IDT Corporation

A native of New York City's borough of the Bronx, Howard Jonas graduated from Harvard in 1978. During the next decade he built a small brochure-distributing and publishing business into an enterprise with revenue exceeding $1 million a year, running it from a converted Bronx funeral home that he shared with his father's insurance brokerage. Shocked by the massive phone bills incurred by staffers who opened a company sales office in Israel, Jonas began thinking of ways to cut this cost of business. After a few months, and with the help of a computer engineer, he had, at an expense of $1, 200, a working automatic-dialing device.
In 1990 Jonas entered the telecommunications industry with International Discount Telecommunications (IDT) Corporation, which introduced international call-reorganization service. This service capitalized on the often-prohibitive rates charged for long-distance telephone calls in certain highly regulated international markets. Subscribers calling a designated number from a foreign carrier's standard international calling service contacted an IDT node in Hackensack, New Jersey, transmitting a dial tone and hanging up after the first ring. The node was equipped with custom-designed call processors programmed to recognize such a call, routing it into the U. S. public switched telephone network and thereby enabling the client to place the call through the usually cheaper international calling service of the U. S. carrier chosen for this purpose.
For calls to the United States from such countries as Brazil, Italy, Spain, and the Soviet Union, the customer typically saved half the cost--sometimes more--by having these calls reoriginated in the United States. Idt billed its customers at rates high enough to cover its operational costs and make a profit. (Before long, however, the company began leasing its processors so that clients could avoid this markup. ) Because touch-tone phones were not readily available abroad, subscribers had to use hand-held dialers to generate the dual-tone multifrequency tones needed to enter access codes and telephone numbers into IDT's call processors. As part of the $250-a-month service, International Discount Telecommunications gave such callers a small electronic box with an automatic dialer and a device to coordinate conference calls. Each box could handle about 100 calls.
The company's first customer was NBC, which needed to be in frequent contact with a three-man team in Barcelona, Spain, preparing for the 1992 Summer Olympic Games. By the end of 1991 the company had 150 customers, some of them Fortune 500 firms, such as PepsiCo, Inc. Few, if any, were foreign enterprises, because they were fearful of angering their national telephone companies--most of them government-owned monopolies. France Telecom threatened legal action, for example, before reducing its own rates so much that Jonas pulled IDT out of the country.

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