Service Categories Cost You Big Time

If you’ve ever  tried to read your  monthly phone bill, you know that the system of charges for traditional phone services is virtually incomprehensi- ble to the  average person. One of the  big benefits of VoIP is that it makes the  POTS-PSTN model, together with its complicated billing structure and  weird  terminology, just  go away.
Traditional carrier services, unlike  VoIP telephony, are heavily regulated. That’s  why you get a phone bill with more  small print than the  phone book,  filled with monthly line-access charges, per-minute usage charges, service charges, taxes, and  special fees all applied to the  number and  type  of individual lines  your  company or family uses.

To add  to the  confusion, under the  PSTN model used in the  United  States, recurring service charges are tiered into service categories. The service cate- gories were developed over  the  years by the  telecommunications industry along  with the  Federal Communications Commission (FCC) and the  various states’ governing authorities.

After your  phone company charges you line-access costs and  for any call fea- tures you add  to each line, they  bill you for per-minute usage charges based on your  service category. Each phone line you use may be billed for any of the  following  five service-charge categories:

  Local
  Intralata
  Intrastate
  Interstate
  International

 At present, international service is the  most highly  regulated category. Interstate is the  second highest in terms of regulation. Intralata and  intrastate come in third in terms of degree of regula- tion.  Local service continues to be the least regulated.

But higher regulation and  longer distances don’t  necessarily mean higher cost anymore. Interstate is more  regulated than intrastate and  intralata, but it is much cheaper on a per-minute rate basis. For example, a corporate cus- tomer calling  from Pittsburgh to Los Angeles  (longer distance) might  pay $.02 per  minute. A call from Pittsburgh to Philadelphia (shorter distance), on the  other hand, could cost anywhere from $.06 to $.62 per  minute.

In the  POTS-PSTN way of doing  telephony, more  regulation translates into more add-on service charges per  line. Under  VoIP, you can eliminate all regu- lated fees and  charges because VoIP is totally nonregulated.

It is virtually impossible for VoIP to eliminate all charges for phone service. For instance, if you are a consumer, I recommend at least one POTS line in the  home for 911 service and  other local calls.  Local ordinances require busi- nesses to have  at least one POTS line for fire control and  911. Your primary goal is to reduce or eliminate the  recurring monthly costs with the  other four service-charge categories, and  your  secondary goal is to reduce your  local service costs. With VoIP, you can accomplish these goals by making  most or all toll-related calls on-net. But until the  rest of the  world converts to VoIP, you still need some connectivity to the  local calling  area  using  POTS.