Telecom Informer

    

by The Prophet

Greetings from 30,000 feet, and welcome to another action-packed episode of the Telecom Informer!

It's late February and my little project in Spencer, Iowa just ended.  Thanks to the money I made, I'm winging my way over the Tasman Sea - on an Air New Zealand flight between Wellington and Melbourne, Australia!

So what was happening in Spencer?  Fun stuff!  Too bad it's over.  If you're a regular reader of my articles, you've probably heard of access charges and the Universal Service Fund, a.k.a. USF.  If not, here's a quick refresher: long distance calls have several chargeable components, which are built into the few cents per minute (or less) you pay to your long distance carrier.

When you make a long distance call, your Local Exchange Carrier (LEC) delivers the call to your long distance carrier at the tandem.  For this, they charge a small fee to the long distance carrier, usually a fraction of a cent per minute.  Your long distance carrier takes the call over their network to the nearest tandem switch to the call destination, where a termination fee is paid to the LEC on the other end.  This is usually also only a fraction of a cent per minute, but in certain high cost rural areas, it can be over ten cents per minute.  These charges are called "access charges" and they're the reason why long distance calls cost money and Internet-only VoIP calls are free.

For a long time, carriers such as International Telecom Ltd. (based in Seattle, Washington) have taken advantage of access charges by hosting free conference bridges, chat lines, and other services - anything that generates a lot of inbound traffic.  You can get free unified messaging from K7.net, free teleconferences from MrConference.com, and even free dial-up Internet service from nocharge.com (in the Seattle and Boston areas).  Free international calls, however, hadn't been offered until someone got a little creative in Spencer, Iowa.

Why Spencer?

It's located in the remote Iowa Great Lakes region.  It's very expensive to provide local service to this rural area and access charges are, as you might imagine, correspondingly high.  However, thanks to USF grants, Spencer has plenty of fast Internet connectivity.

VoIP termination to many foreign countries, meanwhile, is incredibly cheap, so long as you're terminating to land lines.  So you can probably see where this is going.  A simple game of arbitrage!

Call nearly anywhere in the developed world (well, land lines in about 40 countries actually) for only the cost of a phone call to Iowa!  Effectively, if you had a cellular plan offering unlimited night and weekend minutes, you could make unlimited off-peak international calls.  And done right, anyone offering this service could make a half cent per minute or more, splitting revenues with a local partner in Spencer.

Well, the implementation worked beautifully.  The soft PBXs handling the calls were lean, mean, money-making machines.  Unfortunately, I hear this really ticked off the long distance carriers.  Rumor has it they started putting pressure on National Exchange Carrier Association (NECA), the FCC, and anyone who would listen.

Presumably under the mounting pressure of legal threats, our partner in Iowa pulled the rug out from under us.  It was fun while it lasted though, because prank calling random people in Hong Kong at two in the morning was a lot more interesting than most of the calls that pass through my central office.

After the past couple of months' craziness (we were terminating over 10,000 minutes per hour to China alone), I needed a break - at least until I can dream up a better idea.  So I took the opportunity to visit the lovely south island of New Zealand.

Of course, I checked out the telecommunications landscape as well as the glaciers, mountains, and beaches.  New Zealand telecom is in transition, in some areas more liberalized than others but rapidly modernizing nonetheless.

Cellular services are the unexpected dinosaurs - still a duopoly, as was the case five years ago on my last visit.  Vodafone operates GSM with EDGE and GPRS data service and Telecom NZ operates CDMA (3G 1xEV-DO service is offered in major metropolitan areas, but small outlying areas still have only IS-95 coverage - not even 1xRTT).

Wireless service is insanely expensive by U.S. standards.  Incoming calls are billed on a "caller pays" basis.  Cellular phones are all in special area codes in the 02x series and it's outrageously expensive to call anything in these area codes.  You can literally set up a three-way call from a land line between China, New Zealand, and the U.S. for less than one third the cost of making a local call to a mobile phone in Auckland.  (For example, from a payphone local calls to a mobile phone cost NZ$1.20 per minute.)

When I last visited, Telecom NZ was beginning to offer DSL services.  A 64 kbps/128 kbps line with metered bandwidth started at about NZ$70 per month, and the price went up sharply depending upon how much data you transferred.

Competition has, fortunately, driven prices down.  New Zealand has adopted a similar regulatory approach as the U.S., unbundling the DSL and Internet components.  It has worked and broadband prices are fairly reasonable; 128 kbps/4096 kbps service runs about NZ$50 per month.

However, there is a vague "fair use policy" attached to these plans.  Basically, if you run peer-to-peer applications, bad things will happen (such as throttling, traffic shaping, and other QoS measures).  From most providers, for about NZ$120 per month, you can get 200 GB of transfer that is not subject to the same QoS restrictions.

Wi-Fi is beginning to pop up in more places, although it's not nearly as common as in North America.  Unfortunately, Kiwis try to charge for it nearly everywhere the service is available to the public - usually at outrageous rates and with heavy filtering.  I sought out unsecured access points instead - SSID of LINKSYS, anyone?

While my CDMA handset was able to roam in New Zealand, the cost of doing so was $2.19 per minute - prohibitively expensive for all but billionaires.  I opted to let calls go to voice mail instead, and I was pleased to see that Caller ID and incoming SMS were delivered correctly.  Payphones were a much more economical means of communicating.

Unfortunately, there isn't any one best way to make a call from a payphone in New Zealand, so this required some research and creativity.

The easiest way to call from a payphone is to buy a Telecom NZ prepaid calling card.  In fact, if you're calling anything other than a toll-free number, it's the only way to make calls from a payphone.  I didn't see a single payphone on the entire south island that accepted coins.

Unfortunately, using Telecom NZ is also one of the most expensive ways to call from a payphone, and is only practical for local calls (which are untimed and cost NZ$0.70).

Telecom NZ prepaid calling cards are sold at nearly every retail outlet.  They have smart cards on them, and work similarly to the QuorTech Millennium stored value smart cards (still available from Bell Canada, although most other LECs in North America have given up on them).  You stick it in the slot, the remaining value is displayed on the console, you dial, and the diminishing value is refreshed each minute as your call progresses.

Using a prepaid calling card purchased in the U.S. is another option.

Costco sells an MCI calling card that can be used for international origination.  However, the rates are about US$0.35 per minute for calls back to the U.S., and are nearly US$1 per minute for calls within New Zealand.  While sometimes good for short (one to two minute) calls from payphones, it was prohibitively expensive to use these for long calls.

The toll-free country direct numbers in New Zealand are 000-912 for MCI, 000-913 for AT&T, and 000-999 for Sprint.  These numbers can be used for making collect calls, and all of the carriers will transfer you to their respective business offices as well (since Verizon owns MCI now, MCI can transfer you to Verizon Wireless customer service - handy if you're having trouble with your international roaming service).

Finally, there is a burgeoning industry in third-party VoIP-based prepaid calling cards, with rates at about NZ$0.04 per minute.  Of course, there's a catch: you have to dial through a local gateway and, being VoIP, the quality can sometimes be inconsistent.

I ended up carrying two calling cards - one Telecom NZ card used to connect to the local gateway and a separate prepaid calling card to call from there to my final destination.  You can make multiple consecutive calls without redialing the gateway number, which means you only pay Telecom NZ for one call.  I used a Golalk card, which offered excellent call quality and had local access numbers nearly everywhere in New Zealand.

Well, the captain informs me that it's time to put away portable electronic devices, so it's time to bring this issue of the Telecom Informer - and my laptop - to a close.

Next stop, the land of kangaroos, wallabies, and Telstra!