The Economics of Cell Phones

I recently called a friend who was at a meeting in Chicago.  I was in New York.  I momentarily forgot that the friend in Chicago is actually from Toronto and therefore has a Canadian phone number.  Then at the end of the month I got my cell phone bill (from AT&T) and was charged $7 for the call.  Not a big deal.  But it got me thinking.  Why is that?

I was calling from New York on US cell towers and the friend was using cell towers in Chicago.  If the service providers can not tell where I am calling from or where the person I am call is, then what’s with the long distance charge to begin with?

Is this a case of technology moving faster than business plans? Is the world not as flat as I thought? Or am I totally missing something [i.e. the amount of people this actually effects is so little as to not make it worth the phone companies time figuring out how much calls should cost?]

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