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February 2000


rich.gif (5262 bytes) Arbitrage, Far From Dead


I would like to share with you a story about a user of phone service who is so disgusted with large telephone companies that he welcomes the day when a small, customer-oriented telephone company comes to his area so he can switch to that provider forever. The user of the telephone service in this case is me.

I am probably an atypical long-distance customer, as my monthly long-distance bill averages about $10. Recently, however, some of my relatives and friends who I wanted to be in constant touch with went to Argentina for about a month. As I often write about telephone rates plummeting and how the arbitrage opportunities in the States are slowly eroding away, it didn’t even occur to me to check with my current service provider before using 200 minutes of their service to connect to Argentina. This amounted to two or three days of calling. In my head I assumed I would be paying about 30-40 cents per minute, in line with the arbitrage charts I often see in this magazine and on the Web.

I called MCI WorldCom to check what my rate would be, and to my surprise it
was $2.40 per minute! In only a few days, I racked up a $530 phone bill. When I received the bill from MCI, I felt like a thief entered my house and cleaned out my wallet. I, of all people, was a victim of the phone company’s ridiculous rates. Somehow I thought I was immune to being charged astronomical rates on long distance. This was certainly a painful lesson.

As I wrote this Outlook, I received a call from Sprint asking me to switch to their service. How surprised are you to hear I switched immediately? Not, of course, without asking some important questions like, “What is your rate to Argentina?” Their answer was an astounding 52 cents per minute. So as I proceeded to sign up, the telemarketer asked me if I would like the international plan, to which I answered, “I don’t know.” She explained the plan, and her explanation was quite interesting. The international plan is free and it gives you the 52 cents per minute rate. If you don’t mention it, however, Sprint would use a different code, and you don’t even want to know how much they would charge you.

It seems unethical to me that if you don’t think to mention the international rate — something most people don’t even know exists — then you are not entitled to it. Perhaps I am just upset because my phone bill is so outrageous.

After switching to Sprint, I called MCI to see if there was anything they could do about the telephone monopoly-era rates they charged me. Perhaps it was my choice of words, but the answer was no. Of course, they were more than happy to advise me that they too have an international plan and I could sign up if I’d like to. They further informed me that all international plans have monthly fees, and I should get a written contract from Sprint if they tell me otherwise.

I’d be interested in your feedback on this issue (send e-mail to rtehrani@tmcnet.com), but before you press the send button, I’d like to make a few points. I was aware that telephone companies regularly overcharge customers who don’t know any better. For some reason, I thought I had the best rates available.

Of course, I could have used Internet telephony, but with phone bills around $10, I didn’t ever have use for an Internet telephony service provider until now. I decided that Internet telephony was indeed the best way to go, and I asked around my office and was directed to a number of alternatives. I eventually settled on PT-1 Communications, and more specifically their 101-6868 service, which charges a mere 32 cents per minute.

This was all well and good until I went to COMMUNICATIONS SOLUTIONS EXPO in Las Vegas and still needed to keep in touch. Unfortunately, the calling card portion of PT-1’s Web site was down when I needed it, so one of my fellow team members volunteered to walk through the exhibit hall and locate an Internet telephony calling card for me. I ended up with a Net2Phone card worth $100 at a rate of 42 cents per minute.

The only Net2Phone local access number I had at the time was in my hometown of Stamford, CT, and of course, I was in Las Vegas so I used my cell phone to call Connecticut, and from there placed my Internet telephony calls to Argentina. The quality of my phone calls using this method was absolutely astounding… Minimal if any latency and almost no dropped packets. I was very happy until I realized I would soon run out of allotted minutes on my cell phone. So I retrieved the Las Vegas access number from Net2Phone.

I immediately called Argentina from my hotel phone, using Net2Phone’s local Internet telephony gateway in Nevada. Surprisingly, the quality of my call was atrocious, despite repeated attempts. Obviously, the appropriate bandwidth was not available for me to make a clear phone call from Vegas, and I had to resort to my cell phone.

When I returned home, PT-1 came in quite handy for about two out of three conversations. The rest of my conversations sounded more like Internet telephony beta software tests over an overtaxed trade show network. So to this day, I find myself switching between Net2Phone and PT-1 to make clear and inexpensive calls. Interestingly, MCI informs me that I can’t use PT-1 from my office, although in my home it works fine.

Although the phone company’s lowest rates do continue to decrease for international calling, I have lost all my trust in large carriers. I feel their rate plans are too confusing, and I don’t feel that I have been treated well or fairly by MCI. The worse part is that Sprint has similar policies as well. Am I the only one who thinks that these guys need to act more responsibly?

As a customer, I have more choices today than I have ever had when it comes to making long-distance calls, and it seems that phone companies have yet to acknowledge this. If a phone company was to emerge that provided the ultimate in customer satisfaction and service coupled with calls of high quality, I am sure it would quickly take away huge amounts of market share from the larger providers.
After having gone through this ordeal, I have concluded that providing superior customer service is still an elusive goal for many service providers. Hold times are long, pricing options complex, and flexibility to solve customer problems is unheard of. In any other business but telecom, this would be unacceptable.

The moral of this story is straightforward for service providers. Unless you provide unparalleled service to your customers, you will lose them. This includes calling them and letting them know that you have a less expensive way for them to make phone calls. I don’t feel good finding out after the fact that I have been charged incredibly high rates for 200 minutes but can switch to a new plan from this point forward. This definitely is not a relationship-building experience for me.

I have used hundreds upon hundreds of minutes on Net2phone’s network and it is every bit as good as any other network I have ever used. The advantages of the large phone companies and their perceptions of superior quality will soon totally fade away, and they will be forced to compete on price and service. I welcome the day this happens.

The Evolution Of An Expo

For years, attendees (whether they be enterprise users or service providers) have been coming to CTI™ EXPO to purchase Internet telephony gateways and other IP telephony products and services. With this show, we introduce a name change to CTI™ EXPO that more accurately reflects the coverage we have been providing all along. CTI™ EXPO will now become COMMUNICATIONS SOLUTIONS™ EXPO.

At the upcoming show, which takes place April 26-28 in the Washington, DC convention center, we will have more Internet telephony exhibitors than ever. This show promises to be the largest event to date. Beyond the exhibit hall, our conference program is the best ever and encompasses every aspect of Voice-over-IP (VoIP) equipment and services.

We have done our best to come up with conference tracks that are unparalleled in the industry, and in fact, our conference attendance doubled to over 1,200 at our most recent show in Las Vegas. This should come as no surprise to any readers of this magazine, as TMC conference tracks are designed by the editors of this magazine and all other TMC publications, with the assistance of the engineers of TMC Labs. Literally decades of experience are at our disposal to help design a conference program that is leading edge and objective.

Here is a synopsis of the conference tracks you will find at the show. Please visit our Web site at www.comsolexpo.com for details:

How To Become A New Breed of Service Provider: Learn how to become an ASP, ITSP, ICP, etc. by eliminating the pitfalls to be discussed in this session.

Billing And Provisioning Strategies For Next-Gen Network Services: An often overlooked part of the next-gen service provider equation, billing options should be carefully considered prior to implementation of service. What good is leading edge Internet telephony equipment if you can’t properly bill for its use?

VPNs, Internet QoS, And Security: Y2K will be the year of the VPN. Every service provider should be ready to provide crucial VPN services. Come learn how to profitably sell VPN services.

Delivering Enhanced Services: What’s It Going To Take? Explore the Service Creation Environment (SCE) and learn why it is an essential part of staying ahead of the competition.

Achieving QoS Through Rigorous Network Testing: The most important ingredient to a successful IP telephony solution is voice quality. Learn about the standards and procedures necessary to assure QoS on your network.

Managing The Multitude Of Standards: Charting The Course To Interoperability: Cut through the confusion of multiple standards in order to deploy successful Internet telephony solutions.

Broadband Technology Showcase: Examine new applications (potential and actual) made possible by new broadband services. In addition, discuss the wealth of new broadband choices available today.

New to COMMUNICATIONS SOLUTIONS EXPO is the Microsoft Communications Development Solutions Track. This special conference track focuses on how developers familiar with Microsoft’s array of software solutions can become full partners in the burgeoning communications revolution by designing applications related to IP telephony such as: Unified messaging, collaborative computing, video conferencing, e-commerce, VoIP, PBX/ACD, wireless data, cable telephony, and Windows CE-based PDA solutions.

There are so many more quality conference tracks and additional attractions on the exhibit hall floor that I would like to share with you, but you’ll have to wait until next month. If you are impatient like me, please feel free to visit our Web site for more information at www.comsolexpo.com.

I hope to see you at COMMUNICATIONS SOLUTIONS EXPO, April 26-28, in Washington, DC.

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