A lot of people are using FreeConference.com and other services where you can make free conference calls – if participants are willing to pay for the long distance. The services really work – so what’s the catch?

It isn’t clear if Free Conferencing Services are viable long term. They make their money by charging the long distance carriers a lot of money per minute. They can do this because there is a regulatory loophole whereby local carriers in rural areas can charge long distance carriers high fees for terminating call to rural areas. Someone realized they’d make themselves and the rural carriers a lot of money, if they could drive traffic to them. They then set up equipment at the carriers facilities and started advertising free local calls and at one point free international calls and sex lines. At some point though loopholes do get shut down, and this might be seen as a clear case of abuse. On the other hand it isn’t clear how they’ll be able to shut down the loop holes without uprooting regulations.

It is possible that someone will set up VoIP conferencing and use free conferencing as a loss leader to upsell better services. Certainly the Free Conferencing Services overcharge for toll free conferencing. VoIP conferencing is a business model that could last.

For a reprint of a Wall St. Journal article – go here.
http://publicutilities.utah.gov/news/how2guysiowaconnectiontookbigtelecomsforaride.pdf

Apparently MagicJack blocks calls for FreeConference.com – more evidence that FreeConference.com feeds off of high call termination rates.
http://rickyspears.com/blog/2009/08/magicjack-hijacks-my-free-conference-calls-to-218-339-2500/

Update 1
Apparently one large hosted voip provider we know is now blocking calls to free conferencing providers from their customers. They have to pay an order of magnitude more to terminate calls to these providers. They surely won’t be the only ones blocking calls.