One of the most unusual facets of telecom is the way outbound calling is priced. Back in the late 1940s through the 1990s, a person's phone number was tied to their geography. If your area code was 206, you were in Washington. If you were located in California, you could not get a 206 area code no matter how hard you tried. Additionally, the second set of three numbers further pinpointed your location on a map. If your phone number was (360) 986-XXXX, you were located in Aberdeen, Washington and not Seattle or Vancouver. This geographic system allowed phone companies to easily know the geographic distance between your location and the location you were calling and charge you for Long Distance.
Long Distance was really important in those years because it was extremely expensive and time consuming to run copper wires from Washington State to New York. Indeed - that is what they did - they actually ran physical wires from one area to another.
Everything changed toward the end of the century for two reasons:
- The adoption of cellular telephones
- The ability for consumers to move their phone number from one carrier to another
This created a problem where a phone number was not necessarily linked to its geography, but it still inherited its legacy distance-based pricing. In order to accommodate this, many carriers adopted a practice called LCR. LCR is the technique used by phone companies to route an outbound call to its destination using the most inexpensive route. As the number of phone companies grew, so too did the number of available routes. This created a force that brought down the costs for outbound calls to the point where most carriers no longer bother with long distance charges.
How Pricing Works
LCR works by assigning a price based on three things:
- The Source Phone Number (The person placing the outbound call)
- The Destination Phone Number (The person receiving the outbound cal)
- Whether or not the two phone numbers (item 1 and 2) are in different states
Contrary to what you might expect, actual geographic distance does not change the cost of the call. Only routable geographic distance does.
For example, if your neighbor's cell phone number is in the 808 area code (Hawaii) but she lives next door to you in Los Angeles, the cost of the call for the carrier will act as though that call went across the ocean... even though it didn't. The opposite is also true - if your friend's cell phone number is a Los Angeles area code, but he is in Nebraska, you calling him from Los Angeles will act as though that cost never left the state. It's a very strange system.
Thus, every different NPA NXX combinations have their own cost. (360) 986-XXXX has a different cost to call then (206) 800-XXXX, even thought they are in the same state. Even different NXX combinations within the same area code can cost different - so (360) 986-XXXX will cost different than (360) 215-XXXX. These combinations are constantly changing and there are usually hundreds of thousands of possible prices.
How To Read A Rate Deck
This is an example of what an LCR Rate Deck looks like:
In the above example, if you were to call (580) 766-XXXX from across state lines (Inter-State), you would pay $0.00736 per minute. However, if you called the same number from within the same state (Intra-State), the cost would be $0.00861 per minute. The same is true for every possible NPA NXX combination in all of Canada, the USA and about 20 small island countries (like Jamaica).
In order to make this much easier for everyone, most carriers simply average the entire deck together add a markup and then issue a flat rate for outbound calling. In the above example, the Inter average is $0.0074 and the Intra average is $0.0078. Therefore, the entire average is $0.0076. If you add a 15% markup, the flat rate would be $0.0087. This is what Skyetel does to offer flat-rate outbound calling.
This creates two problems:
- It puts Skyetel in a position where we can loose money if a customer calls a very expensive destination (like (906) 573-XXXX from the same state).
- If our flat rate was $0.0087, and our cost was $0.00906, we'd loose money every time a customer called that destination. (This is one kind of fraud)
- It makes the cost of the call artificially expensive for customers who are calling very inexpensive locations
Skyetel's LCR Billing
Please note - once you are switched to LCR Billing, it is not possible to be switched back to flat rate billing.
In order to fix these two limitations with Flat Rate billing, Skyetel is proud to offer its own LCR Based pricing. When enabled, the cost for each call is determined at the time the call is completed based on our actual costs to route the call rather than Skyetel's averages. We then add our markup (we have to keep our lights on!) and then deduct the total cost of the call from your balance. This technique allows us to offer insanely low rates for customers who are calling inexpensive metropolitan locations.
Our favorite part of this feature is that we calculate our customer's average rate and display it in our dashboard:
In the above example, you can see that this customer's average rate is $0.0083. This stat updates daily.
When enrolled in Skyetel's LCR, you can download your current rate deck from the Rates and Fees page inside the Skyetel portal. From there you can generate your own averages or add them to your own LCR if you maintain one. Because our LCR product is a Managed LCR product, we do not issue rate change notifications.
Managed vs Standard LCR
The core difference between a Managed LCR and a Standard LCR is that we do not issue rate changes, but we also do not send back 503 SIP messages either. In a standard LCR product, if the destination you are dialing has an outage, or is having congestion, the LCR provider will reply to your INVITE with a 503 so you can try your call through a different Vendor. In our Managed LCR product, we always deliver the call, even if our cost of doing so is higher than what we put in our rate sheet. In addition to the guarantee of delivery, our Managed LCR is hard-linked to our own costs; so as our costs go down, so do yours (the opposite is also true - if our costs go up, so will yours).
To download your customized rate deck, head over to the Rates and Fees page and click "Get Rates"
After a few minutes, you will receive an e-mail with your custom LCR rates.
LCR Billing Eligibility
Skyetel's LCR Billing is only available to customers who fit certain requirements. If you are interested in enrolling in Skyetel's LCR Billing, please open a ticket with the support department.