facts here remain very murky, and I have no idea of the carriers are legally entitled to block these calls. (although my gut feeling based on my very surface understanding of the applicable law and the available facts is a qualified no — How’s that for legal caveats and wishy-washitude!) But if you’d like my speculaton on what I think is going on here, and why it’s likely to go on, read below….

Paul Kapustka lays out the basics pretty well in this article on Giga Om.

When a long-distance call is “terminated,” if a long-distance provider like AT&T or Qwest doesn’t own the local lines where that call is going to, it must pay a fee to the company that does. Even though such termination fees are typically higher in rural areas, since there are usually relatively few customers in the sticks big long-distance providers can easily balance the cost with their other businesses.

In Iowa, higher than average termination fees (as much as 13 cents per minute, according to both Qwest and AT&T) have been lately combined with fiber-based Internet access to provide a pretty good place for a VoIP-based gateway, which can then provide a way to cheaply reach foreign PSTNs, or to provide other services, like conference calling or chat sessions. The profit comes from some method of subtracting the money paid for foreign terminations or other services from the amount gained from the long-distance providers by “terminating” calls in Iowa.

In other words, by exploiting a legal loophole designed to pump up the profits of rural telephone companies (so they can provide the same quality of service in their higher-cost areas as urban telcos do), these free conference call (and other services) companies in Iowa are making money by getting you to make phone calls to them that your carrier has to pay for.

Or, with apologies to Dar Williams, I have never had a way with RLECs, but the rates of Iowa make me wish that I could.

The telcos, understandably, are not happy with this state of affairs and have taken steps to shut down these businesses. For the most part, they have confined themselves to legal actions like law suits rather than self-help. Apparently, however, some carriers have run out of patience and decided to just stop their subscribers from reaching freeconferncecall.com (without, of course, telling their customers beforehand. Sucks to be you, don’t it?)

The interesting question, of course, is whether this sort of self-help by carriers is legal. Back in the bad old days when we believed government had a role in regulating such things, the answer was “of course not — you can’t just cut off millions of people from a service (and cut off a service from its customer base) without some kind of legal decision or due process!” In these more enlightened times, after a decade of pro-competitive deregulation that has once again put subscribers and small businesses at the mercy of giant carriers, it is much less clear.

Section 201 of the Communications Act requires every telecommunications carrier to interconnect with every other telecommunications carier, and Section 202 of the Communications Act makes it illegal for a carrier to discriminate in the provision of services. Section 214 requires that a carrier notify a customer if it plans to discontinue service and allow that customer to protest to the FCC before terminating service. The state of Iowa Public Utility Commission may also regulate intercarrier connection or termination of service. Cell phone companies are subject to certain common carrier regulation (unless explicitly preempted by the Commission) under Section 332(c).

All of these would argue against allowing Cingular, Qwest and others to just start blocking calls to freeconferencecall.com. Yes, Cingular is apparently telling folks that they include stuff in their terms of service that allows them to block customers from reaching certain numbers. Except the whole point of statutory langauge is to make such terms of service illegal and therefore null and void.

Still, I am quite willing to believe in this rather arcane and fairly fact specific area of law that the carriers have arguments on their side for employing this kind of self-help. I simply don’t know.

I’m just glad they haven’t decide to stop allowing customers to get to TotSF.

I miss the day when my blog reached everyone as a right, rather than as an act of grace by benevolent megacorps. It felt, I dunno, like being a citizen rather than a corporate serf.

Stay tuned . . . .