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Summary:

After getting some New York Times 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 […]

After getting some New York Times 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.”

Our pal Alec Saunders had previously explained how FuturePhone’s VoIP-based telecom arbitrage game might have worked (Tom Evslin also explained it well) — simply, FuturePhone was probably taking advantage of a regulatory loophole that allowed it to earn more money for terminating long-distance calls to Iowa (where the 712 area code is located) than it was paying to connect international calls.

One thing you can count on — when such loopholes exist, it’s a good bet that the team with more lawyers and lobbyists is going to win in the end. And as we keep digging to find out why the company’s service was yanked, we wonder if this isn’t another warning to the VoIP disruptors that they need to do more than find fancy ways to cut costs. Because sometimes those loopholes can close with a noose.

By Paul Kapustka

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  1. I am surprised that a regulatory loophole like this is allowed to exist.

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  2. no such thing as a free ride. pstn termination isn’t free regardless of the loopholes

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  3. It still exists with http://www.allfreecalls.net/

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  4. Alaskan Carnivore Monday, February 5, 2007

    “pstn termination isn’t free regardless of the loopholes…”

    hmm… What about Google Maps Click2Call?? Who pays that termination bill? Anyone??

    Does GOOG have an official telco partner?

    Live.com Maps ClicktoCall is powered by MCI aka Verizon according to past PR. Perhaps today it may be mixed with a sprinkle of Nortel via the OfficeLive.com platform..?

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  5. 如何拨打免费国际电话 (3)…

    早上是我最后一次作为GA(研究生助理)带实验,给学生答疑。没几个学生在实验室,因此我就上del.icio.us网站转转,又一次顺藤摸瓜地看到了一个(通过VoIP方式)免费拨打国际电话的网站:F…

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  6. IT is the second time i Rad about the death of FuturePhone and in both cases the comment was that the loophole could last forever. But in both cases the article forgot to mention that FuturePhone was NOT the only company with such a “business model” and that the other, like http://www.allfreecalls.net/ are still up and running! some other,l like http://ophone.net/ are aslo dead

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  7. Hope you got my mug Paul?

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  8. I am surprised that a regulatory loophole like this is allowed to exist.

    Basically, it’s part of the various efforts (such as the Universal Service Fund) to subsidize rural phone network costs. Subsidies often create arbitrage opportunities. (Or, if you like, “waste, fraud, and abuse.”)

    It’s not extremely different from, say, a high school getting subsidized to buy computers at less than cost, and then selling those computers. The difference is that the ephemeral nature of the phone calls meant that the plan could scale up much greater– at least until the subsidizing phone companies and regulators noticed.

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  9. Rural LEC termination has been around for a long time, and has been quietly tolerated by the big carriers as a way for small companies like mine to provide enhanced services without charging customers via credit card etc.

    FuturePhone and its brethren got shut down because they went after carrier’s primary business, phone calls. It doesn’t surprise me that these guys got shut down pretty promptly.

    One of the rural LECs we use does not allow international calling services like this, so he shuts them down proactively, to avoid attracting litigation from the carriers.

    Rural LEC termination is an attractive way to offer a low cost service to users, but it’s risky, and therefore wise to have other ways to generate revenue in case you do get cut off, have to relocate, etc.

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  10. There are similar services in the UK which have been running for some time now. For example, I can make free calls from my contract cellphone by using this service: http://www.dialabroad.co.uk/mobileplus

    I’m surprised the US isn’t more liberal when it comes to telecos – competition is good!

    Charlie

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