Dial Around Juggernaut - Page 2

During the first 3 years in particular after the AT&T breakup, the larger and more traditional long distance carriers began to observe that this newer breed of long distance carrier (the exclusive operator services provider) had begun to gouge the transient calling public. The victims were oftentimes existing customers of the traditional long distance carriers who already provided operator services but generally at a cheaper rate than the newcomers. The traditional long distance companies responded to this phenomenon by making efforts to educate their customers on ways to access their networks by using dialing methods that dialed around the location provider's presubscribed operator services provider. In this manner, the customers would enjoy the long distance calling rates to which they had become accustomed, and could avoid being gouged by an unrecognizable operator services carrier.

In response to the dial around practices of a more educated public, the operator services providers began to require their location providers to block dial around calling on their telephone systems that served the locations. This preserved the highest level of captivity from their audience (the dialing public) and translated into higher profits for the perpetrators. The location providers easily complied with the blocking requirement of the operator service providers' contract renewals, because if they didn't comply then the operator service providers would simply go away, which would halt the location provider's ability to earn revenues for all the operator service calls placed from the location. The reason the operator service providers could easily procure service contracts with the location providers is because the operator service providers would pay a commission on the revenues earned by the calls coming from the location.

It wasn't long after the long distance industry became competitive that many people were up in arms about the operator services situation and began complaining to the FCC about the abuse being dished out by the operator service providers. In 1988, two different consumer advocacy groups compiled detailed cases against several of the long distance operator service providers that were engaged in the gouging and blocking, and the cases were brought before the FCC in formal proceedings. The FCC was quick to respond.