There used to be a service doing this in the UK. You call a 0870 (national rate number where the destination gets a % cut of the revenue) then the full international number.

Used this a lot back in 2000/2001 - don’t know if it is still going.

Fairly curious.I am surprised long distance call companies are not screaming already

Darn! Wish India were on that list.

Wish Ethiopia was on the list. Darn!

Just tried it from the UK (via Skype!) - it works! But only with UK landlines so far - no success with UK mobiles yet.

I have been useing a service called Telestunt for years and calls are charged at a local rate, only 3p per minute to South Africa.

very cheap

Mike

The payments you call “kickbacks” are not just in Iowa, but typical for small and mid-sized rural telcos. I’m a telecom reporter who’s been following this for years. The phone company in Iowa collects seven cents a minute from the incoming long distance carrier to “complete” the call. It’s called Intercarrier Compensation, and moves about $4B a year to rural telcos. Companies from Vermont to Montana collect this booty, a small fraction of which legitimately helps meet rural costs. So Skype, selling Skypeout for four cents, is paying 7 cents or so to the folks in Iowa via the wholesale carrier Skype uses. Skype can live with this because they pay much less, $0.0062 on most calls, and get an even better deal in some competitive cities.

Of the seven cents collected from the LD carrier to Iowa, about 1.5 cents will cover the wholesale rate of calls to 30 or so major countries. Distance really has disappeared: at wholesale, it costs me about the same to call Hong Kong, London, or Chicago. How much this service keeps and how much they share with the small Iowa telco who fronts for them I don’t know, but it’s a straightforward business ripping off the system.

The ICC and USF system is so complicated most reporters are scared to even try to explain it, much less identify where the rip-offs are. In D.C., rural Congressman protect the whole system because they see it as money coming to their districts. Everyone else, including FCC Commissioners I’ve discussed this with, knows how rotten the system is but is unwilling to fight to change things.

I’ve got to call it a night, but wanted to get you on track.

Dave Burstein
Editor, DSL Prime

I had seen this before somewhere. I found this in this blog. I think FreeDigits.com also makes use of this convenience (all Iowa numbers).
http://saunderslog.com/2006/10.....area-code/

The reason India (land + mobile) and European Mobile is not included as those termination costs are higher and not profitable for these setups. So the savings you get are not that much (you can already call Germany for 2 or 3 cents). Unless you call all the time for business reasons etc. the savings will be minimal.

Great blog. Thanks.

My UK ADSL provider gives me free US phone calls, so I have been using a similar service bases in Iowa called Future Phone - http://www.futurephone.com. Used this serice for a few months and it works fine although line quality can be poor at times. They also pulled Japan off their system in the new year. I see that AllFreeCalls does not have Japan either so NTT must have got to them. Originally got on to FuturePhone via this New York Times story: http://www.nytimes.com/2006/11.....mp;ei=5070

Everybody loves a loop hool!

Right on. So get a Skype account pay the $15.00 a year for free long distance in Canada and the US. Then call the number above and you can make internaional long distance calls for just a little over a $1.00 per year. Brilliant.

This is a great example of exploiting a system set up for a different purpose.

From the comments above I read that the 7 cents are subsidized by the government, so in the end consumers pay the service themselves with their tax money, right?

Hmmm..

futurephone.com offers a similar service and Iowa based too!!

I’ve been using a similar service, http://www.futurephone.com for a while, and what a surprise, that’s in the 712 area code, too….

Actually, I was trying to use it more than really using … often there is a message stating “this line is full”, and when the call actually goes through, it’s rarely good quality. More often than not it’s like early internet calls:-(

So this also appears to be the same as ophone.net

Looks like Iowa’s the place to be…

Micheal:

You’ve got it essentially right. The terminating telco always gets access revenue for calls coming inio its territory and terminating on “its” (your) line; Iowa is just the most lucrative and universal access fund money DOES play into that. That’s why several such free services are located there.

More details for those want them:

http://blog.tomevslin.com/2006.....natio.html
http://blog.tomevslin.com/2006.....citiz.html
http://saunderslog.com/2006/10.....area-code/

I understand most of this.

He’s got a CLEC in Iowa. So he makes a small amount per connection, but it’s not a lot. I also believe he needs to own a class 5 switch

He backhauls internationally via VoIP. But he’s still got to initiate the connection to the local foreign number. That’s not free. Unless he manages to get the foreign party to initiate their side of the call…

Please note: this is an Irish start-up by Pat Phelan with an Iowa dial-in number!

http://blog.roam4free.ie/ is Pat.

Too bad I dont need to make international phone calls.

Skype is still “free” to the user if it is skype to skype so until that changes, Im just going to stick with it.

I remember my accountent saying to me once that there are many loop holes in the law that you need to benefit from, but these will keep getting closed and as they do it opens new loop holes.
I can see the law changing soon and kickbacks stopping but then I am sure another loop hole will open to let another free phone call service start…its all fun.

I think this will probably be short-lived, thanks to generalization of DSL connections:

Here in France, most ISPs provide free international phone calls included in the basic internet / phone / TV DSL package (that’s about $38 a month).

It’s free to about 30 countries, and very cheap to others.

Even calls to cell phones to US and Canada are free

You don’t even have to dial a number before the one you want to reach, just plug your regular telephone on your DSL box…

As long as you are home, it’s pretty convenient, what do you think ?

This general business model is old news in the telco business. I have a friend in Israel with a Vonage phone with a US area code. It is cheaper for him to call his next-door neighbor via Vonage via this service, than to use his regular phone from Bezek, the local carrier.

It’s these kinds of silly legal complications that will help VoIP kill traditional telephony.

David Pogue wrote about this in the New York Times about 6 weeks ago. Your understanding of the system is correct–it is essential arbitrage on a system of phone regulations which David Burstein with DSL Prime has explained in greater detail in the comments above.
It works quite well in combination with Skype-out for very inexpensive calls to some countries. It is huge with the Taiwanese/Chinese expat community here in the US. You will find several of these Iowa free call services/websites are pitched almost exclusively to the Chinese community in North America.

Mike,

Dave has it about correct, including the part about a small rural ILEC being the actual source of their right to collect that revenue. However, I think there is less inbound revenue left to work with these days than Dave does (though those numbers were definitely right a few years ago).

I’m former CEO now chairman of a small NYC CLEC, and am fairly familiar with the math. I had initially drafted a much longer comment including wholesale cost examples, but it was lost (user error) and I’m too frustrated to re-create it in full, at least for now.

Based on what LD carriers charge my company wholesale for calls to that number I estimate freecalls.net is working with revenue of only $.01-$.015/minute. However, freecalls.net does offer a few international destinations which wholesale for slightly more than the top of that range, so I could be forgetting to include some aspect of the underlying arbitrage they are working with. It could be that they are simply hoping to build traffic to the edge case destinations and use that to shop for lower wholesale costs.

Also, Although their website doen’t make this clear, it should be said that they will not complete calls to most cell phone numbers internationally, because in may countries those rates are much higher, in some cases up to $.20/minute. Exceptions where the rates are not higher than landline rates include US, Canada, China, HK, Singapore.

I tried about 10 calls last night, all unsuccessful. Maybe they’re still setting up, or maybe they want callers trying more than one time, since they get cost free-revenue for answering any call which doesn’t result in an outbound connection.

Any comparision of this service with Skype is useless. Freedcalls.com is something that is set up to be a low overhead bootstrap model profitable from nearly day one but not all that scalable. Skype’s motivation for offering rates that do not fully recover their costs (Neither $15 nor $30/yr for US & Canada will for most users), is marketing related. They are trying to be disruptive and are desperate to build market share.

Last point. I’m aware of and admire you and Tech Crunch because of being a long-time Gillmor Gang listener. I’m sorry not to be hearing you and the others there anymore and hope something as worthwhile comes along to replace it.

This site has a fascinating overview of ICC:
http://www.nrri.ohio-state.edu.....n.ppt/view

(Well, fascinating to those who are reading this thread and want to know how it works.)

The chart on slide 7 shows rates for ICC compensation. If you happen to be calling from Iowa, this can get really expensive for your phone company.

Really interesting and to echoing Steve G’s last paragraph -

I’m aware of and admire you and Tech Crunch because of being a long-time Gillmor Gang listener. I’m sorry not to be hearing you and the others there anymore and hope something as worthwhile comes along to replace it.

I do miss hearing you on the Gillmor Gang

There’s loads and loads of places that have been doing this for many years in the UK and it all works due to the high local call charges over here.

http://www.telediscount.co.uk/ is the service i’ve used for around 5 years. It can often work out cheaper for me to call family 10,000m than to call friends long distance - 50m away - in the UK. Yay!

Just to say that the service can be reached from outside the USA. I am in germany and I can use it. The fun of it, for some destinations it even makes sense!!

Step 1: Create an Iowa CLEC
Step 2: Give people a reason to call an Iowa phone number
Step 3: Count the pennies

How much could this business model really make? There has to be a better way to monetize the phone traffic… than a penny per minute.

Still very neat! I wonder how he built it…

Pat the founder of this must be a kool guy! I read this new on OkDork.com first!

Here’s Pat’s blog if you want to congratulate him

Complicated Laws are great for Prosumers / Consumers / US

“I expect to revise every sentence in the above paragraph”

That made me laugh. Thanks!

So…what does it take to start up one of these in IOWA? Or can u find a rural part of California and do the same thing?

Steve G
We have had tens of thousands of successful calls in the past 18 hours, can send you ACD/ASR reports if you wish
We have 640 T1 available right now. Thats capacity for 160 million minutes so scalable is not an issue.
We have been in the business quite a while and I will take margin of 1c per minute all day long, I wish
I am CEO of the company and should you have any further connections issue do not hesitate to contact me

The world is moving toward ‘free for individuals’ in many ways. I love it. I hope they make a killing. It’s coming down to what you know, not who you know or how much money you have. It could lead to massive patterns of emerging global equity.

Oh great, it was good while it lasted.

I used to use futurephone.com to make calls to Japan about 2 months ago, but recently Japan is no longer on the free country call list. It was good while it lasted.

Does anyone know of services like this that allows calling to Japan (landline or mobile)? I would appreciate it.

If thats how it really works , it sounds like an awesome way to make money

This has been going on for a lot longer than people realize.

My first paying job out of college was with a chat/phone sex company. During my stint as a “phone sex repairman” in 1993-1994, I built and installed systems in the US and overseas, including luxury hotspots like Guyana. Whether the system was at a rural telco or overseas, the idea was to capture part of the termination fee. It’s easiest to understand this system if you think of a call as two phone calls, one outgoing call from your phone company (be it SBC, Cingular, etc) and one incoming call to the callee’s destination. The system is complicated and outdated, and may seem like a rip off, but its important to remember that these settlement charges usually balance out on most routes (I call you for ten minutes on Cingular, you call me back some other time, and it zeroes out). Situations like AllFreeCalls are statistically insignificant relative to overall use.

What I like most about this is that it creates an easy no-hassle way for telecom entrepreneurs to make money of services like this, conference calling, etc. Without them, you have to bill by credit card or premium SMS (and give 50% away up front), and that severely impacts usage.

From the perspective of a telecom entrepreneur, this system is very much like Google Ads, and an easy way to convert usage into revenue that would otherwise be very hard to accomplish.

They need to add more Russia (outside Moscow and St Petersburg), otherwise it is useless for me. Please, if the “freecalls” guys are reading the feedback on this blog, add Vladivostok and Yuzhno.

Damn, wish I cared.

Isn’t bureaucracy great?

sounds similiar to the loophole that Freeserve discovered here in the UK some years ago. albeit around data access. BT was big enough to get the parasite squashed. this whole freecall thing used to be interesting as businesses all racing to the bottom of the well. both on wireline calls and wireless. but as someone pointed out you need a reason to call iowa. nuff said.

See this http://saunderslog.com/2006/10.....area-code/ for a good description of why this works.

These payments are not new, When Internet access started changing phone line use patterns from short calls to 24 hour calls, some independent local telcos (some set up just to support BBS/ISP) were making a fortune.

The theory was that inbound and outbound between companies would balance and if they didn’t the payment would compensate for the imbalance. Needless to say the ISP calls were all one way.

Is there anyway to co-lo a voip server in rural Iowa and get some of this revenue without becoming a clec?

Contrary to what Brian McConnell states, these termination fees do not even out. These fees are not normal termination fees, but higher termination fees paid to rural telcos under the universal service fund (USF), which is funded by a tax that is put on the phone bill of every household in America with a POTS line. This is a massive redistribution of wealth from phone users in urban areas to those in those in rural areas. The USF was set up in the early days of the phone system to promote universal connectivity when it was feared that low density rural areas would be prohibitively expensive to wire for service. In the interim, technology has made that concern moot, but the rural telcos have fought tooth and nail to protect this taxpayer funded gravy train. Allfreecalls has cleverly figured out how to use a portion of this stream of taxpayer largess to subsidize overseas calls (and of course put some of the revenue stream in its own pocket). Hopefully they will be fabulously successful so that the USF

In the report I cited above there’s a chart that shows that 30% of rural ILEC revenue comes from USF. That’s obscene.

Now if you’re upset with your wireless carrier, here’s a way to exact revenge. Call the Allfreecalls number at 9:00 p.m. on Friday night and leave the phone off the hook until 6 a.m. Monday morning.

Hey,

Complain about it all you want, but the only companies that take a hit on this are large telcos, and relative to overall phone usage, calls to these exchanges are not a signficant percentage of their traffic. That’s my point. If the call is originating from a cell phone, the termination fee, even to a rural CLEC, is probably 1/5th to 1/10th what they’re pocketing from the cellular call.

It may not be the intended use of USF, but it’s doing two things that benefit consumers:

1) it makes it possible for telecom entrepreneurs to build products without having to build complicated billing and fraud control systems. They can build the product, and if it’s popular, they make money. Without this, the cost of building a product goes up substantially because of the billing, fraud and customer support headaches.

2) it does redistribute wealth, to tiny companies in a place known as “Flyover Country” to the snobs here in Silicon Valley. good for them for figuring out a way to work the system.

This only works if the termination charge to the country you are calling is less than the call to Iowa. Of course, this is not true for a number of countries. So for example, calling to Iowa from any other state is cheaper than calling from Iowa to India. Hence, they don’t include India.

Another solution to this is to do it the VoIP way, many many providers already do this. They setup shop in a locale. They buy local access lines in each country the want presence and string the entire thing with VoIP. So calls to those cities/countries that have local access lines do not incur IDD charges. If they are based in Iowa then they can even get the FCC kickback.

This way they can support more countries!

Sigh. No Ecuador on the list either …

Snapvine.com uses this same loophole for their voice messaging product. Notice the area code they use doesn’t match their location (e.g. Seattle). Haven’t checked to see if it is in Iowa though.

Since it was set up before the law is changed, I am hoping that this person can continue offering the service!

Just tried to use it o call Australia - 61 code - got a message that calls to that destination is not possible.

I wonder how many countries listed on their web site actually work…

Now I understand why IPKall (washington state) must work, giving away free DID’s that they’ll terminate to your SIP for free. Anytime someone calls you, they actually get paid. That would be an even better gimmick than free internaitonal calls cause your termination cost is just your bandwidth.

Hi Michael. Nice article. Like other industries, people in telecom are always finding new ways to make money take advantage. This kind of scheme changes the way things work or are ruled. When someone starts getting hurt (financially speaking), I bet rules will change. It doesn’t mean the scheme will end, but it will change. While 10 people think how to creat strong rules, there are 10.000 thinking how to take advantage of it.
Anyway, I got curious about the Milo’s scheme you mentioned, but I couldn’t find exactly what it is and how it works. Could you please tell me or let me know where can I find it?
Thanks
André

I found a hack for AllFreeCalls.net and its posted here: http://voipguides.blogspot.com/

in addition, there are more reviews about such FREE calls providers on this blog.

Damn! I wish Iraq was on that list… gotta tell them extremists to KNOCK IT OFF! (before I nuke you!)

You can read the original hack for AllfreeCalls.net here:

http://voipguides.blogspot.com.....dwide.html

Hi i also just tried it from the UK (via Skype!) - and it does work! But only with UK landlines so far.. like few ppl above!!

As a former VOIP guy, I will briefly comment on this:

1. This works thanks to the fact that technology innovates faster than your congressmen can correctly spell “Skype”(the only guy seems using technology a bit better is Mark Foley, sending salacious SMS and instant messages to his pages, and getting canned, rightfully so. But I digress)—i.e., arcane telecom regulations bring money to clever entrepreneurs.

2. Whether a country will be on the free-call list is decided solely by the termination cost to that country vis-a-vis the profit margin it gets from the inter-carrier compensation(and other subsidies) minus his operational cost. So if a call to freaking Ethiopia costs $0.25 wholesale, you bet that it will not be free, until Martians roaming earth in year 2500, and calling home with an apple iPhone.

3. This free-call thing will not be here very long, if it gains critical mass(now a given because it is on tech-crunch:-)), and finally begins to annoying your congressional representatives from their busy ear-marking activities.

4. As far as I see, the benefits are most pronounced for the Chinese, HongKongese(is this a word?), Taiwanese, Korean, Singaporeans, and some western Europeans who currently resides in the states, who actually can call the iowa number with Skype or cell phone free minutes to connect to their parties in those countries. But european mobile will not be on free-call ever, reason is #2 above.

5. With all the calls to these Iowa numbers, it will get harder to connect, because you will be hearing a lot of “This number is full” messages. So users needs to be more diligent to find newer numbers to avoid the crowd. There is another number 712-945-0416 which I used a couple of times, and it seems to be working well without busy prompts.

So all in all, enjoy while it lasts.

Interesting article I just saw on yahoo, discussing some of the charges:

http://news.yahoo.com/s/ap/200.....surcharges

I’ve tried this three times in the past 3 days with calls to the UK. Every single time the call failed — usually the quality of the connection was so bad and so full of echos that I just hung up and dialed again with another service. Too bad — I had been using Jajah but their site got updated and became rather painful to use…

Another Free International gateway to add to the mix:
(712) 945-4444.
http://www.freephonecallz.com
It seems there must be a business model here after all as I think this is the third gateway I found. Looks like these guys are going to try and convert you to a premium service. System must be new as I’ve tried it a few times and no busy signals. Lets see how long that lasts.

hi,
Itried this service. Its not working. Anyone can help? I found this website http://free-internet-phone-calls.net which they try to explain better how the system works. i think Jajah is the real solution.
.

This is an interesting development in the US. I live in the UK and have been using a similar service which allows me to make ‘free’ calls from my contract cellphone. I get 750 minutes a month (most of which I don’t use for domestic calls (it was a cheap plan so I went for it!)) and using these dial an access number (07744788888) followed by the international number. Works to a wide variety of destinations, although not generally cellphones.

The service I use is: http://www.dialabroad.co.uk/mobileplus

There are quite a few out there though.

John

I wish Peru was on the list.

I will be in Ireland from the US for a few days. I purchased a tri-band phone for the trip, and I will purchase a SIM card at the airport in Dublin. What is the least expensive way for me to call home? Thank-you for any help and suggestions.

I will be travelling from my home in Florida to Ireland and I am looking for the least expensive way to call the US.

Old Skool stuff. But nice as long as it takes. I would say use it as long as it is available. Hopefully their line capacity is sufficient!

They make some money from incoming calls (based on a kickback) and they subsidise the the termination for calls to fixed numbers in Europe etc. only some mobiel numbers are supported like Singapore where mobile termination is also very low.

With this service I still have to pay for the international call to Iowa! So it’s a US only solution… It’s not economical to use the service outside the US. Right?

Personally I’ll think the future is in the mobile-2-community businessmodels, like Nimbuzz, http://www.nimbuzz.com, is offering. Global mobile calls at local rates. (International) Groupcalls straight from your mobile. Free and integrated mobile IM. And free Text services. These are sustainable businessmodels you can use if this service lost its momentum.

Cheers!

You can also do it! See my blog at http://flatplanetphone.com/wordpress/?p=31

Tried both cell & landline for Korea (South Korea) its call to this type of # is not allowed!!!???

pretty disturbing to see legions of righteous fanboys gesticulating about this…
when it was fully detailed TWO MONTHS prior at Saunders…
aptly shown in comments 8, 16, 44.
Hey, what should I know, in fing Havana? Isn’t Pork simply the decline and fall of the hoaxed Democratic albeit NWO Imperialism of “Greed Gone Wild!”

Why has Futurephone and Ophone shut down? Service in the UK (like http://www.dialabroad.co.uk/mobileplus, http://www.call2abroad.com, etc. etc.) have been running for many months or even years. Surely competition in the US is good for consumers. Know what I mean?

As I wrote on my blog - http://flatplanetphone.com/wordpress/?p=40
They received a cease and desist order

abc

visit http://voipsms.blogspot.com for free calls

It was good while it lasted. Knowing it probably wouldn’t last, I used it to the utmost. Oh well, back to using skype.

just got off chatting with pat the owner of this company. he’s gonna blog on this issue at his blog (http://blog.roam4free.ie/) and probably post some comment here as well regarding this issue. but the short story is it’s a combination of technical problems (load capacity expansion needed) and legal problems (dealing with a 2 million $$ lawsuit from our good neighborly friends over at AT&T). he said they’re getting sued at every step of the process… but the good news is he said they got 1/2 dozen engineers working on the service and should be back up shortly. keep an eye on this one, the big boys don’t like to see the kickback service companies proliferate. monopolies are good for business.

Thanks for the update. Even if this one goes down, I am sure there will be more companies poping up offering same services until the loop hole is fixed.

http://t1-lines.net

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loni

no uganda on the list whats up with that?!!! i guess we just have to wait for more competitors to come in to the game.for now still nothing beats calling cards.

Hi

I found Uganda on http://www.reallyjustdial.co.uk . by the way I have tried a lot of calling cards and living aboard I am always ringing back home. I have had a look at the rates and they are quiet similar to the service I use at http://www.reallyjustdial.co.uk. The only problem I have with calling cards is that there is always a connection charge, which eats always from the minutes you have on the card, and secondly it cuts off after a certain time, so re-dialing, hence and new connection charge. Thirdly the line quality on most of the cards not so good

Nevertheless, exceptions are there. I have found it easier to put up phone and dial the access numbers I get from http://www.reallyjustdial.co.uk

Regards

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Gizmocall, lets you call to international landlines for free for 10 min a day, 3 min duration of one call. A great way to say hello and ask about weather.

http://nationwideLD.com
Compare long distance companies and plans for home, residential, small business, International calls!

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good

This service is good. For all those based in the UK who want this service have a look at http://www.planet-numbers.co.uk who offer very cheap international calling. They also offer 0845, 0800, 0844 and 03 numbers for businesses looking to expand. Hope this helps.

I am surprised long distance call companies are not screaming already