Screaming Penguin - Source Does Matter

Greed Never Pays
Future Phone/Iowa Telephone Companies Got Too Greedy

As someone who is involved in telecommunications I believe there are two bad guys here.
-ATT/Cingular
-Greedy Local Telephone Companies in Iowa and FuturePhone.

Some background.
All telephone companies in the USA, local and long distance, “hand off” traffic to each other in order to make the phone system work.
When the “hand off” is made, the carrier who is accepting the call is paid, a few pennies per minute to complete the call from the company originating the call.

In some parts of the country, this “fee” (known as a reciprocal compensation) is just a few tenths a penny per minute.
In theory, most companies should pay as much to connect calls, as they get paid to complete calls.
In practice however, some small phone companies earn a few dollars to complete the calls.

In the case of the Iowa companies, more calls were placed TO their ustomers rather than their customers placing calls outside of the local area.
This is totally legal and long ago was sanctioned by the courts and the FCC.

In Iowa, due to the rural nature of the state, the rate the local companies are paid by ATT, MCI and other long distance carriers to accept and complete calls is sometimes as high at 5-cents per minute.

However, the companies named in the lawsuit, decided to ignore the regulated 5-cents per minute fee and charged up to 14-cents per minute.

After several months, ATT, MCI and others became aware of this situation and stopped paying the fees altogether.(Payments stopped in January 2007.

FuturePhone was the main culprit, despite claiming the mantle of “friend of the consumer”The owner gave numerous interviews with newspapers and even appeared on the ABC Evening News and urged callers to essentially beat ATT at their own game (e.g.) “Don’t pay for an international phone call ever again”
ATT naturally looked into FuturePhone and stopped payments to the local Iowa phone companies, which were handling all the incoming calls to FuturePhone.

If FuturePhone had “kept a low profile” ATT would NOT have had a legal case against them.
If the local phone companies had accepted the regulated “connection fee” they were normally paid, they would NOT be in legal hot wate.

FuturePhone and the Iowa phone companies decided to “take a chance” and swing for the fences and earn alot money together. Instead of a home run, they struck out.

Eventually the lawsuits will be settled.
-ATT and others will NOT pay amounts larger than 5-cents per minute to the local Iowa phone companies.
-ATT will NOT pay any money to the Iowa phone companies for any calls made to a FuturePhone Number.
-The local phone companies will agree to abide by the rules in the future, and instead of making millions and millions of dollars on connect fees, they may earn “just a few million”

Capitalism works. Greed never does.