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September 23, 2006

VOIP - The Details Kill The Fun

Michael Arrington

62 comments »

A bunch of VOIP services have launched to help people make cheaper calls from normal phones. None of them are compelling for the mass market.

VOIP is great when you initiate calls from VOIP phones or software (Skype, Vonage, etc.). These VOIP networks can call other VOIP phones, or patch into the normal telephone networks to make relatively inexpensive calls. Vonage long ago replaced my normal telephone service, and an increasing number of people are using VOIP solutions instead of a normal telephone.

But a new crop of companies have a launched that are trying to let people make free or cheap VOIP calls from a normal POTS (plain old telephone service) phone (often a cell phone) to another POTS phone. If someone gets it right, there’s a huge market out there to destroy. The problem is that no one has gotten it right. And the mass market won’t adopt these services until they are dead simple to use.

These services generally take one of two approaches to allow people to make VOIP calls. One approach is to tell the service what number you are calling from and what number you would like to call. The service then calls both parties and connects them. The second approach is to assign special phone numbers to use instead of the normal phone number. These special numbers are controlled by the VOIP service and bypass the POTS system for the most expensive parts of the call.

Neither approach allows people to make quick calls on the fly to someone. Both require multiple steps to make a call, usually involving the use of a website as well (meaning you have to be at a computer or try to access the services via a mobile browser).

Here are a few that we’ve been tracking:

Jajah: Go to the website, tell it your phone number and the number you want to call, and a call is initiated to both phones. Call rates are very cheap, sometimes free. But you have to be at your computer to use it, and have a billing relationship with jajah if you are making non-free calls. They have some big news coming out this week, however, that will be worth noting.

Rebtel: We first covered Rebtel here. They just announced a whopping $20 million in venture funding. Rebtel has an extremely confusing method for making calls. The basic fee is $1 per week. They then assign local phone numbers for each of your friends. You call that number instead of the normal number for that friend. Your friend picks up the phone, hangs up and dials the number that just called them to connect to you. The call is then free. If that wasn’t clear, you can see the instructions here. You can also use Rebtel without the person hanging up on the other end, but you will be charged for the call (rates are lower than normal phone rates).

Hullo: We covered Hullo here. Very similar to Jajah, with slightly better features.

ConnectMeAnywhere: Sam Sethi wrote about ConnectMeAnywhere on TechCrunch UK. Like Rebtel, ConnectMeAnywhere assigns local numbers to your contacts, and you use those local numbers instead of their normal phone number. Unlike Rebtel there is no free option where the person hangs up and calls back. Instead, CMA just charges a lower rate than your phone company does. Their rates are here.

None of these services is good enough to change user behaviors in the mass market. Having to be at your computer, or call special phone numbers, is too much trouble for most people. Certainly forcing the person receiving the call to hang up and call back isn’t very attractive. And traditional POTS rates continue to fall fast, meaning the incentive to go with a hard-to-use VOIP provider is lower.

We’ll monitor new services as they launch, of course. And perhaps someone will come up with a better solution. Until then, I’m not betting on any of the current crop of companies.

  • Sphere It

This entry was posted on Saturday, September 23rd, 2006 at 3:25 pm and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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  1. TechCrunch UK » Blog Archive » RebTel gets on the Index

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  2. TechCrunch Japanese アーカイブ » VOIP―ディテールで興ざめ

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  5. VOIP - The Details Kill The Fun « Techflock - Flock onto technology and more!

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  8. VOIP - The Details Kill The Fun » Voice Over Internet Protocol (VoIP) Resources :: VoIP Providers, Philippines VOIP

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  9. blogdelight » Kostenlos mit dem Handy telefonieren - Killer VOIP-Applikation

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  10. Gnome News is Good News » Blog Archive » Making VoIP compelling for mainstream consumers

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  11. GigaOM » Rebtel, Jajah, and CallBack 2.0

    September 28th, 2006 at 7:29 am

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  13. iPhoneSystems - VoIP News and info » Rebtel, Jajah, and CallBack 2.0

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  14. Techcrunch » Blog Archive » Talkster Launches Presence-Based Communication Beta

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  15. Talkster Launches VoIP Bridging Service For The Enterprise at Swiss Podcast Directory and Blog

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  16. Techcrunch » Blog Archive » Jaxtr Widget Lets Social Networkers Chat On Real Live Phones

    December 14th, 2006 at 3:24 am

  17. Multimedias.mobi » Jaxtr Widget Lets Social Networkers Chat On Real Live Phones

    December 17th, 2006 at 1:49 pm

  18. Talkster Launches VoIP Bridging Service For The Enterprise

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  19. Jaxtr Widget Lets Social Networkers Chat On Real Live Phones

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  20. iMicro.mobi » Jaxtr Widget Lets Social Networkers Chat On Real Live Phones

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  21. Jaxtr Out Of Private Beta: Link Your Phone To Your Web Page

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  22. VOIP Startup Fring Raises $12 Million Series B : Knurów

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  23. VOIP Startup Fring Raises $12 Million Series B | Tekjuice.com

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  24. Just a random blog !

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Comments

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  1. Bob

    September 23rd, 2006 at 3:31 pm

    I dont get it. None of them have rates that are lower than any of the international calling cards, or even skpe[out]. Why would someone use these services?

  2. Pat Phelan

    September 23rd, 2006 at 3:54 pm

    Hullo works only in North America
    Connectmeanywhere only works in North America and UK.
    Jajah and Rebtel are at least worldwide plus Rebtels technology is pretty slick once learned, looking forward to Jajah’s announcement @ Demo

  3. user

    September 23rd, 2006 at 3:57 pm

    hmm, the Rebtel website is down, maybe this is a sign :P

    Shame there are no free mobile calls to the UK on Jajah, yet!

  4. Bryan

    September 23rd, 2006 at 4:17 pm

    Vonage does the job for me, and has ever since they started…. And I think they have a similar service allowing you to use your computer to initiate calls, but I may be wrong. All in all… with Vonage leading the way, and Skype, and all the TelCo’s following right behind… these little guys really need to bring something huge to the market if they want to survive, otherwise they will just get a handfull of nerds who actually know they exist.

  5. caleb

    September 23rd, 2006 at 4:38 pm

    Please don’t consider me a typo nazi: Nonw. Delete this comment and please fix it, I care about your professional appeal.

  6. Michael Arrington

    September 23rd, 2006 at 5:42 pm

    thanks Caleb, fixed it.

  7. Brian McConnell

    September 23rd, 2006 at 6:47 pm

    I work in VoIP, and have for ten years. I can tell you right off that retail VoIP is a crappy business to be in. It’s useful as a loss leader for early adopters, propellerheads, etc, but that’s about it.

    VoIP is a call transport mechanism, like T1 or ISDN, only cheaper, and easier to manage. It’s a great technology to trunk calls into your Linux servers at your data center. We use VoIP to trunk calls into our conferencing system from 30 or so countries. This simplified our system a lot, and brought our IT costs down 90% compared to a traditional TDM system, but as far as our users are concerned, they’re just calling a local number.

    Consumer VoIP is just another way to make cheap (read: no profit margin) calls. If most consumers have a choice between a reasonably priced mobile service and a VoIP service that requires them to sit at a computer wearing headgear, they’ll go with a reasonably priced mobile plan. For example, you can get MetroPCS for $40/month with unlimited local and long distance, which is a pretty darn good deal.

  8. rdp

    September 23rd, 2006 at 7:12 pm

    Take a look at Phonegnome. It is a very interesting meld of the services you mention as well as voip providers like Vonage, Sun Rocket, et al.

  9. JeffPulver

    September 23rd, 2006 at 8:05 pm

    Michael - I spent time with the Rebtel team and there is a lot of “there” there — especially under the hood. Being someone with 12+ years experience in the world of VoIP / IP Communications it is easy for me to get jaded. Rebtel has the potential to be the first major BIG winner in the world of Fixed Mobile Convergence.

  10. kwa

    September 23rd, 2006 at 10:11 pm

    In France, Free, the #2 Internet operator in France (the #1 is Orange a.k.a. France Telecom/Wanadoo), introduced a very interesting offer a couple of years ago now: for 30 € (about $38, taxes included), you’ve got:
    - an Internet connexion (ADSL 2+ up to 24 Mbps);
    - television (about 100 channels);
    - a cheap old-fashioned standard phone line;
    - a free or extremly cheap (based of your call destination; local, national and some international calls, including some European countries, North America and so on are free) VOIP phone line.

    The main difference between the “old-fashioned” and the VOIP phone lines is the plug you plug your phone to… And you can use your standard phone for both. In fact, in France, most people using VOIP don’t even know they use VOIP (in addition to the fact they don’t even know what VOIP is!)

  11. Greg

    September 23rd, 2006 at 10:12 pm

    Why wouldn’t these sites just have you SMS (or email) them the number you want to be connected to from your phone? They then have the number you want to reach, and the number you are at, and can call both sides and connect them. Easier to use from your cellphone..

    Oh, and you saw it here first. Don’t go patenting it!

  12. EricA

    September 24th, 2006 at 12:10 am

    You need to take a look at http://www.voxlib.com. It is way cool. It works through Skype and requires that you have a machine logged into Skype, but it has a very simple UI. VoxLib also has an SMS interface, where you can send an SMS message with the number you wish to dial. The problem I have with their SMS system is that it causes your Skype account to be debitted 22 cents, which I find a little much. I assume this is an issue they ran into in order to let Skype be able to get some revenue sharing :)

  13. Pat Phelan

    September 24th, 2006 at 1:38 am

    On comment number 3 user.
    You will ave a long wait on UK mobile becoming free.The average consumer is now beginning to expect free calls to really expensive termination destinations and it just isn’t true, UK mobile 9 cents wholesale for example.
    Michael I can guarantee you that either Rebtel or Jajah have the potential to rock once to figure out how to put their system into the average Joe’s hand
    Greg, Sms callback is 10 year old technology.

  14. FORCER

    September 24th, 2006 at 3:17 am

    I use jajah for cheap international calls when my SkypeOut connection is laggy. I think its a good alternative to SkypeOut because it does not use your broadband connection. I know I could have a backup prepaid calling card but its hassle for me to go to shop and find some reasonably priced.

  15. Steve Macdonald

    September 24th, 2006 at 6:32 am

    @Pat Phelan

    “Michael I can guarantee you that either Rebtel or Jajah have the potential to rock once to figure out how to put their system into the average Joe’s hand”

    Right! And I in turn can guarantee you that AI will rock. All we have to do is figure out how to make comptuters think.

  16. Phoenranger

    September 24th, 2006 at 6:45 am

    I agree with Brian’s skepticism about no/low margin consumer VoIP. Whether using a headset (ours preferably) or a POTS handset, the VoIP call is pretty much the same experience that MCI and ATT gave us 15 years ago. Except that now the calls are a lot cheaper and carrier margins are almost non-existent. Adding presence info is great but most VoIP users don’t care about it yet. So VoIP services compete on price and price alone. But with low barriers to entry there’s no floor on where prices can go.

    Building CallinSearch we’ve had the chance to look inside the business models of many of the new VoIP services. The ones that have the best chance to survive are trying to create simplified versions of exisiting business services e.g. conference calling, 1-800 Click-to-Call and PBX. Some of the names you mentioned are also poking in those markets.

  17. Sreen

    September 24th, 2006 at 9:29 am

    I live in Europe/Germany. The best one’s I came across are:
    http://www.voipcheap.com, http://www.voipbuster.com, http://www.voipstunt.com
    All these services are from one company:
    Betamax GmbH & Co KG
    Im Mediapark 8
    50670 Köln
    Voipcheap offers free calling facility to most of the destinations and the quality is just amazing. Payment methods/options are very good.
    Hope this helps.

    (I am not at all advertising for Betamax, Just want to share this info)

  18. Sreen

    September 24th, 2006 at 9:35 am

    Sorry, I forgot to mention about the interesting feature offered by Voipcheap. When you make a call, Voipcheap shows howmuch Skype would have charged for the same call ;-)

  19. Sameer Patel

    September 24th, 2006 at 1:51 pm

    Brian (#7 above),

    Re: your comment -
    “It’s useful as a loss leader for early adopters, propellerheads, etc, but that’s about it.”

    I’m not so sure. If you step out of the US or any local market, there’s massive adoption for Skype for international communication. Every one I know, (including my self) that has family or business dealings outside the US has adopted Skype. Even my parents who never had a computer, heard about this thing called ‘MSN’ as a way to chat for free with family abroad, quickly figured out how to get this going. The same happened when Skype came on to the scene as a voice alternative to IM.

    Also, whilst folks would definitely move to better quality, you’d be surprised about how high the tolerance can be for sub-optimal quality when its free for a big portion of international conversations. So if Jajah or someone else improved the quality, kept the price down or free, people will go through the hassle of initiating a call via the computer. Remember the baseline for this international audience was dialing a series of passwords and pin numbers on a calling card, only to receive an instable and groggy connection.

    So even what Jajah offers today makes this relatively a breeze and I’m sure that they are only getting warmed up.

  20. pireland

    September 24th, 2006 at 2:42 pm

    Also note that the uncertain call quality is another large barrier to mass consumer adoption. I’ve played with many of these cheap/free services and rarely is the call quality on-par with a normal POTS call. The deterioration gets really noticeable when you add more people into the mix… none of the services I’ve tried seem to handle conference/multiline calls very well.

  21. pireland

    September 24th, 2006 at 2:47 pm

    After I posted my last comment questioning quality I ran across this article about “Some VoIP services surpass traditional phones ”
    http://arstechnica.com/news.ar.....-7806.html

  22. Serop

    September 24th, 2006 at 6:30 pm

    What is good in VoIP services is their rates for overseas destinations. Do you know how many people have to call overseas?! Millions of immigrants living in US and Canada call to different countries every week, talking for hours each!

    To #17: Right, these sites look very similar. And I am very active user of http://internetcalls.com - their rates way better than Skype’s. Paying 10 euro for 3 months I can call to Russia practically unlimited talking for hours every weekend. And dialing is not a problem at all. Why would I use these services for local calls? I have no idea because they are not meant for that.

  23. Derek Scruggs

    September 24th, 2006 at 8:03 pm

    My understanding is that most international calling cards are VOIP, and it’s a big part of Level 3’s business. FWIW I have a Chinese VOIP service that gives me free calls in North America and to China (my wife is from there). It’s a decent service and cheaper than Vonage, but you have to speak Mandarin to get tech support. Here’s the site: http://www.italkbb.com

  24. tim

    September 24th, 2006 at 8:49 pm

    and the mantra continues: cheaper calling, cheaper calling, cheaper calling.

    sigh.

    i speak with a bias (i’m at jangl), but when it comes to consumer voip, there’s gotta be more. like billy joel once sang, “who needs a house out in hackensack? is that all you get for your money?” (with all due respect to hackensack.)

    it is true that many benefit from cheaper calling, of course. . .there’s a democratization here that’s hugely imporant to many, many people who otherwise couldn’t afford to maintain relationships to the extent that they can with these inexpensive calling options. and of course it is always gratifying to see tech companies upstage the entrenched telcos. (wink)

    at the same time, there are more fundamental issues — like control, freedom, privacy, personalization — that can be realized with voip, too. hundreds of millions of cell phones worldwide have their owners by the shorthairs.

    time to take ‘em back.

  25. PHHUANG

    September 25th, 2006 at 12:36 am

    Do they offer simple solutions? http://www.dsg.com.tw/

  26. gman

    September 25th, 2006 at 2:26 am

    Just FYI, YahooBB in Japan did solve this. When you sign up for ADSL service they give you an ADSL modem. You just plug your old phone in the back of the modem and calls are automatically VOIP calls –AND– your old calls still come through to the same phone.

    Dialing out is no problem either, just dial. If you want to use your old service to dial out you can either enter a code on the phone before dialing or press a button on the front of the modem to turn off the VOIP.

    Calls to other YahooBB people are free. Calls outside of that are cheaper than the phone company. Calls from Japan to the USA are 1.5 cents a minute.

  27. Brian McConnell

    September 25th, 2006 at 1:41 pm

    All I am saying is that VoIP, in of itself, is not a long-term business.

    If you’re a mobile operator and want to make VoIP irrelevant in your territory, just do what MetroPCS did and offer flat-rate calling on the majority of call routes that matter for your customers. As more mobile operators migrate to this model, the need for VoIP outside of niche uses will diminish, or rather it will disappear into the public telephone network and become invisible to users. Users don’t care what technology is used to carry the call, only whether its easy to use and reasonably priced.

    While I’d like my mobile bill to be less than it is, having worked in telecom since school, I respect the fact that the phone companies invest billions of dollars to build a national infrastructure and expect to be paid. I also expect that over the next few years, mobile networks will copy the flat-rate model that’s becoming standard for fixed line service. This will undermine the need for VoIP significantly in those markets because it is hard to beat the convenience of cellular networks.

    The market for VoIP won’t disappear entirely, but it’s not going to displace cellular unless the VoIP companies themselves become cellular operators, a move that will require billions of dollars of capital.

  28. TechAddress

    September 25th, 2006 at 3:28 pm

    REBTEL DIALS UP $20 MILLION IN SERIES A FUNDING. Check it out:

    http://techaddress.wordpress.c.....a-funding/

  29. Mike Abundo

    September 25th, 2006 at 6:38 pm

    Screw POTS. Luddites aren’t worth talking to. VOIP all the way.

  30. Johannes Kleske

    September 26th, 2006 at 3:37 am

    For comment no. 20: Talkety (http://talkety.com) handles conference calls pretty easy.

  31. Priit

    September 26th, 2006 at 5:13 am

    http://www.voipfone.co.uk has pretty much all the features mentioned here plus many more.

    SMS Call back- you send a sms with a number where you want to call and the system calls you and the other person then connects your calls.

    Mobile Voip Link- the easiest of them you just call their access number and when it picks up type the number you want to reach.

    https://www.voipfone.co.uk/FP_Voipfone_For_Mobile_Customers.php

    Theres also FREE Access Call Back, Virtual PBX, Fax, Web Calls, etc etc.

  32. Luca

    September 28th, 2006 at 9:11 am

    I found this article just now. I totally agree.
    Here’s my view:

    http://lucafiligheddu.blogspot.....ughts.html

  33. Peter B

    September 29th, 2006 at 12:58 pm

    I have used Tel3Advantage (http://www.tel3advantage.com/) for over a year, and get Skype-like rates for all calls outside the free zone. It works from our POTS, and our cell phones. Dial their local number from any registered phone and it accesses the account, then dial the number you want, in most (if not all?) countries. Call quality is nearly always excellent, and a quick redial code will get a new connection if not. I don’t even need to pay for broadband access, and there are no fixed charges. I assume Tel3Advantage are using VOIP.
    The new Jajah system for automatically working out which calls should get sent through VOIP sounds interesting, though I assume it will not work for POTS connections.

  34. Alex

    October 2nd, 2006 at 1:01 am

    Great comments about (( truphone )) on the following blog entry —>
    “Truly scrumptious” http://www.telepocalypse.net/archives/001008.html
    (( truphone )) http://www.truphone.com

  35. trulover

    November 8th, 2006 at 4:09 pm

    To add to the discussion, I have been using Jajah and a Rebtel Clone for a while until I came accross (( truphone )). I already had a WiFi / GSM phone as I liked the look and feel of the Nokia E60. Now what comes next is just short of stunning. — I always disliked Skype service for the same reason James mentioned above.

    I have been using VoIP on my Nokia E60 for the last 75 days with the (( truphone )) client installed. I recently added up my bills and came to the following conclusing.

    I have made 65 hours of mobile VoIP calls using the (( truphone )) client to many foreign locations (mobile and landline). My average per minute charge with all the free stuff they are giving away (FREE are most global landline calls) was 4.7 pence. WOW!!!! I used to be at 25 pence with my mobile network operator (due to the international and roaming stuff)! What a great saving…(I calculated my mobile savings will come to $6000 per year without the landline savings (have not even done the numbers)).

    This stuff realy works once you manage to install it (can be still tricky but the team at truphone is first class and helped me out).

    (( truphone ))on mobile when in WiFi range is just the best thing ever happening to me!!! Gentlemen forget landlines, get yourself a WiFi / GSM mobile like the Nokia E60 and your next family holiday can be paid from the savings on your mobile and landline bill.

    this kills services like Jajah, Rebtel, Clones of any kind, Skype, gizmo, etc…

  36. VOIP for Small Businesses

    February 12th, 2007 at 12:41 pm

    I am launching a website dedictaed to deciphering all the ins and outs of VOIP solutions for small businesses. It will be ready at the end of the month. Any suggestions are welcome.

    Eggert Isberg
    http://www.voiphomeandbusiness.com

  37. Mark Tomin Nationwide VPN

    February 17th, 2007 at 10:35 am

    What’s lagging behind are the voip phones. Mobile phones with wi-fi might be the answer and they are getting more popular.

    Trulover, I have E60 too. Great phone, but it is not getting love it deserves. It seems people care more about phone camera than wi-fi.

  38. Otto

    March 9th, 2007 at 6:51 pm

    VOIP has greatly influed the communication industry. Now with the upcoming IPTV, a new wave of changes will follow as well. Both need high-speed internet connection, but with the rising demand, it is hard to find an affordable one.

    http://t1linepricequote.com

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