Down Come the International Rates

by Bruce Stewart

I've read (and written) a lot about the ongoing plummeting of telephone rates as VoIP becomes more widespread and voice becomes just another application on the network. Usually we're talking about in-country calling, or client-to-client VoIP calling, but I've noticed a couple of items recently that point to a similar free-fall in calling rates for international calls as well.

First, Russell Shaw had an interesting post the other day noting that Skype had applied for a trademark on the phrase "The Whole World Can Talk For Free." Now that very well may be just a normal business practice for a tagline they have been using for over a year, but Russell thinks its more than that and predicts Skype will open up global free outbound calling:

I envision a scenario in which Skype provides totally free outbound calling to those users who sign on for the revenue-generating SkypeIn service. Free world calling could, then be an incentive that would drive registration for Skype's paid services.

Then today I saw the TechCrunch post Rebtel Makes International Calling Cheap and Easy about how Sweden-based Rebtel is using VoIP to offer dirt-cheap international calling.

Sweden-based Rebtel have launched a product that will allow users to dial any international number at the cost of a local call. It works by having the two ends of the call use local connections (over low-cost local calls) to a VoIP point and then bridge the call to the recipient at the other end over the net.

And just take a look at Brian McConnell's recent post on this site about how easy it was for him to set up a global PBX using Gizmo and Asterisk, and you start getting the sense that international calling is really ripe for disruption.

I'm pretty sure that the high international calling rates we've experienced for years have been one of the incumbent carriers' biggest gravy trains, but I think that train is slowing down fast. Just like local and in-country calling, I expect the cost of international voice calls to rapidly approach zero, forcing the telcos to come up with new business models or die trying.


Terry Laurenzo
2006-07-27 07:13:57
IMHO the telcos are on a slippery slope with international rates. For the first time ever, people have real choices that don't involve getting a HAM radio operator's license. Last year, the telco hit me with a big bill for making a couple of calls to Canada (from the US). Within a week, I had completely cancelled all of my services and upgraded to a local VOIP carrier. My total bill was cut in half and the new carrier charges something like 2c/minute on international, which is something I can live with.

I know one other person with a similar story. The point: International rates can be a gravy train, but they are so unreasonable and the bar to switch is so low that keeping their current rate structures can act as a catalyst for consumers to jump ship entirely. It's never a good thing for a company when the pricing structure for one product line completely jeopardizes whether consumers will even purchase another product.

Bruce Stewart
2006-07-27 09:18:31
Yeah, I completely agree with you, and had a similar experience myself. A couple of years ago before I was using VoIP carriers, I would occasionally make calls to a friend from California to New Zealand. I normally used a discount international carrier that I had to dial their carrier code first to use, but one time I forgot to do that and inadvertently placed the call through my normal carrier, and ended up with a $300 charge for a single hour-long call. That was the end of that long distance relationship for me, and I can't fathom paying those kind of rates today.