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Phone scheme cost it millions, Qwest alleges

Calls were routed illegally, it says in Iowa lawsuit

Jeff Smith, Rocky Mountain News

Published February 23, 2007 at midnight

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Qwest Communications claims it has lost millions of dollars due to an illegal phone call routing scheme created by rural Iowa telcos and companies that advertise free adult chat and international calling services.

Seven independent telcos in Iowa are being sued, along with a half-dozen companies that allegedly operated such sites as hotlivesexchat.com, freeconference.com and callchinaforfree.com.

Qwest filed suit in federal court in Iowa this week in an effort to get its money back and stop the companies from engaging in the allegedly fraudulent practice.

The scheme, which involves routing calls in such a way that long-distance carriers pay the call termination fees, has emerged in recent months. AT&T recently filed a similar $2 million lawsuit in Iowa.

Qwest doesn't disclose in the lawsuit exactly how much money it lost.

But Qwest executives indicated earlier this month that "untoward" and "inappropriate" traffic on its network had cost the company $10 million to $15 million.

The defendants include Superior Telephone Cooperative, Dixon Telephone Co., Great Lakes Communication Corp., Future Fone Services Inc. and Free Call Planet LLC. None of the defendants could immediately be reached for comment.

Qwest spokesman Bob Toevs said the Denver telco doesn't comment about pending litigation.

Qwest claims in its lawsuit that many of the companies make false and misleading statements about how they can provide "free" services, with some Web sites saying tax dollars are paying for the calls.

Many of the telephone companies named in the lawsuit serve small communities yet have thousands of access lines assigned to them, Qwest said.

As an example of the issue, Qwest said it delivered 15,000 minutes of long-distance calls to Superior's 175 customers in June. In November, Qwest said that traffic increased to 6.4 million minutes of long-distance calls.

Qwest CEO Dick Notebaert said in a conference call this month: "We've fixed the systems now so that I can tell you that if we get a little spike like we did from some spots . . . we can immediately block it."

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