Complicated Laws = Free Calls

I’m still trying to figure out how this works, and by the time I do the service may be gone. Regardless, Iowa based AllFreeCalls is letting people make phone calls to many foreign countries for free. Or rather, for the cost of a call to Iowa. You call the AllFreeCalls phone number, which is 712-858-8094, and at the prompt dial 011, the country code you are calling and the number you wish to call. The call is made at no charge to the user. A list of supported countries and prefixes is here, and the company says they are adding ten more countries in the coming weeks.

Here’s my understanding of how this works: the founder created his own telephone company in Iowa. Iowa is apparently the only state taking advantage of an FCC kickback scheme that gives telco’s a portion of the fees generated from every inbound call to an Iowa number. So when you call the AllFreeCalls phone number, a portion of any long distance fees you are paying go to the company. The kickback is apparently authorized via the Universal Service Fund. These kickbacks are enough on average to more than cover the international outbound calling fees.

I expect to revise every sentence in the above paragraph as I work this out more completely (and then call my congressional representative), but that’s my current understanding after an email discussion with the founder.

I don’t know if calls originating outside of the U.S. will work, although I assume they will. I’m not sure if that would save the caller much in fees, though, v. calling directly to their destination.

Lots of good insights in the comments, and I recommend reading this post as well. If anyone has read Catch 22 – this makes about as much sense as Milo’s scheme where he bought eggs for 7 cents and sold them at a profit for 5 cents.