I was wrong. Like MCI, I had underestimated the unwavering loyalty that people have to the AT&T brand name. People simply could not believe that anyone other than AT&T could actually make their calls go through. It didn’t matter that AT&T was charging them higher rates, and it didn’t matter that our network was as reliable as, and in most cases identical to, AT&T’s. It especially didn’t seem to matter that we were nice guys. People were not going to switch, and we were not going to make anything.

I have come to realize over time that our position as the nice guys actually worked to our detriment. People, it seems, expect charities to give them things for free and lose money. People will willingly pay top dollar for gourmet cookies or antique bric-a-brac, but let a Girl Scout troop start charging premium prices for their cookies, or a church or synagogue bazaar demand market prices for antique collectibles, and people will just refuse to pay. It’s not that people are inherently rotten, but they have certain fixed notions about “value.” AT&T is allowed to overcharge, but the Girl Scouts aren’t.

I was still naive and unaware of this quirk in human nature. Perhaps, I reasoned, people don’t want to switch from AT&T because that would mean that IDT would be carrying all of their calls. Perhaps people felt that it was only fair for IDT to carry those calls which are going to the IIA’s Internet service. In some way, there was a strange logic to this, and so I unknowingly embarked on a course of action that almost destroyed the IIA and our Internet aspirations along with it.

What I did was arrange a system whereby people could reach the IIA’s modems over toll-free lines rather than by making a conventional long-distance call, if they so desired. Those choosing the toll-free option would be charged 15¢ per minute directly on their credit card, or they could continue using AT&T.

I even went one step further. Every time clients logged on or off, I had the computer tell them how much money they were wasting if they had reached us over AT&T or some other overpriced service provider, and how much they would have saved on IDT’s toll-free connection. I also made a policy decision that all of our clients would have to keep valid credit card numbers on file with us, in the event that they saw the light and began to use our cheaper toll-free lines. Thus, users would be more apt to switch to IDT if they’d already gotten past the obstacle of credit card registration. Nothing had changed. We were still offering free Internet service to anyone who wanted it, only now it looked as if we might actually make some money, as the number of billable minutes on our toll-free lines soared daily. A lot of people, however, didn’t see it my way.

The IIA had made a lot of friends, but it had made enemies as well. The large Internet providers, for instance, hated us. How were they going to continue charging large monthly and hourly fees to use the Net if we were giving it away for free? Many computer industry magazines hated us too. Who was going to shell out big advertising dollars to push expensive on-line access with us around? Finally, there were what I call the “Internet vigilantes.” These were people whose goal it was to see that no commercial activities infiltrated the Net. From the start they suspected the IIA, because they felt that no one would give away so much for nothing without wanting something in return. Now they felt our evil side had been exposed, and they were ready to move in for the kill.