Traffic pumping, also known as access stimulation, is a controversial practice by which some local exchange telephone carriers in rural areas of the United 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 the Telecommunications Act of 1996.
Definition Under the regulatory mechanisms of the Telecommunications Act of 1996, wireless and long-distance carriers including AT&T, Sprint, T-Mobile US, and Verizon, pay access fees to local exchange carriers (LECs) for calls to those carriers' subscribers. The FCC permits rural carriers to charge substantially higher access fees than carriers in urban areas, based on the rationale that they must pay for substantial fixed infrastructure costs while handling lower call volume. 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 include phone sex and conference 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. As a result of this arrangement, the rural carriers can receive millions of dollars in fees, which they share with the service providers. 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 bill interexchange carriers directly at a (comparatively high) rate of five to thirteen cents per minute. 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. 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 a competitive local exchange carrier or independent telephone company and may be located in a rural numbering plan area in a sparsely populated state, such as area code 218 in northern Minnesota or area code 712 in western Iowa.
Voice over IP In 2006, various startup companies began to offer voice over IP or Internet fax services which purported to be "free"; the companies operated from Iowa or used Iowa local numbers. One such service, callchinaforfree.com invited users to call a number in Iowa's area code 641 to reach a voice-over-Internet gateway from which calls could be made to China (country code +86) at no additional cost. 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 or "free fax service" with "unlimited incoming faxes" which would then be delivered outside the region via broadband Internet. By 2007, calls ceased being placed to China for the price of a call to rural Iowa as AT&T disputed millions of dollars' worth of calls. By 2008, the offer of a free Iowa number for inbound Internet voice and fax calls had been withdrawn, and the site talkdigits.com is now defunct and no longer accessible.
Consequences 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 cost of using these services is borne by their long-distance carrier. Providers of traffic-pumped conference calling services assert that these long-distance carriers still profit when their customers use the 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 using 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 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.
Role in dispute between AT&T and Google
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