You might remember AllFreeCalls, the company I reviewed in January. They offered free international calls to a number of countries by taking advantage of a loophole in the complex laws regulating telcos.
Guess what, AT&T didn’t like the bill they had to foot for all those calls to Iowa and they sued AllFreeCalls, FuturePhone, and a number of other startups profiting from the scheme.
Filed in the U.S. District Court for the Southern District of Iowa, Central Division, AT&T’s lawsuit seeks to stop FuturePhone as well as the telcos who provide local infrastructure from continuing with their operations that use regulatory-fee arbitrage and VoIP to provide international calls for only the price of a long-distance call to Iowa.
According to the company blog, AffFreeCalls is still fighting to get back in business while FuturePhone has already put up a big red “service not available” sign on their website.
I always thought it was a matter of time before these startups attract enough attention and the loophole is closed. For any idea to work it has to make sense and I just don’t see how a business like this could survive for long.
Oh well, easy come, easy go. We still have plenty of other alternatives with more solid business plans, and I am sure they will not evaporate overnight. ;-)
To find more about why it worked when it did read this detailed investigation from Alec Saunders: “What’s With the 712 Area Code?”