Yak4Ever May Not Be Around 4Ever

from the regulatory-arbitrage dept

TechCrunch is reporting on the demise of Yak4Ever, a startup company that exploited a regulatory loophole to allow them to offer free international calls. The bill was being paid by large telephone companies like AT&T and Verizon, which were forced to pay exorbitant rates to connect the calls under the FCC's byzantine long distance regulations. Apparently, the Baby Bells got fed up and simply stopped paying the bills, and the FCC hasn't ruled on the issue quickly enough to keep Yak4Ever in business. We wrote about a similar company, called FreeConference.com, back in January. That one offered free conference calling services, again subsidized by exorbitant interconnection charges. In that case, we criticized AT&T for blocking the calls instead of appealing the fees to the FCC. But regardless of the legal details, it's awfully hard to have much sympathy for either Yak4Ever or FreeConference. It seems pretty clear that they're not creating new wealth; they're just taking advantage of poorly-thought-out FCC regulations to make a buck at the expense of other phone companies. This is one of the reasons regulators should leave interconnection rates to market forces whenever possible. If long-distance interconnection rates were determined in competitive markets the way transit agreements are negotiated between Internet carriers, this sort of regulatory arbitrage wouldn't be a problem. It's only when the FCC is setting rates by fiat that these kinds of opportunities crop up.
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Filed Under: arbitrage, free conference calls, iowa, telcos, termination fees
Companies: yak4ever

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  1. identicon
    bob, 20 Nov 2007 @ 10:45am


    The concept of charging more for the distance voice data travels is outdated. They need to revise the laws.
    I can set up a teamspeak server and anyone on the planet can connect to it and we can talk at no extra charge to them.

    Charging someone because their call crosses an imaginary line is like charging someone the difference between a road trip and a plane trip because one side or the other might lose money.

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