How Does Make Money?

I've always been surprised at how never tries to up-sell me on monthly services. The least I'd expect is that their call recording service would come at a price, or they'd remove the "welcome to" announcement from the greeting if I pay them something.

So how can this company afford to connect all these calls for free?

Turns out it's because they get kickbacks from rural carriers on the high carrier interconnect tariffs that the government allows them to charge.

The telecommunications act of 1996 allowed small rural phone companies to charge other larger phone companies a “termination fee” to access their lines. Basically, if you had a small phone company in Iowa or South Dakota, you could charge AT&T or Verizon when folks called into your area code. I have cell coverage via AT&T (unfortunately), so when I call a rural number in Iowa, AT&T has to pay a termination fee (which is actually billed per minute) to that provider in Iowa. The government allowed this to happen because small phone companies had high costs to throw up a line to that rural Iowa farmhouse, but they don’t make much money from it.

More traffic = More $$$! So, they had a brilliant idea!

If they can get businesses with a lot of incoming calls, like conference calling companies, they could make a lot of money. So they started cutting deals with conference call companies, phonesex lines, etc. If the termination fee at a particular location was 8 cents, they could pay a conference bridge company 4 cents per minute and still make 4 cents on the call. Conference calling is relatively cheap to setup, so these companies are able to offer free service to customers like us and still make 4 cents per minute. It’s all about using more minutes.


In a conversation with someone from a large telecommunications infrastructure company, I learned:

There's some pretty nasty tricks the carriers use to try and keep those fees as low as they can. Everything from blocking calls to free conference numbers, to lawsuits, to adding to your terms of service that you're not allowed to call them. Look in your terms of service for your wireless plan and you'll probably find that you're not allowed to call into conference calls with it.