Lots of people use free conference calling services with access to phone numbers in the Midwest United States, for reasons having to do with the structure of access rates in those areas. In 2010, more than $423 million in long-distance revenues will be lost by fixed-line and wireless carriers whose customers use services, TEOCO (News - Alert) predicted. 

Losses have been greater in some earlier years. About $390 million was lost by long-distance providers in 2006; $547 million in 2007; $533 million in 2008 and $445 million in 2009, TEOCO said. 

Of course, some of that lost revenue represents an actual revenue source for some local exchange carriers and the "free services" providers. Basically, the local telephone companies and the conference or other calling providers split the access revenues. 

In addition to "free conference calling" services, other application providers using the same techniques provide pornographic chat services, free international calling, free "pre-recorded calls" or free international radio services. 

The arbitrage operations are entirely legal, and simply represent one way service providers can game the access system. Such arbitrage operations are not unprecedented. Some years ago, many competitive local exchange carriers could gain similar advantage by providing service to dial-up Internet access providers that received lots of inbound traffic, with minor amounts of outbound traffic. 

In mid-2006, TEOCO found that several rural Local Exchange Carriers with historically low volumes were experiencing explosive growth in terminating minutes, sometimes by over 40,000 percent. 

"Free Calling Service Companies" can offer many services for free because of access rate arbitrage, representing revenue losses for major carriers in excess of $2.3 billion over the past five years, TEOCO said.

The lost long-distance revenues for fixed-line providers amounts to $1.27 billion while wireless long distance losses amount $1.06 billion. 

As often happens in the complicated voice business, the rules originally were established to provide financial support for isolated and rural telcos that perennially have trouble in the revenue area because of low subscriber density, less local business traffic and sometimes lower typical household incomes as well. 

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