How are some companies offering such cheap rates?

Why some rates are so cheap

Recently, long distance rates have been only minimally regulated by the Federal Communications Commission (FCC). Less regulation in the long distance market has led to increased competition, which ultimately has led to more choices and lower overall costs for consumers.

In this now highly competitive long distance market, many smaller, lesser-known long distance providers have surfaced and are able to offer extremely cheap rates to consumers. These smaller, lesser-known long distance carriers actually use the same networks to transmit calls as the larger, more well-known long distance carriers.

The main difference between these smaller and larger long distance carriers is usually in the area of customer service. These smaller companies provide their own customer service and have their own billing departments.

These (smaller) companies often “rent” in bulk from a major carrier and then re-sell this to consumers at a cheap rate. They are able to provide cheap long distance rates by keeping costs down. These companies avoid the large costs associated with advertising and marketing and don’t have to worry about many other expensive aspects of running a large-scale corporation.