by Timothy Lee
Tue, Nov 20th 2007 7:33am
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.
If you liked this post, you may also be interested in...
- Former Security Director For Lottery Charged With Tampering Equipment Before Secretly Buying $14.3 Million Winning Ticket
- Iowa College Grants Hecklers More Veto Power, Resulting In Summoning Of Campus Police To Offending 'Free Speech Wall'
- Throwing Tax Breaks At AT&T And Verizon Shockingly Not Creating Promised Jobs, Investment
- Iowa Dept. Of Transportation Announces Plan To Give Police Officers, Security Personnel Full Access To Your Smartphone
- Iowan 'Drug Interdiction' Officers Legally Steal $100K From Poker Players Passing Through Their State