About 6 months ago, a small website Futurephone.com came out with a new service that allowed you to make free international phone call by simply dialing an Iowa phone number. Once you were connected you typed in the international number and were immediately connected. I personally used this service a number of times to call my family members abroad. As of today the service no longer exists. As it turns out, AT&T got stuck with a $2 million per month bill as a result of the “free” service. Futurephone.com (and I’m assuming the alternative service allfreecalls.net) utilized regulatory-fee arbitrage. As Alec Saunders explains:
The 712 model, as I refer to it, is really a variation on the 900 number model, but financed by taxpayers. Take a low cost call, terminate on a high cost carrier, and pocket the difference.
So basically the service was financed by tax subsidies. Amazingly enough these sites are actually making money from the service. I doubt that allfreecalls.net will last much longer following the lawsuit by AT&T against Futurephone.com. Oh well, it was fun while it lasted!