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« Network2/pulver.com Networking Events in LA (Feb 7th) and SFO (Feb 8th): | Main | Sitofone is now Mobile »

February 05, 2007

Yes, FuturePhone is No More.

GigaOM: FuturePhone, a Thing of the Past?

"After getting some New York Times1 recognition for its free international calling plan, it looks like FuturePhone is no more. A visit to the company’s website pulls up a red banner announcing This Service is No Longer Available, and a call to the company’s international access number, 712-858-8883, gets you a message saying “we’re sorry, this service has been disconnected.”

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Hope you enjoyed the free phone calls while they lasted.

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Posted by jeff on February 5, 2007 06:37 AM | Permalink

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Posted by: Anna www.brewer.in at January 26, 2010 11:37 AM

"The various rural Iowa LECs have extremely high regulated termination fees, much higher than anywhere else in the country."

I should say that this is slightly inaccurate. There are other rural areas that also have high regulated termination fees.

The idea is that regulators, both nationally and at the local level, want to encourage rural phone service. It costs considerably more to install and service phones per customer when the population density is lower. So, a variety of methods are used, such as the Universal Service Fee.

One of the methods is call termination fees. Rural providers get paid extra money to terminate calls, in an effort to subsidize their business and encourage rural phone service, and the tax is paid by the big carriers but ultimately by other consumers. Like any subsidy, it causes distortions, but so long as people didn't figure out how to arbitrage it, it survived and the big carriers could absorb the small cost. (After all, the inherent number of calls that people wish to really terminate in rural areas is limited.)

Now, with this arbitrage exposing the problems, there are two options:

1) Reform the subsidies, perhaps dropping them entirely and subsidizing rural service in other ways (if at all)
2) Prohibit the arbitrage.

I'd have to prefer 1), because I think that a law prohibiting the arbitrage would interfere with real disruptive uses.

Posted by: John Thacker at February 7, 2007 12:00 PM

John,

"With dialabroad.co.uk, people are using their existing packaged minutes, and presumably not calling a number that has an astromomically high termination fee either."

That explains it!

I wonder how this will effect services such as Efax and free conference calling services which having been operating from Iowa for many years.

Regards,

John

Posted by: John at February 7, 2007 11:52 AM

According to an update-- http://gigaom.com/2007/02/07/atts-free-call-bill-2-million/

AT&T sued and brought out the big guns because their termination fees to one Iowa LEC, Superior Telephone Cooperative, jumped from $2,000/month to $2 MILLION/month.

John-- the situation is considerably different from dialabroad.co.uk because of the nature of the regulation. The various rural Iowa LECs have extremely high regulated termination fees, much higher than anywhere else in the country. Any other phone provider just plain loses money when people call rural Iowa, but it's normally such a small volume of calls that it doesn't matter.

With dialabroad.co.uk, people are using their existing packaged minutes, and presumably not calling a number that has an astromomically high termination fee either.

The size of the rural subsidy is fairly enormous-- like 10 to 13 cents per minute termination cost. There are plenty of legimate opportunities for saving money via routing calls over the Internet, but this isn't one of them. This is trying to take advantage of regulations and subsidies, what would be called "corruption" (though still widely practiced) if it were a big corporation doing it instead of lots of people... of course, in the long run it may cause the elimination of the subsidies, which may well be a good thing if you oppose them.

Posted by: John Thacker at February 7, 2007 10:26 AM

This is strange. Services that work on an arbitrage principle have been successful in the UK and around for a while now, e.g. http://www.dialabroad.co.uk/mobileplus

Have the government clamped down?

John

Posted by: John Smythe at February 6, 2007 12:31 PM

Any idea WHY? Does this mean the end of the 712 model?

Posted by: Jonathan Roberts at February 6, 2007 09:52 AM

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