Traffic Pumping Costs US Carriers $400m Annually

TEOCO, the cost and revenue management vendors headquartered in Virginia, have issued a startling report about traffic pumping in the US market. Traffic pumping, also known as access stimulation, is a kind of arbitrage where local carriers (LECs) in rural areas are complicit in arranging for the termination of inflated volumes of traffic on their networks. They form partnerships with providers of ‘free’ services to end users, who receive a cut of the LEC’s termination charges. Typically these services will be conference calling facilities or sex chatlines. Carriers are legally obliged to carry the calls, and rural LECs profit because the regulator sets them high termination rates in order to protect services in rural areas. The regulator’s noble intentions are little comfort to the carriers forced to pay the high termination price for a lot of inflated traffic. TEOCO has analysed the data, and per their calculations, traffic pumping has cost US carriers a total of USD 2.3 billion over the last 5 years. To find out more, read TEOCO’s press release and download their report (registration is required).

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Director of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.