Published May 14th, 2007
in Business: Strategy.
Michael Arrington from TechCrunch just broke the news that AllFreeCalls, a phone company offering free international calls by taking advantage of a loophole in the complex telco laws, is back alive, now under a new name. The service launched earlier this year but only managed to stay afloat for about a month before AT&T sued them and a few other startups.
Notably FuturePhone, another company with similar business model, has removed the “service not available” sign and instead has a long message on their front page explaining why free international calls are legal. Here is an interesting bit that might shed some light on how these companies manage to avoid being shut down:
Since Futurephone did not charge for its service and 100% of the calls went over the internet, Futurephone does not fall under the category of a telecommunications carrier. Futurephone provided an internet connection.
Which brings an interesting point. You are only making a phone call if you pay for it, otherwise you are, hmm, browsing internet?
Anyway, I have never really questioned legality of what these companies are doing, yet I have always believed that building your business around hijacking tax subsidies is not a very good idea. This might work for a while but eventually legislation will catch up and the loophole will close.
For the time being however, if certain moral implications are swiped away, you can “yak” your free phone calls.
Published February 17th, 2007
in Interesting / Other.
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?”
