A trick question – do free conference calls cost money? No, right?

Have you wondered if and how free conference call services make money?

Free conference call services save you money. But, it remains a mystery how they work without requesting payment from you.

Do you want to know the secret behind it? Well, you’re not alone. Many people need to understand how these services make money.

This article will explain how free conference call services make money.

Let’s begin.

Free conference call business models

We’ll go into detail on some of the ways free conference call services work and how they make money. Here are the business models adopted by free conference services.

Freemium business

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The freemium model lets you try out some basic features for free before you commit to the service. It is the same idea when you get free samples of cookies that then influence you to buy the bigger cookie jar.

Once you get a feel for the service, you can upgrade to a more extensive and paid package. This is helpful because it lets people test the product and decide if they like it before spending money.

Many conference call services use a freemium model. It helps them to get users without spending on advertising. This is one way free conference services make their money, and there’s more.

The pay-what-you-want strategy

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The pay-what-you-want model lets users pay a desired amount for a certain unit of a service or product. 

Instead of paying a fixed subscription rate for a service, you pay for exactly what you use.

This method is suitable for users who want to use a service but want to avoid staying stuck on it. 

It’s a flexible system that allows free conference call providers to earn money. 

While this method is good, there are better ways for conference call companies to earn money in the long run. 

The advertisement strategy

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Apart from paid subscriptions, free conference call services make money from advertisements. You might see ads that can make them money using a free conference service.

Your interaction with these ads ensures that the conference call services keep running.  And yes, ads can be annoying, so they may prompt you to subscribe to paid plans without ads.

The revenue-sharing model

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Most conference call services use this strategy. It is dependent on the country and the regulations at play in that country. Although this arrangement varies, the agreement is more or less the same.

To grasp this arrangement, you need to know the telecommunication act of 1996 by the FCC (Federal communication commission).

The FCC set up this model to make things fair for rural phone companies.

Large phone companies will pay rural companies a ‘termination fee’ to use their lines.

For example, a rural phone company could charge AT&T or Verizon when people call into their area code.

Small phone companies will get paid when big companies route calls via their network.

So these companies began working with free service providers. The idea was to route calls through their carriers. It offers them more traffic which translates to more revenue.

It also allowed smaller phone companies to profit while providing a high-demand service.

Despite the way it works, it has a loophole. The local phone service provider is the host of the conferencing bridge. This is an agreement between the conferencing company and the local service provider.

Users get assigned a dial-in area code when they sign up with a free conference service provider. This code connects to the local telecom provider. And they collect fees per the volume of calls routed through their system.

So, when you use a free conference service, you are helping some local telecom provider.

Free conference service providers direct non-toll free calls to local telecom providers. They do this to have a share in their revenue.

For instance, when you start a free conference call, it could get terminated at a rural phone company. 

A large phone company like AT&T gets charged 8 cents per minute per the FCC telecommunications act of 1996. From the 8 cents, the phone company keeps 4 cents per minute and gives 4 cents to the free conference call company.

Where did things go wrong?

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More traffic means more revenue. So these local phone providers had a great thought.

They could make more money if they get more businesses with many incoming calls. So, they started making such deals -phonesex lines. This led to traffic pumping, access stimulation, and phantom traffic.

Traffic pumping

Traffic pumping happens when a local carrier signs a contract with a company with a high call volume. This might include free conference calls, adult entertainment, or chat lines.

The agreement boosts the volume of calls to the local carrier’s network. The local carrier then gives the free service provider a part of its enhanced access income.

A cost management resource study found that, in the last 5 years, traffic pumping cost major telecoms – Verizon, AT&T and Qwest $2.3 billion.

With this money, some free services got funded. They include free pre-recorded calls, conference services, and free pornographic chat.

Google Voice, Skype and other VOIP companies are not bound to this rule. They forbid calls to free conference services and sex chat lines. With this, they avoid paying high termination fees to rural phone companies.

FCC’s new ruling

The FCC’s new ruling disrupts the revenue-sharing business model. Rural carriers will now bear more of the cost for their high call volume for some months.

As expected, this is not pleasing to the rural telecommunication providers.

With this new ruling, some free conference call platforms have changed their models. They blame this on the new FCC rule, which they say favours paid services. This is the case with FreeConferenceCall.com.

AT&T, the wireless provider of FreeConferenceCall.com, has been in dispute. AT&T claims that the traffic pumping practices of FreeConferenceCall.com have cost US customers up to 80 million per year.

Transform the way you hold conference calls

Now you know how free conference call services make money. 

Although consumers appreciate free conferencing, the business model is unsustainable.

And as a business owner, a free conference service can do more harm than good to you and your business.

Free or not, there are other factors to consider when picking a conference service.

If you are looking for the best option, then TelebuJoin is what we recommend. Get started with our free trial.

Read our other blogs: 10 Best Conference Call Apps For Business
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