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May 16, 2007

"Free" International Calls Are Back

Once again you can make calls to landline phones in many countries around the world for the price of a call to Iowa.  Pat Phelan, CEO of Cubic telecom group, posted the good news that www.yak4ever.com is now live replacing the defunct allfreecalls.net which was driven from business a few months ago by large telcos including at&t who stopped completing calls to these numbers.  Michael Arrington has taken allfreecalls out of theTechCrunch DeadPool although he warns: “AT&T and others are going to continue to fight to kill this, since they are effectively subsidizing the service.”

It’s not clear (to me at least) what deals got made.  The service was deliberately made harder to use: you have to register online; you have to pre-setup a list of just ten numbers that you want to call; you have to remember the codes that you assigned to these numbers – Aswath tested and has a good explanation of how this works and a few suggestions for improving the UI.  Pat hints in his post and in the comments that these changes were part of a deal for bringing the service back.  Aswath speculates this satisfies some technical requirement that these be calls terminating in Iowa.

Paul Kapustka posting on GigaOm broke the story a couple of weeks ago that the FCC told at&t and Qwest they can’t take the law into their own hands by blocking calls to these companies.  The FCC, however, has not yet ruled on whether the big carriers have to pay access charges to the Iowa carriers for these calls.

Although the economic basis for this service is the outsized access charges which rural telcos – particularly rural telcos in Iowa – are able to collect per minute for calls which terminate on their networks, I disagree with Michael Arrington’s assertion that “AT&T and others… are effectively subsidizing the service”.

The fact is that we are subsidizing at&t and Verizon by paying non-competitive access charges to them for reaching all the landline phones which they control.   These charges are less per minute than the rural telcos get but at&t and Verizon are in a position to collect on many more lines.  When they set their long distance charges, they allow for the access charges they will have to pay each other and the relatively small amount that they’ll have to pay to independent carriers. They haven’t complained about the high rates charged by the rural telcos before because they could predict the volume of calls going in there and allow for these rates AND because the last thing at&t wants to do is upset the access charge applecart.

It’s hard to have any sympathy for at&t.  It is time – past time – to abolish access charges altogether and, where necessary, find more efficient ways to provide good rural telecommunications.  Meanwhile, if you have international calls to make and aren’t already getting them cheaply through Skype, Vonage or some other service or just want them to completely free – assuming you don’t pay extra for calls to Iowa – you shouldn’t feel bad about taking advantage of this arbitrage play.

Related posts:

at&t and FuturePhone – POTS Calls the Kettle Black

Price – Splitting the Pie – Access Charges

Free International Calls! NOT Too Good to be True

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