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Your Telco Might Be Ripping You Off

VoIP is traditionally thought of as an alternative to the plain-old-telephone system (a.k.a. “POTS” or public switched telephone network). True, it’s usually cheap and would require none of the usual expensive switching equipment that telephone companies usually use. However, users of traditional telephone systems may not be aware that their telcos are ripping them off by routing calls via the Internet but still charging access fees.

Long distance and overseas calls are usually expensive because of these reasons: For international calls, international gateway facilities charge your local telephone company access fees whenever you dial someone from outside the counrty. For long distance, the same system applies, but this time, the telephone company of the person you’re calling charges your telco for access–or they both have access charges against each other.

The reason they feel they can justify charging expensive fees is because the international gateway facilities (IGFs) are expensive to set up and maintain, and they usually have to comply with regulatory requirements (such as franchises, permits, and the like) before they can run their business. In contrast, Internet service providers are usually viewed as value-added service providers instead of utilities–hence lower barriers and costs to entry.

However, with the onset of VoIP as a popular alternative, telcos have started to route their calls through the Internet, too. I have personally seen several prepaid services (that use calling cards) marketing themselves as good alternatives to the regular telephone system, but not exactly as VoIP solutions. You still have to contact your correspondents by dialing through your local phone system.

What I do notice when I try these services for calling overseas is that the voice quality is different. I mean, you will definitely be able to distinguish between a phone call that’s routed through an analog circuit, and one that’s packet-based. So what does this mean? My telephone company is actually routing my calls through VoIP.

What’s worse is that some telcos I know are charging the same rates for calls, but they’re routing the voice calls via the Internet. This means they’re no longer paying the IGF charges, but still charging us end-users the same rates!

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