The Cost of International Calling

palm-trees2We have gotten so used to the cost of long distance calls dropping in the US that many people don’t realize that it is still very expensive to call some other places in the world.

In the US we are now used to unlimited long distance plans, and so most of us don’t think about the cost of long distance. We all still pay for it—for example, that’s one of the costs built into your cellphone bill. I imagine that there are younger people who have no appreciation that we were once very careful about making long distance calls.

I remember in the early 80s when AT&T announced a ‘reduced’ long distance plan that had a flat rate of 12 cents per minute. Before that plan, costs varied by distance called and it was not unusual to call some places in the US that were as much as 50 cents per minute. Long distance rates also varied by time of day and people would wait until midnight to call relatives to get the nighttime rates.

But over the years the FCC has deliberately taken steps to reduce long distance rates since they figured that might be the one thing they could do that would most boost the US economy. And it worked.

At the same time that the US made a deliberate effort to reduce costs many other countries did the same. Thirty years ago it was almost universally expensive to call other countries. Part of this was due to lack of facilities; there were only a few trans-oceanic cables that were capable of carrying voice – and they were generally full all of the time with calls. But today it’s almost as cheap to call places like Canada and a lot of Europe as it is to call in the US. And there are now many calling plans that include a number of foreign countries.

But this is not true everywhere. There are still a lot of places around the world that are very expensive to call. The rates I quote are from Comcast’s latest international long distance rates, but the rates charged by others carriers are similar. Even today it costs $2.90 per minute to call Afghanistan. A few years ago that was over $5 per minute. Surprisingly, it’s less than half that rate at $1.20 per minute to call Antarctica.

It costs a lot more in general to call islands. Most of the Caribbean is between $0.40 and $1.20 per minute (although the US Virgin Islands are at US rates). The pacific islands in Micronesia are generally around $1 per minute.

In general there are two reasons why rates are so high in some places. For some islands, the cost of the calling reflects the expensive cost of the facilities needed to complete the calls. Such calls these days are often completed over satellite since there are still places not connected to the world by undersea fibers. But the other big cost component is government tariff rates, charged as a moneymaker for the local governments. This is why you see calls to North Korea costing $3.28 per minute, calls to Laos costing $2.43, and calls to Myanmar costing $2.17.

In most cases these expensive rates are bypassed using voice over IP across the Internet, and so people that live in places with expensive rates usually bypass those costs and use the Internet to talk to family overseas. In many countries that is a risk and you can be prosecuted for bypassing the tariff rates. I remember when VoIP was new there were entrepreneurs in Jamaica who set up calling over the Internet and then dumped the calls into the local network. It seemed that the Jamaican government would arrest a few VoIP vendors every week, but new ones always sprung up to take their places. Now only the most repressive countries still try to police this while most have bowed to the reality of VoIP.

I remember working with many clients in the 70s and 80s and one thing I always looked at was their long distance revenues. Even the smallest telcos would have a few residential customers that made over $1,000 per month in long distance calls and many others who spent hundreds of dollars per month. I remember when parents would groan if one of their kids got a boyfriend or girlfriend who was long distance. We’ve come a long way from those days, and unless you have a reason to call a handful of expensive countries or islands a lot, long distance is now one of those things that you don’t give a second thought about.

2 thoughts on “The Cost of International Calling

  1. I can remember paying ~$13/minute to call the U.S. when I was stationed in South Korea in 1976-1977. Times have changed!

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    • Mike, this still happens. I sent an engineer to Barbados just a few years ago and he got a huge bill for his cell phone usage that was over $5 power minute. Turns out that some countries charge a lot more for cell phone calls than they do for landline calls.

      I looked it up and calls to South Korea are now 2.3 cents per minute. That’s a little easier to handle. When you paid $12 per minute, a lot of that went to the South Korean monopoly telecom providers, but I am sure AT&T took a nice chunk of it too.

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