Can I resell unlimited long distance minutes?

June 11, 2007 5:45 PM

Telecommunications question: Do any laws or regulations prevent me from getting a license to operate as a telecom carrier, buying a few consumer long distance accounts for unlimited minutes of long distance service over land lines, and then using all those minutes to serve multiple residential customers who purchase long distance coverage from me? Assume I have figured out a way that makes this technologically feasible and that I have the local portion of the call worked out and handled separately. Would it against FCC policies or federal/state law? Would I be avoiding access fees that I'd otherwise be obligated to pay for long distance services?

I know you are not a lawyer, and specifically you are not my lawyer, and that I should consult a lawyer. But any ideas you have on the question are helpful.

posted by Go, now. Go! to law & government (10 comments total)

Well, for starters it is probably a breach of your contract with the long distance carriers for residential long distance service. Take, for example, AT&T's Unlimited Plus Plan:

This plan covers residential voice calls only and does not include Internet access services, commercial, telemarketing, or other non-residential uses.***

*** If AT&T determines that usage is not consistent with residential voice applications, such as for Internet access services, commercial facsimile or auto-dialing, resale, telemarketing or other non-residential uses, AT&T may immediately suspend, restrict or cancel your service without prior notice.

So they'll probably pull the plug as soon as they notice what you're doing.
posted by grouse at 5:51 PM on June 11, 2007

What grouse said.

You're talking about being a CLEC, (competitive local exchange carrier) which falls under the auspices of your local public utilities commission. More importantly, you're not able to guarantee things like redundant routing on 9-1-1 calls and provide adequate hardware/software backup in the event of an outage. Do you really want to run that risk?

There are ways to be a paper CLEC, where you actually lease space in a central office or POP, and do what you want to do, but they require significant investment and a lot of patience to go through the process.

It is POSSIBLE, in SOME states, to do this WITHOUT going through the PUC, however, you need a) some kind of hardware/software (soft switch, for example) living in a solid server farm, and you need to lease blocks of subscriber lines from the ILEC (baby bell) and you essentially re-sell the services. It's not a one man operation, and it's not easy to break into. It CAN be lucrative, but it takes time.
posted by TeamBilly at 6:04 PM on June 11, 2007

Do any laws or regulations prevent me from getting a license to operate as a telecom carrier

Do you have a few years and a few hundred kilobucks? This isn't the kind of thing you get with a $35 filing fee.

Fortunately, you don't actually need a license to do what you want. You would need a license if you planned on lighting up your own fiber circuits and selling minutes on them.

You do want to deal with a wholesale provider. RNK is used to dealing with startup-size carriers, and can provide all the incoming and outgoing service you need. If your are moving less than $100k of minutes a month, RNK will give you a far better deal than any of the tier-1 providers.

You will probably need to provide your own SIP routing solution.
posted by b1tr0t at 6:08 PM on June 11, 2007

You're talking about being a CLEC

It isn't even clear that the OP wants to be a CLEC. As I read the question, this is just a routing business. It should be possible to lease everything and avoid licenses entirely.
posted by b1tr0t at 6:10 PM on June 11, 2007

Thanks very much for the helpful responses. Here is a clarification: I really don't want to buy the services wholesale -- the plan would involve taking retail unlimited minutes and using them for multiple customers. If we assume I had the individual contractual problems that grouse noted handled (as well as TeamBilly's technological problems of redundant routing etc), are there any laws or regulations that would say I can't do it?
posted by Go, now. Go! at 6:30 PM on June 11, 2007

I really don't want to buy the services wholesale -- the plan would involve taking retail unlimited minutes and using them for multiple customers.

No, you really do want to buy them wholesale.

Telecoms don't really mean unlimited when they say unlimited, and wholesale minutes are much cheaper than you think they are.

are there any laws or regulations that would say I can't do it?

1. The contract that you sign with your local provider will forbid it
2. You won't have access to the signaling information you need in order to make this scheme work if you use retail lines.
3. Wholesale minutes are less expensive than you think. Much less. There is a reason why telecoms offer "all you can call" plans.
4. If you think you can do this with a few retail lines, then your scale is so small that you will never be able to afford a lawyer who is allowed to say "telecom" in a legal context. The law doesn't matter if you can't afford to fight, and telecoms are quite happy to play dirty with people who annoy them.
posted by b1tr0t at 6:41 PM on June 11, 2007

Indeed, in their example, the OP wants to be a long distance reseller.

There are thousands and thousands of communications resellers. Remember those 10-10-321 people? The calling card people? VoIP providers like Vonage? (Note that Vonage isn't even a CLEC -- they resell services from CLECs over the IP network.) They're all doing the same thing you want to do, taking long distance services from the big names and selling it under their name. You're stepping into a crowded field.

If your technology for doing this is over the public communications network, you need a license from your state Public Services Commission (or Public Utilities Commisson) and the FCC. Each state has their own process, and different costs and regulations. You'll want a lawyer for this, as there are many laws and regulations at hand.

If your technology for doing this is over the Internet or a private IP network, chances are you don't need a license -- the FCC and the states have taken a generally hands-off approach to VoIP, with the exception of the mandate to provide 911 service, which you may well need to do.

So, what's the rub? You do need to get into a wholesale agreement with a telco. If you purchase a consumer plan that doesn't allow reselling, your provider may well take notice and shut you off, leaving your customers high and dry. Many telcos simply won't sell you multiple consumer plans at the same address. Unless you're sharing with your neighbors or your office building, chances are it won't fly with the provider and they'll force you to purchase a commercial account -- which will end up costing much more -- or a wholesale account -- which will end up costing much more, if you don't have a large number of minutes to back it up.

In addition, you'll find that selling long distance service isn't about the number of minutes you have, it's about how many subscribers per interconnection to the telcos you have -- you may have all the unlimited minutes in the world, but if 4 customers try to connect on 3 lines at the same time, someone's getting a busy signal (and will soon find an alternative to your service).
posted by eschatfische at 6:43 PM on June 11, 2007

Lots of people are answering based on (reasonable) assumptions about the contract/EULA/TOS they imagine must be in place, but that's not what your question asks. You have asked about "regulation" and "law", two forms of government imposition, not contracts which are (theoretically) mutual agreements.

So this question is really asking what the Government (state and federal) has to say about such a practice, not what (assumed) contracts say about it.

So what does the government have to say about reselling retail minutes to multiple clients? That's how I read the central question.
posted by NortonDC at 8:00 PM on June 11, 2007

I don't know which way the last bit about avoiding access (termination) fees goes, but it only matters if the answer to the first part is that no government power prevents this scheme. If no government stricture does prevent it, then it might be a way around termination and universal service fees.

I don't know the answer, but I think I'm reading the intent of the question more clearly than a couple other folks have.
posted by NortonDC at 8:00 PM on June 11, 2007

The level of restriction depends on the transport methodology. I could, very conceivably, set up a soft switch in my house, run a t-1 in and out of it, and sell people IP services off of it. It's essentially hosted PBX service, and b1tr0t is correct - I made an assumption about being a CLEC. The above is not CLEC. There is still 9-1-1 exposure, and ever since the Vonage stink a few years ago, the FCC is getting it's shit together re: 9-1-1 regulation. A large part of the impetus for this is coming from NENA.

Re-reading the OP, it feels like Go Now Go has identified what he thinks is a loophole (unlimited minutes, pooling them as an LD carrier) in the system.

I would advise against this course of action.
posted by TeamBilly at 7:01 AM on June 12, 2007