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Take a low cost call, terminate on a high cost carrier, and pocket the difference.The first of these subsidies is the Universal Service Fund. Raven’s Twitter feed features a photo of a scantily clad woman, and many of the personal messages left on the Minnesota-based chat service are explicit.“I don’t know if you could go to the person and say you need to pay back the government,” he said.Rural carriers are allowed by the FCC to charge substantially higher access fees than carriers in more urban areas, based on the rationale that they must pay for substantial fixed infrastructure costs while handling lower call volume.
Payment for inbound long distance calls to small rural telephone companies is normally handled through a shared pool, the National Exchange Carrier Association (“NECA”).Individual telcos are free to opt out of this process.For the first two years, they are then free to bill interexchange carriers directly at an initially-high rural rate of five to thirteen cents a minute.The cost basis to provide service in those communities is dramatically lowered. Most Iowa telephone companies (and there are a lot! The NECA publishes a tarrif, which each company participating agrees to use, and then they split the revenues.The termination charges for those tarrifs are a significant source of revenue for the local phone companies.