Why are long distance phone calls free when calling from a cell phone but not when calling from a landline?

The pricing of communication services has very little to do with actual costs.

In “the old days” when “the Bell Telephone Company” was a monopoly provider, they derived almost all their profits from their “Long Lines” division. Later, when the courts ordered the breaking up of AT&T into 7 regional local service providers and a long distance company, and set parameters to allow other companies to compete for long distance service, the most expensive long distance calls were the ones that were outside your “local calling area” but short enough that they did not have to be handed over to the long distance carrier. (Intra-LATA long distance calls.)

When cell phone companies started, they were also regional. In each service area, there were provisions to have two cellphone companies: One was the local telephone company (if they wanted it) and the other had to be a non-telephone company. Eventually, the wireless carriers started merging and offer national coverage, and they took the opportunity to carry all calls within the country at the same rate as local calls.

The reality is that except for the last mile, most telephone calls go through the Internet (or some circuit switched network where other circuits are used to provide Internet links). Most of the costs are not in providing the circuits, but in customer service and occasional trouble-shooting.

My business has 5 desktop telephones and a FAX machine. We used to have 3 landline circuits, one of which was dedicated to the FAX. We paid about $200 per month, but I hated their service; they would screw up our billing every so often and try to upsell us and give misleading information about what the “improved” plan would entail and what it would cost. Repeatedly, the telephone sales agent would promise us savings, and when we got the first bill, it was $50 to $75 month MORE than the previous plan. So I decided to make a change.

We now use an internet based telephone service. We pay about $15 per month. We did have to buy new telephones, but the whole set cost less than $300, and we sold our old PBX switch for almost that much.

CallCentric (VoIP Internet phone service) is the company. They are wonderful if you are a techie and can do your own technical support. The only problems we have had were because we had not tied down our network security enough. Someone hacked our phones to dial cellphone numbers in Macedonia that streamed music all day at about $2/minute. (I am sure no actual cellphones were involved, but the numbers were in a number range listed a mobile phones, so that the rates were higher than normal international rates.)

The real rip-off today is international roaming charges on cellphones. I came home from my European vacation in May/June to a $6,200 cellphone bill due to a data entry error at ATT. Took 2 months to straighten out. Made up for the “free long distance calls” for a long time.

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