Stephan Beckert

http://www.telegeography.com

1 Comment

    • Free International Calls Are Latest Threat to the Telcos [view article]
      Futurephone, RIP. Their service has been shut down.

      Futurephone was an arbitrage play that took advantage of high network access rates in rural Iowa. Access charges are the main cost factor in the voice business--internationa... transport, itself, is now dirt cheap. Access charges in some rural jurisdictions in the US are many times higher than the access rates charged by incumbent carriers in many OECD countries. Futurephone worked by having the user place a call to Iowa, and then "reoriginating&qu... the international call. Futurephone's business model banked on the assumption that most US callers now have some form of unmetered or flat-rate domestic long distance service, so they would, in effect, be making "free" international call. Futurephone wouldn't permit calls to mobile phones abroad because mobile network access charges, particularly in Europe, tend to be far higher than fixed-network access charges.

      However, in any arbitrage play, somebody has to pay. In this case, it's the long-distance carriers used by Futurephone subscribers, who are forced to pay the high access rate charged by the rural carrier in Iowa. Also, arbitrage plays don't scale well, so I doubt they were ever a real threat to long-distance revenues (which is not to suggest that LD is a healthy business).

      I'm not sure why Futurephone's service has been shut down. I assume that Futurephone had some sort of revenue sharing agreement with a rural phone company in Iowa, and that the rural telco ended this agreement due to regulatory pressure.       Feb 22 11:34 AM
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