Free Long-Distance? It Couldn’t Last.

Back in October we did a story about a startup company called FuturePhone, which promised international phone calls–simply for the cost (often nothing) of a call to an out-of-the-way number in northern Iowa.  The company would then route calls over the Internet to the country you wanted to reach. We tried it, and it seemed to work.  So did David Pogue of the New York Times.  So did Michael Gartenberg of Jupiter Research, one of the country’s leading technology analysts. Each of us kept asking, "What’s the catch?"  None of us could find one. But AT&T did.  It’s fairly technical, but it has to do with where calls "terminate," and who pays for that if it’s not in a place served by your long-distance phone company.  AT&T apparently argues that it was being made to pay $2 million a month for calls that "terminated" in Iowa, even though they really reached Thailand, or Chile, or wherever else it was that people were calling.  Paul Kapustka, who runs GigaOM, has a good explanation HERE.  He writes: "Boiled down, AT&T’s main argument is that because the calls are not actually ‘terminated’ in Iowa — AT&T says Iowa is just a midpoint in what is really an international call — AT&T shouldn’t have to pay the LECs the termination fees. Telco legal sources we talked to said that while the suit’s merit can certainly be contested, what it does immediately is give AT&T a legal reason to stall payments of such monthly bills, which could effectively strong-arm the startups out of business." Our apologies to anyone who found out about the service from us and now can’t use it.  If you have any experiences we ought to know about, please tell us.  This is hardly the end of the connectivity revolution; there are more and more ways to route calls through VOIP (Voice Over Internet Protocol) without paying overseas rates. But if you go to FuturePhone’s website, you’ll see a large banner: "THIS SERVICE IS NO LONGER AVAILABLE."