AllFreeCalls has been taken offline after a flurry of legal action by a very pissed off AT&T.
The AllFreeCalls service allows people to make international phone calls absolutely free by exploiting a FCC regulation that provides kickbacks on incoming calls to rural phone companies. Users first call a phone number in Iowa and then call out to any of dozens of countries from there. The user only pays the toll to Iowa, if any. See our original post for more information on how it works. Apparently all of these free calls (from AllFreeCalls as well as other similar services) resulted in a jump from $2,000/month to $2,000,000 in subsidies from AT&T to a single Iowa Telco.
In a blog post today founder Pat Phelan says “Our allfreecalls provider in Iowa today took flight due to increasing pressure from a large USA based carrier. We are working on getting a new number up. We expect to be back in business on Monday afternoon.”
We’ll check back in next week to see if the company has found yet another loophole in the regulations to keep (profitably) providing free international calls to people. Until then, you’re just going to have to pay for those international phone calls. Or use Skype. For now, we’ve put AllFreeCalls into the TechCrunch DeadPool.
I would think twice before investing my money in a company that structures its business model around regulatory loop holes…
I agree it seemed a little weird You could call your grandmother in India or Poland for free with a little help from a rural subsidy meant for Iowa farmers. T
But is AllfreeCalls really the nastist way subsidies have ever been exploited?
At least they’re using a technology, and giving people a tangible return in the form of an open, free service. They’re almost a template for how these subsidies should be reformed.
here’s the gooye details of what’s happening behind the scenes:
http://gigaom.c...lion/#more-8100
On the one hand I’m glad that they’ve been shut down as they are effectively fleecing US taxpayers to give free calls to some leaches. Yet on the other hand I want them to get a lot more attention and press coverage so that US taxpayers can see how ridiculous it is that these subsidies exist in the first place. If phone service costs too much for those who choose to live in the boonies then too bad, move to the cities and stop leaching off productive Americans.
This company was making 2million a month from this?
I wish
Nothing at all like that figure, in fact we have it on record that we have refused any payment from our Iowa provider until the legal situation was clarified. Chris the USA taxpayer didn’t contribute one cent, the terminating carrier paid an instate fee. It had no impact on the USA taxpayer.
2million I didn’t think so!…I was bout to start morefreecalls.net but I will just stick with my site for now!
Joe – thanks for the link, to GigaOm, I rewrote some of the post based on that information.
Pat – Good for you to hold off until things are resolved one way or the other.
worked for me – I clarified that sentence to try to make it clear that those payments included other services similar to allfreecalls. I’m jetlagged and slow today. Apologies.
Here’s more info (hopefully not duplicate) re FuturePhone call termination arbitrage and AT&T
http://gigaom.c...bill-2-million/
Doesn’t hurt to try. Props to innovation. ATT has been screwing the pooch for years. Serves them right!
hey michael, what about http://internetcalls.net ?
do you know how it works?
they offer free calls, but the call finish after two, tree minutes every time if you dont have money in the site but it is always free. i have paid ten dollars and now i make international calls for free computer to landphone with out problems with out limit of time.
did you know this company? i think they are uk based.
germain based.
Mmmm…I doubt this idea is ever going to fly with the big guys. It costs them a lot and gives them no advantage. Who wants their business to be used so widely without any returns? Its an impossible business model.
@David Mackey…I doubt this idea is going to fly with the big guys.
I agree with you, but there might be a place for it in the economic development community. Right now, Africa is the fastest growing mobile phone market in the world; countries left behind by the communications revolution are playing catch up. Institutions like the World Bank emphasize private sector development, but almost everyone agrees that taxes and subsidies will have a role to play. Allfree’s business model evolved in Iowa but it’s a natural for, say, sub-Saharan Africa. Consumers could truly benefit from free calls, and subsidies would spur investment by service providers.
From UK O2 mobile call 0844 570 5743 same priciple as above for UK based customers
Snapvine also uses an Iowa (641) area code. I wonder if they’re also trying leverage the CLEC loophole.
AllFreeCalls.ie seems to still be up, not quite deadpool?
Chris,
You are a jerk.
regards,
Kirk
Pretty amazing it took the the big blue globe that long to get rid of this operation. Pretty sure there are many more of them out there.
Maybe Chris up there should do his research before spouting off deragatory comments. None of the telco’s involved recieved USF benefits. While AT&T has scared the telco’s, don’t be suprised if they don’t get it slapped hard by the FCC. There was nothing illegal about any of these services.
I agree with Clem. The Michael’s headline is irresponsible and illadvised. It would appear that some of you would rather have lived in the Soviet Union where monopolies ruled and there was no competition. God forbid. Free Enterprise is threatened whenever the little guys let the monopolies bully them with the kinds of legal tactics that AT&T has employed here.
Remember folks, monopolies like AT&T NEVER like competition and are ALWAYS going to try and bully would-be competitors, especially the creative little guy. We should be cheering on AllFreeCalls for their creativity instead of berating for it. Regulatory environments are there as guidelines, not barriers to free enterprise.
RE: Mike
While I’m certainly not a fan of ATT, I definitely wouldn’t consider someone who uses another companies own infrastructure and gouges them via a loophole a true “competitor”. Holding them up as some sort of normal small business being ‘bullied’ and put out of business by the ‘big guy’ who is out to shut down ‘free enterprise’ is taking a pretty extreme view.
As an owner of a consulting company it would be like me paying off employees of my largest competitor to send me their sales….and then complaining when those people got fired and saying that the company was just bullying the little guy and stifling ‘innovation’. Legal? Maybe. Morally ambiguous? Definitely. Bullying by a Monopoly? Pffftttt.
Whether you are a big company or a small company, wouldn’t you shut something down if someone was using your own infrastructure to take away your money?
Re-origination of international calls is not new.
I have heard of telcos doing it to change the tarrif from a high priced country like say outgoing from China to the lower priced incomming to China.
I like the twist of having the “death star” pay a rural subsidy. The subsidies are to encourage the companies to build infrastructure into rural areas and until they do they owe the smaller telcos in those areas the subsidy to reward their work in connecting service to the places that they would like to by-pass.
If you want DSL in places where the mortgages are low and the smog is thin then Kudos to the telcos that make the big boys pay to by pass Iowa.
Don’t feel sorry for AT&T. There is a natural check and balance here that AT&T doesn’t discuss. As a rural LEC’s revenues increase (from ENTREPRENUERIAL effort), their state regulators will eventually lower their approved tarrifs and their portion of the universal fee.
Let the free enterprise system work. Better rural LEC support themselves via entrepreneurial effort (like AT&T is attacking) rather than continued subsidies. How else will our rural phones be supported? Next time you travel in the countryside, count the number of telephone poles to some of those farms. Those didn’t magically sprout!
Also, VoIP calls haven’t even begun to be regulated yet. AT&T is simply using its monopolistic muscle to kill competition. It is the nature of the beast.
Further, we all pay for the universal phone service access we all enjoy, one way or another; through access fees and taxes. One way or another, the costs must be paid in order for us to pick up the phone and know that our calls to the mountains of Wyoming will be connected. The whole point of giving the rural companies a rate advantage is to help them support the rural environment which is, per capita, much more expensive to support. We will need to continue to support that infrastructure, either from fees the carriers pay, or from funds given to those rural companies by government subsidies. I don’t know about you, but I would much prefer to see the the market cover these than bureaucrats. In this case, the market will be more efficient, and the market will reward the rural innovators. We, the people, created AT&T. Now it is time for AT&T to stop inhibiting market creativity with bullying tactics.