Telephone entrepreneurs after the quick sting<BR>
AT&T is trying to swat some of these nimble entrepreneurs out of the industry.
Callbacks offer discounts on trans-atlantic and other overseas calls by selling access to the technologically advanced - and deregulated - North American telecommunications networks.
For example, one callback service charges $1.10 per minute for a call to the United States, which represents a 30% savings over Telekomunikacja Polska's (TPSA) $1.58 per-minute. It's also lower than a short-duration call over AT&T, which charges a $2.50 connection fee, $2.00 for the first minute and $1.39 for subsequent minutes. However, AT&T offers additional discounts based on volume, making that service competitive for high-volume users.
Because callback services undercut rates of local systems, callbacks have faced threats of legal action from state-run monopolies in the Czech Republic and Hungary. But TPSA is more concerned with upgrading service than with fighting legal battles, according to a spokesman.
Callback services refer to themselves as "switchless resellers," said Ross A. Epstein of BCH TeleCommunications, one of a handful of operations with offices in Warsaw. "Time is a commodity. There are brokers who buy it and sell it. We're in that business."
As resellers, they have no equipment. Rather, they negotiate with the owners of international satellite and cable networks, selling unused blocks of time at reduced rates.
As the largest network owner, AT&T, along with Sprint, MCI and others, sells excess time to third parties. The company doesn't ask how that time will be used, according to Olga Chandra, spokeswoman for AT&T global strategy in New Jersey.
It's the next step that gives the telecom giant fits.
Customers initiate a callback by dialing a special number to a computer in the United States or Britain.
Some companies employ a computer which returns the call, without answering, and gives the customer an open line. Chandra calls this operation - "code-calling" - a practice AT&T considers illegal. "Basically, you are using the network, but you haven't paid for it," she says. "This has wire-fraud implications. In effect, you are stealing time on the network."
Last fall, AT&T filed a petition with the U.S. Federal Communications Commission (FCC), specifically seeking to stop code-calling. The commission is still consulting with other federal agencies, including the Departments of State, Commerce and Justice, Chandra says.
The FCC threw out an AT&T petition last April that tried to stop the whole callback industry by challenging callback pioneer Howard Jonas. That petition took almost two years to work its way through the regulatory bureaucracy.
The callback vendors in Poland dismiss AT&T's argument and cite the Jonas case. "If they consider it wire fraud, it would appear that AT&T is participating in it" counters Gary Granai, who operates American International Business Group in Warsaw. Granai says his company currently sells excess time on the AT&T system.
"Tomorrow it could be MCI or Sprint," he adds. "The major carriers all have excess capacity. We're all resellers." Granai said his customers in Poland initiate callbacks by sending an unanswered call to a switch in the United States.
Epstein, whose company operates its computerized "gateway" from the United Kingdom, says his customers also do not pay for the initial call - and he believes there's nothing wrong with that. "It happens a zillion times a day," he says. "Every time somebody makes an international call and nobody answers, it's the same thing."
BCH now has four full-time sales personnel in Warsaw and roughly the same number at its Prague headquarters. Epstein says the market is growing all the time, that BCH is bringing in one or two new customers a day in Warsaw, and that the company has between 500 and 1,000 customers.
Both BCH and American International offer additional services, like communications consulting. Both plan to break into the calling-card business, offering toll-free access numbers. And both say the market is huge and expanding exponentially.
According to Granai, there are some 30 companies in the callback business. Most of them operate on a mail-order basis, placing advertisements in international newspapers, billing in dollars and keeping out of local jurisdictions. BCH and American International also conduct their billing from outside the country.
Their activities apparently do not bother TPSA, although the monopoly knows it is losing revenue.
"This (callback business) is not the biggest problem of Polish Telecommunications," company spokesman Krzysztof Barnicki says. "The only thing we can do (to recapture lost business) is improve our services and reduce our charges." He says he does not expect improvements to the system to take place rapidly.
Piotr Czarnowski, public relations director for AT&T Poland says global telecommunications volume is "growing visibly" in the region, even with rates going up.
Czarnowski expresses personal reservations about resellers, who operate only as sales forces or via mail-order. "If I were running a business, I would be very careful. I would not want to deal with somebody I did not know. They are unknown people, offering an unknown product of an unknown legality."
Granai says his industry has little impact on the major telecommunications firms. "We're mosquitoes in this market," he says.
Callbacks offer discounts on trans-atlantic and other overseas calls by selling access to the technologically advanced - and deregulated - North American telecommunications networks.
For example, one callback service charges $1.10 per minute for a call to the United States, which represents a 30% savings over Telekomunikacja Polska's (TPSA) $1.58 per-minute. It's also lower than a short-duration call over AT&T, which charges a $2.50 connection fee, $2.00 for the first minute and $1.39 for subsequent minutes. However, AT&T offers additional discounts based on volume, making that service competitive for high-volume users.
Because callback services undercut rates of local systems, callbacks have faced threats of legal action from state-run monopolies in the Czech Republic and Hungary. But TPSA is more concerned with upgrading service than with fighting legal battles, according to a spokesman.
Callback services refer to themselves as "switchless resellers," said Ross A. Epstein of BCH TeleCommunications, one of a handful of operations with offices in Warsaw. "Time is a commodity. There are brokers who buy it and sell it. We're in that business."
As resellers, they have no equipment. Rather, they negotiate with the owners of international satellite and cable networks, selling unused blocks of time at reduced rates.
As the largest network owner, AT&T, along with Sprint, MCI and others, sells excess time to third parties. The company doesn't ask how that time will be used, according to Olga Chandra, spokeswoman for AT&T global strategy in New Jersey.
It's the next step that gives the telecom giant fits.
Customers initiate a callback by dialing a special number to a computer in the United States or Britain.
Some companies employ a computer which returns the call, without answering, and gives the customer an open line. Chandra calls this operation - "code-calling" - a practice AT&T considers illegal. "Basically, you are using the network, but you haven't paid for it," she says. "This has wire-fraud implications. In effect, you are stealing time on the network."
Last fall, AT&T filed a petition with the U.S. Federal Communications Commission (FCC), specifically seeking to stop code-calling. The commission is still consulting with other federal agencies, including the Departments of State, Commerce and Justice, Chandra says.
The FCC threw out an AT&T petition last April that tried to stop the whole callback industry by challenging callback pioneer Howard Jonas. That petition took almost two years to work its way through the regulatory bureaucracy.
The callback vendors in Poland dismiss AT&T's argument and cite the Jonas case. "If they consider it wire fraud, it would appear that AT&T is participating in it" counters Gary Granai, who operates American International Business Group in Warsaw. Granai says his company currently sells excess time on the AT&T system.
"Tomorrow it could be MCI or Sprint," he adds. "The major carriers all have excess capacity. We're all resellers." Granai said his customers in Poland initiate callbacks by sending an unanswered call to a switch in the United States.
Epstein, whose company operates its computerized "gateway" from the United Kingdom, says his customers also do not pay for the initial call - and he believes there's nothing wrong with that. "It happens a zillion times a day," he says. "Every time somebody makes an international call and nobody answers, it's the same thing."
BCH now has four full-time sales personnel in Warsaw and roughly the same number at its Prague headquarters. Epstein says the market is growing all the time, that BCH is bringing in one or two new customers a day in Warsaw, and that the company has between 500 and 1,000 customers.
Both BCH and American International offer additional services, like communications consulting. Both plan to break into the calling-card business, offering toll-free access numbers. And both say the market is huge and expanding exponentially.
According to Granai, there are some 30 companies in the callback business. Most of them operate on a mail-order basis, placing advertisements in international newspapers, billing in dollars and keeping out of local jurisdictions. BCH and American International also conduct their billing from outside the country.
Their activities apparently do not bother TPSA, although the monopoly knows it is losing revenue.
"This (callback business) is not the biggest problem of Polish Telecommunications," company spokesman Krzysztof Barnicki says. "The only thing we can do (to recapture lost business) is improve our services and reduce our charges." He says he does not expect improvements to the system to take place rapidly.
Piotr Czarnowski, public relations director for AT&T Poland says global telecommunications volume is "growing visibly" in the region, even with rates going up.
Czarnowski expresses personal reservations about resellers, who operate only as sales forces or via mail-order. "If I were running a business, I would be very careful. I would not want to deal with somebody I did not know. They are unknown people, offering an unknown product of an unknown legality."
Granai says his industry has little impact on the major telecommunications firms. "We're mosquitoes in this market," he says.
