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by Smudge 4342 days ago
No this is not unique. Tons of services exploit this loophole (free conference calls, adult chat lines, phone-to-ip services, to name a few).

It is enabled by "common carrier" laws, meaning a phone carrier is legally obligated to connect these calls (to typically rural locations) even if it is at a loss. The connecting local service can charge absurd rates at a high profit margin. To further increase profits, the local services typically offer kickbacks as incentive for internet/VOIP services to connect through their phone numbers. So a rural county with only a small population can have an absurdly high volume of expensive calls flowing through them, all on the carrier's dime.

This is why Google Voice refuses to connect calls through to certain rural areas, something that US carriers complain about, since they feel Google should be subject to these same laws. (Google disagrees, claiming they act as a web service instead of as a traditional phone carrier).

Edit: As to the question of whether the "exploit a loophole and profit" business model itself is too narrow, I'd argue that, no, it isn't. I can't think of any other concrete loopholes off the top of my head, but I'm sure this can't be the only loophole (legally-enforced or otherwise) that businesses profit from, and looking at the sheer number of businesses doing so it seems like it would deserve a place in the list.

1 comments

I think the parent comment's question was whether the idea of "exploting a loophole" is too narrow to be considered a business model, not whether others exploited this particular flaw.