DES MOINES – Aug. 14, 2009 – The Iowa Utilities Board today announced its decision in the “traffic pumping” case brought by Qwest against several local telephone companies operating in rural areas of
Traffic pumping is when a local telephone company enters into an arrangement with a calling company to provision free services, like chat and adult content services, in order to artificially stimulate traffic volumes on its network. The local telephone company then bills third party long distance companies to deliver those calls to the free service provider. The local company and the free service provider share the revenue from the long distance companies. By offering "free" services, these companies literally collect millions of dollars from unaffiliated companies, like Qwest, whose customers think they're calling a free service.
· Several local telephone companies in
· These companies serve rural areas and are permitted to charge higher rates to off-set the cost of delivering local basic services, which is more costly than in metropolitan areas. However, because of the calling companies’ intense marketing campaigns, and the duration of these calls is longer than average, millions of minutes in traffic are being “pumped” to the local numbers that long distance carriers are charged to complete. The local telephone companies and the free calling companies then share in the access revenues collected from the long distance carriers.
· Qwest and oed complaints with state commissions and the FCC challenging the legality of these forced charges and raising important public interest concerns, including that calls to numbers offering adult content and other inappropriate material do not provide parents and guardians with the capability to block such material from their children.
· The windfall profits reaped by these telephone companies and the free calling companies have greatly increased the costs incurred by all long distance carriers, and ultimately these costs are passed on to consumers.
Steve Davis, Senior Vice President, Qwest Public Policy and Government Relations:
· “Qwest is very pleased with today’s decision. We agree with the Iowa Utilities Board, as well as the Iowa Office of Consumer Advocate, that these telephone companies and their free calling partners have engaged in unreasonable practices that harmed and misled consumers, regulators and companies like Qwest.”
· “This is a seminal decision which other states, the courts and the FCC will follow to eliminate this form of regulatory arbitrage throughout the nation.”
· “We commend the board for its leadership in initiating a rulemaking to ensure that parents and guardians have the ability to safeguard their children from obscene and inappropriate material offered by some of the free calling companies.”
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