The PhoneBoy Blog

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How Does Numbr Make Money?

NumbrIn my post about Numbr, someone asked how Numbr makes money when they don’t charge anything to the end users? Simple: they make money on incoming calls.

In most parts of the world, to make a local call, you have to pay a per-minute charge to the local phone company. That is not true in the US. Local calls–typically within 12 miles of your location–are considered “free” calls, unless you have purposefully subscribed to a measured-rate plan.

Prior to the introduction of mobile phones in the US, generally speaking local calls originated from and terminated within the same carrier. However, if you live in a “border” area between local exchange carriers (LECs), part of your local calling area may include someone who has a different LEC. In this case, there is a per-minute charge that happens between the two LECs. You may never see or pay that charge, but it’s there. The carriers periodically “settle” these charges.

When you make a long-distance call–my that term seems so antiquated–it is much more likely the call will originate on one LEC and terminate on a different LEC. In this case, the originating LEC will charge a certain amount of money and pay the terminating LEC a per-minute charge to terminate the call. Calls are likely to go both directions and the LECs eventually settle.

Some of the more rural LECs, particularly in states like Iowa, are allowed–by law–to charge higher-than-market rates for call termination. The theory is that rural LECs aren’t going to receive a lot of calls, but will likely originate lots of calls. This excess charge is allowed to help keep the rural LECs afloat. This “loophole” is being exploited by several companies to provide free services–and make a profit.

Numbr is using inbound telephone numbers in NFL cities–places where the cost of terminating a call is likely below a penny a minute. They certainly aren’t making a ton of money off inbound call terminations. Then again: they don’t have to. If you buy outgoing VoIP minutes in a large enough chunks, I’m willing to bet the cost of terminating the inbound call to a number covers the outbound cost of the call with fractions of a cent to spare.  Those fractions of a cent likely go to pay for equipment and rack space in data center.

I get the sense that the guys behind Numbr really aren’t in this to make tons of money anyway. They’re into the social good this service serves.  The fact that the service basically pays for itself is a bonus.

#Cybersecurity Evangelist, Podcaster, #noagenda Producer, Frequenter of shiny metal tubes, Expressor of personal opinions, and of course, a coffee achiever.