Free conference callingFree conferencing is different from traditional conference calling in that it has no organizer fees and allows for multiple people to meet for the price of their long distance connections. Companies that provide free conference call services are usually compensated through a revenue sharing arrangement with the local phone company, sharing the terminating access charge for all incoming calls to a phone carrier.
Some background on the terminating access charge: On every long distance call in the United States including toll conference calls, the consumer is paying for origination (dial tone), transport, and termination (connecting the call). Each of these phone companies share a piece of the cost of the call. If it is the same phone company performing all three tasks (most likely the two largest phone companies - AT&T and Verizon), they keep all of the charge. This is known as Intercarrier Compensation (ICC) and is intended to keep the telecommunications system functioning by having every phone company receive compensation for using their network.
In the case of free conference calling, the conferencing company strikes an agreement with the local phone company that hosts the conferencing bridge to receive a share of the terminating access charge received for connecting the call. At large carriers such as AT&T and Verizon, they keep these access charges for their own conferencing services in addition to charging the customer for the conference service. With free conference calling, as mentioned above, there are no organizer fees so these services do not double dip: the consumer pays for a regular call with the same three components - origination, transport, and termination - of any call. In other words, the call costs the same as any other call under the customer's calling plan, but the conferencing is included for free to the host and participants of the conference call.
This added competition in the conferencing market has brought average rates down from over 20 cents per minute to under 10 cents per minute.(Elliot Gold, Telespan - http://www.telespan.com/contact.html) In addition, it is more efficient and less expensive to speak to many people on one call (a conference call) than on multiple person-to-person calls.
In November 2011, The Federal Communications Commission (FCC) published a 732 page Order on InterCarrier Compensation (ICC), including rules governing revenue sharing. Citing Section 251(b)(5) of the Telecommunications Act or 1996, the FCC mandated that terminating access rates for all calls (not just conference calls) be leveled in 2012 and 2013, then reduced in three increments over the subsequent three years until they reach $0 in 2017. These mostly sub-1 cent charges are replaced with an Access Recovery Charge (ARC) that is added on to every customers' bill by their phone carriers. In other words, every phone company will get to keep the terminating access charges they had to pay out to connect each call while charging consumers more whether they make calls or not. This Order has been challenged at the Federal Appeals Court by several parties.
As for revenue sharing, the order adds a measure for high volume call traffic which triggers an immediate terminating access charge reduction to the lowest rate of any carrier in that state.
In the United Kingdom the 0870 prefix was originally used by UK-based free conference calling providers in order to receive a rebate from every call from telephone company that owns the number. However in April 2009 Ofcom, the independent regulator and competition authority for the UK communications industries, announced that the rebate that is payable to the telecom's supplier when an 0870 number is used would be removed. Systems were soon moved to 0844 and 0871 prefixes in order to retain the revenue sharing arrangement.