Long Distance

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Long Distance

 Free Long Distance Rate Comparison Calculator.

Long distance rates have fallen drastically in the last couple of years.  The competition has heated up to the point where prices are falling nearly every month.  This is the results of several factors.

The Break-up

Many new long distance companies have sprung up over recent years.  At one time there were no other long distance carriers worth mentioning other than the big three: AT&T, MCI and Sprint.  Sprint ran a very successful campaign with it’s fiber optic network and the “Pin Drop” series of commercial demonstrating the quality of it’s network.  The other two quickly played catch-up.

When AT&T was broken up, it was split into several smaller companies severing national regions.  These “Baby Bells” were forbidden to carry long distance traffic and AT&T was then forbidden to carry your local traffic.  This, in  general, has accomplished what the courts goal was: increased competition in the communication industry, resulting in lower prices and better technologies.

Consider the following:  prior to the breakup of AT&T, the only real advance in technology to affect the consumer was Touch Tone or DTMF.  This was a “Feature” that AT&T charged extra for so if you wanted the speed of Touch Tone you paid more for your phone bill.  But lets consider why Touch Tone was created – to make their own network more efficient.  It was actually cheaper to provide the consumer with Touch Tone than it was to provide rotary dial. 

However, after the breakup, many new innovations have occurred.  Caller ID, 3 way calling, voice mail and call waiting just to name a few.  Even more features are available for business telephone systems.  Prior to breaking up AT&T there simple was no reason to develop these new technologies because there was no competition.  You got what you got and you paid whatever price to get it.

 Over Building of Network Capacity

The Free Fall of Long Distance Rates

Now, prices have falling drastically in the long distance market.  Within the last few years, prices per minute have fallen from 20 cents plus to less than 3 cents.  This type of discount was once only available to major corporations that could commit to several thousands of dollars in long distance calling per month.  Now it is common for residential customers to pay between 3 to 5 cents per minute.

This is a result mainly of overbuilding of the long distance carriers’ ability to handle your calls.  In the late 90’s and early 2000 the Internet was growing at a very rapid pace.  Websites were making millions of dollars and investing in their infrastructure.   The companies attempted to anticipate the need for traffic both for voice and data and heavily invested in their networks.  Each company planned for an expansion in the communications field and gambled for market share.

Then the Internet bubble burst.  Thousands of companies and individuals that were heavily invested in the stock market and technologies lots millions and billions of dollars.  Companies slowed or even halted their investment in technologies and their need for expansion in communications faded.  Many technologies companies either folded or were bought outright by their competition. 

The communication carriers found themselves with more capacity than they could hope to fill.  Now the market share grab begins in earnest.  Discounting heavily in order to attract more customers, each carrier begins to sell blocks of capacity to other long distance providers or “third party billers.”   These third parties would then sell their services to businesses and residential customers under their name passing along huge discounts.  In many, although you may be with one long distance company you are really using the network of another.

Voice Over IP

Find VoIP Service

Voice Over IP or VoIP is in essence sending your voice calls over the Internet.  Many businesses are using VoIP for their internal phone systems and standard telephone lines for their outside calls.  Even more calls can be made using VoIP technologies.  With a standard voice T1 connection you could connect up to 24 simultaneous calls, with a T1 data connection you can have 70 or more.  The more call the lower the cost.

Now, many long distance companies are springing up that can provide VoIP for your home or business.  One advantage is that, as of this writing, VoIP in not regulated or taxed by the Federal Government yet.  This means even greater savings for the consumer.  However there is a movement within the federal government and many state governments to begin regulating and taxing these services.  It seems these governments have problems with consumers trying to hold on to their money.

 Compare VoIP Rates Here

Conclusion

The price war for long distance cannot last forever.  With cellular phone companies offering free long distance and pricing in traditional long distance dropping closer to zero we may see more providers going out of business.  No company can afford to keep capacity on-line with out having revenue to pay for it.  This means that capacity will diminish.  With diminishing capacity, the demand for the available bandwidth will increase.  The end result will be a type of balance between demand and capacity. Expect to see this “Balance” within 10 years as more users switch to VoIP technologies.  You can also expect prices to increase for traditional services and overall cost of ownership for VoIP technologies decrease.

Until then, we should all take advantage of the low rates available now.  You can compare rates for your area here at the Free Long Distance Rate Comparison Calculator.