In case you missed all this the first time around, here are the basics of the situation: When a long-distance call is “terminated,” if a long-distance provider like AT&T or Qwest doesn’t own the local lines where that call is going to, it must pay a fee to the company that does. Even though such termination fees are typically higher in rural areas, since there are usually relatively few customers in the sticks big long-distance providers can easily balance the cost with their other businesses.
In Iowa, higher than average termination fees (as much as 13 cents per minute, according to both Qwest and AT&T) have been lately combined with fiber-based Internet access to provide a pretty good place for a VoIP-based gateway, which can then provide a way to cheaply reach foreign PSTNs, or to provide other services, like conference calling or chat sessions. The profit comes from some method of subtracting the money paid for foreign terminations or other services from the amount gained from the long-distance providers by “terminating” calls in Iowa.
RLEC=Rural exchange carrier.
Which inspires me to sing:
I have never had a way with RLECs, but the rates of Iowa make me wish that I could
My family and friends I hate to call you, but to get rate arbitrage, I would