Consumer VoIP

Fring cuts 20%, claims biz surging, blogger bashes

Doug Mohney — Sun, 30 Nov 2008 20:38:01 -0500

Ah yes, Fring, another me-too mobile VoIP start-up play starts laying off people, while trying to convince everyone else to "Don't worry, be happy." With apologies to Bobby McFerrin.

TechCrunch says Fring is laying off 10 people, about 20 percent of total staff (so they had 50 people before the axe came). CEO Avi Schechter says the company is doing well and the layoffs were to insure the company had enough capital to get them through 2009. And oh-by-the-way, we have raised a third round of financing, but can't tell you how much was invested or who invested it; Fring had previously raised $13 million over two previous rounds.

Fring recently cut a deal with Mobilkom Austria to put their client onto phones and claims they are seeing 400,000 new downloads and activations per month. But FMC/UC blogger/guru Ken Camp says he has tried to run the service on numerous devices and has encountered nothing but pain, suffering, and reboots.

If Fring did secure another round of investment capital, we suspect Mobilkom Austria is on the list of contributors.

For more:
- Ken Camp dishes on his bad experiences with Fring. Blog.
- Meanwhile, TechCrunch bites down on Fring's personnel cut. Post.

Nimbuzz, mig33 work to differentiate out of mobile VoIP pack

Doug Mohney — Wed, 26 Nov 2008 15:16:20 -0500

Nimbuzz and mig33 made announcements over the past seven days to posture themselves as A) Different from everyone else and B) Growing despite all the other "me too" cheap mobile VoIP offerings in the marketplace.

Joining the iPhone/iPod Touch crowd, Nimbuzz has release a free app available through the iPhone App store. The app lets users call, chat and IM through a laundry list of IM communities and social networks, including Skype, Yahoo! Messenger, Facebook, MySpace, AIM, Windows Live Messenger, Google Talk, ICQ and Jabber. IM buddy calling over WiFi is available to Yahoo, Google Talk, Skype and Windows Live Messenger. And if that's not enough, there's also support for local social networks in Germany, The Netherlands and Poland.

Current numbers posted by Nimbuzz include over 10 million logins per day and it claims to be adding new users at a clip of more than 10,000 per day.

Meanwhile, mig33 says it has doubled its user base from 9 million back in January to 18 million today. Like everyone else, you can IM through it, make cheap long-distance calls, yadda-yadda. Most of the growth is occurring overseas, and the company is doubling-down by providing support for Bengali, simplified Chinese, English, Hindi, Indonesian and Russian.

So how many IM/mobile VoIP/cheap phone call plays can the world support? There's iSkoot, Raketu, Nimbuzz, mig33, Truphone, Skype and that's before we even start sweating hard. Plus, Yahoo and Microsoft and different variants within AIM and GoogleTalk.

For more:
- VoIP News talks about mig33

Deltathree's capital squeeze

Doug Mohney — Sun, 23 Nov 2008 22:22:33 -0500

How bad is it at deltathree? Bad enough that the company sent out a press release on Friday announcing it had renegotiated its lease with its NYC landlord to free up $750,000 more of short-term working capital.

Under the agreement deltathree's landlord and subtenant of its offices at 75 Broad Street agreed to release and terminate the letter of credit securing deltathree's obligations under the lease. With other negotiated release of other letters of credit, deltathree expects to get net cash of $750,000 based upon funds that were restricted as of September 30, 2008. The company is also working on securing additional capital funding - good luck with that in this market - as it continues to restructure by cutting operating costs. We're not sure how far the restructuring can go, though. Since the beginning of the year, the company has laid off two-thirds of its staff and subleased its NYC offices.

Earlier in the week, deltathree reported its 3Q 2008 results with the major headline in the release reading, "Senior Management and Board of Directors Exploring Strategic Financing and Transaction Options With Financial Advisor." This is typically code for "We're in bad shape, we've brought in someone from the outside to see what kind of a deal they can broker, maybe we'll get lucky and get bought."

The company's latest financials don't look good, regardless of how you want to look at them. Total revenues were $4.8 million, down from $5.4 million in 2Q08 and $7.3 million in 3Q07. Third quarter GAAP net loss is $4.0 million as compared to a GAAP net loss for 3Q07 of $2.1 million. If you take out the write-off for assets they got from Go2Call, 3Q08 non-GAAP adjusted EBDITA was $400K. As of Sept. 30, 2008, deltathree held approximately $3.3 million in cash, cash equivalents, short & long term investments, plus additional restricted cash.

Currently, deltathree is supporting "tens of thousands" of active users around the world through a service provider/reseller channel and a direct-to-consumer channel. The direct-to-consumer group includes the iConnectHere offering and the joip consumer brand backed/promoted through Panasonic's GLOBARANGE hybrid phone.

For more:
- deltathree reports third quarter results and clawback of $750K on leasing.

Kremlinology and the Vocito/GrandCentral app

Doug Mohney — Thu, 20 Nov 2008 10:52:46 -0500

Back in the days of the Cold War, intelligence analysts would pour over cryptic statements and publicly released photos published in the Soviet-run newspapers to gain clues as to the real state of affairs behind the "Iron Curtain." Today, observers are forced to do the same thing to make educated guesses on what Google is doing with GrandCentral.

The latest clue is the release of Vocito through GoogleCode, a Mac desktop user interface for GrandCentral. Vocito enables users to easily dial anyone from their desktop, utilizing GrandCentral to dial a remote phone and a local phone simultaneously to connect people together. For Mac users, it integrates into Address Book, Quicksilver, supports "tel" URLs and is fully scriptable. You can use it to build and save little applets to automatically dial your phone with a double-click.

But what does it mean? In the general discussion of the product, there's the whole "GrandCentral is currently in a limited beta" - a state they've been in since Obama started running for President. But the author urges us to run out and reserve a GrandCentral number now to "get in on the action as soon as more invites become available." Certainly, there's the implication that more invites will become available sometime in the near future, preferably before Obama has to start his re-election campaign.

For more:
- Go visit the Vocito web page. Maybe there's something airbrushed out of the pictures we've missed.

Keynote: VoIP audio "merely tolerable"

Doug Mohney — Sun, 09 Nov 2008 22:58:54 -0500

Releasing its sixth study on VoIP service providers in three years, Keynote Competitive Research (KCR) says audio quality hasn't improved since the last go-round in April 2007. Reliability, however, is improving.

KCR, the industry analysis group of Keynote Systems, measured a mix of nine voice services -- landline service provider AT&T; VoIP providers AT&T CallVantage, Lingo, Packet8, EarthLink, trueVoice, Verizon's VoiceWing and Vonage; and cable Comcast Digital Voice and Time Warner Digital Phone services.

Findings of the study indicate that digital providers are outpacing the competition with audio quality, an interesting finding where VoIP audio is deemed as "merely tolerable" and a shift from the previous study where landline providers prevailed. In the published rankings, Comcast Digital Voice scored 901 performance points, followed by Verizon's VoiceWing service at 609 points and AT&T's land line service at 506 points.

Only one of the VoIP providers in the study failed to provide dial done 99.9 percent of the time or better and there's also one VoIP provider out there that requires two seconds more to set up a call than anyone else.

Eight out of the nine providers have improved their call completion rates since the previous study.

For reliability, AT&T landline line service ranks at number 1 with 996 points, but Time Warner Digital Phone pulled 926 points, followed by Verizon's VoiceWing service at 872 points.

For more:
- Visit Keynote's website for the press release.

Vonage reports 3Q results, $8M loss

Pete Wylie — Thu, 06 Nov 2008 14:29:45 -0500

Vonage released its third quarter earnings Thursday, and despite a net gain of more than 9,000 customers in the quarter, it lost $8 million for the quarter, $1 million more than the previous quarter.
With increasing losses and continuing churn issues (3 percent for the quarter), the road to profitability never seems to end for Vonage. Add to the equation the time it took Vonage to find a taker on its debt and a threat of delisting by the NYSE, and it's tough to see how Vonage makes it in the long-run. Bleeding millions of dollars while only adding a few thousand customers a quarter cannot sit well with Vonage stockholders.

CEO Marc Lefar tried to put a good spin on the news, highlighting the net customer gain and the eventual refinancing of the debt.

"As we look forward, we continue to maintain our focus on fixing the business fundamentals," Lefar said. "We are becoming more selective in our product investments, continuing to improve customer care and reevaluating our marketing messaging and media investment. Although we anticipate modest growth for the balance of the year, the changes we are putting in place should position us for accelerated growth in 2009."

But the pressing issues for Lefar and the rest of Vonage's staff are figuring out a way to reduce churn and cutting marketing expense for new customers (it currently spends $272.24 per subscriber added). While adding new customers is necessary, paying too much to do so is a recipe for continued insolvency.

For more:
- see the Vonage press release about 3Q financial situation

VoxOx launches free Universal Communicator

Pete Wylie — Mon, 03 Nov 2008 16:18:39 -0500

TelCentris, a San Diego telco, announced a public beta for its VoxOx "Universal Communicator" free, web-based service Monday. VoxOx combines free inbound and outbound VoIP calls, voice chat, IM, SMS, social networking, file sharing and email aggregation for PCs and Macs.

VoxOx sets itself apart from other free social networking/IM clients by providing free voice and video chat. Users accrue minutes of outbound calling time by watching VoxOx-supported ads or referring friends to the service.

Certain features, like built-in prank call sounds boards, seem to indicate that VoxOx is targeted at a younger consumer. TelCentris reportedly plans to monetize the offering from users who pay 1 cent a minute or $20 per month for unlimited service.

"We've added the advertising in there because right now with the whole economic crunch going on a lot of people would appreciate that they could fire their phone company and not have to replace it with one that charges them a bunch of money," said CEO Bryan Hertz to Wired.

For more:
- see the Wired blog post here

NYSE delisting = more bad news for Vonage

Pete Wylie — Fri, 31 Oct 2008 16:32:48 -0400

Vonage Holdings admitted to more gloomy financial news Thursday, as it reported that the NYSE informed the VoIP company last week its stock was in danger of being de-listed. Vonage must get its share price over $1.00 within six months, or it risks being removed from the premier stock exchange in the world.

In a statement, Vonage said that it "intends to cure the deficiency."

You can bet that the current share price and de-listing notice will be a hot topic at the Vonage Special Stockholders meeting Monday, Nov. 3. The meeting was originally scheduled to discuss Vonage's debt refinancing agreement with SilverPoint Partners, but the board now has this to consider as well.

Vonage had to extend its tender offer four times before some one bit at refinancing the debt, and it has yet to fix issues with churn, or find new subscriber bases. And it was ordered to pay Sprint $80 million for a patent violation just over a year ago.

No doubt Vonage employees are hoping 2009 is a lot better than 2008.

For more:
- see the company's release here

Microsoft Live Messenger VoIP now available in South America

Pete Wylie — Fri, 24 Oct 2008 15:37:40 -0400

Microsoft officially announced it has chosen Telefonica, the largest telecommunications provider in Latin America, to distribute its Microsoft Live Messenger VoIP client in seven South American countries. Brazil, Argentina, Chile, Columbia, Peru and Venezuela will now have access to the PC -based phone service, called Voype, which was announced for U.S. users Oct. 3.

The Voype service is priced under Skype's rates; $0.014 a minute for Voype calls to the U.S. compared to $0.021 for Skype. Skype's clear advantage is the ability to answer calls on SkypeIn, as Telefonica said that feature will not be available until a later release date.

Telefonica also plans an eventual rollout in Latin America.

For more:
- see the CNET blog post here

Vonage finally inks refinancing

Pete Wylie — Mon, 20 Oct 2008 13:51:39 -0400

Vonage today announced it will refinance $253 million in convertible debt, pending a shareholder vote on the deal.

Silver Point Finance LLC will fund $202.3 million of the debt in a tiered system, including a first-tier $130.3 million security in senior convertible notes and $72 million second lien credit facility. Silver Point will also purchase $18 million in convertible third-tier notes from Vonage, according to company release.

Vonage plans to purchase the difference of around $33 million with cash on hand. These finalized plans put to rest speculation that Vonage might not find a taker for the refinancing of the debt facility, which was set to mature in 2009. Vonage has struggled in the past few quarters to grow its subscriber base. The company, which floated the tender offer June 30, 2008, announced on Friday that it was extending the offer for the fourth time.

John Rego, Vonage CFO, said in a release,"This agreement provides Vonage with the financial stability to focus on increasing profitability while continuing to provide customers with innovative, feature-rich phone service."

The company's stockholders will vote on the proposed purchase of the debt Nov. 3, 2008, at a special meeting.

For more:
- see the company release here

Vyke 3Q numbers boost shares

Doug Mohney — Mon, 20 Oct 2008 10:05:25 -0400

UK-based Vyke Communications's third quarter numbers have boosted the company's stock price for today. At press time, Vyke's stock was up 3.5 percent and had peaked at almost 5 percent up early today.

Vyke says it is on track to become EBIDTA and cash flow positive on an ongoing month by month basis by the end of the year. It reports 1.8 million customers, an increase of 326 percent compared to 3Q 2007. It has been adding customers at an average of 14,000 per day since 2004. The company says it has a "strong start" with twenty-one Fortune 500 companies participating in its pilot mobile VoIP projects.

Late in September, Vyke sold off its declining calling card business to Direct Connect International and expects to get $1.65 million over the next three years on an earn-out basis; the sale also freed up $50K per month in assorted equipment, hosting and legal expenses.

From a business perspective, Vyke has avoided the "me too" trap of many mobile/web VoIP companies. It has aggressively adopted a Wi-Fi strategy and has a targeted marketing strategy to bring Asian expats onboard.

For more:
- Proactive Investor reports on Vyke share prices up on 3Q numbers

Lingo's $100 early termination fee, contract duration

Doug Mohney — Sun, 19 Oct 2008 23:02:50 -0400

Lingo users might want to review the latest terms and conditions for their VoIP service. The company recently sent out a letter to users indicating they will either have to stay longer or pay more if they leave early.

Initial contract length for Lingo's residential service was 12 months, and the contract included a $59.95 early disconnection fee. DSLReports says users have received a Lingo email saying that, starting on Oct. 23, 2008, customers who cancel service within 24 months of activation now will be subject to a $99.95 cancellation fee per account.

Since Lingo's typical plans run from $21.95 to $34.95 per month, "ouch" comes to mind.

Increasing termination fees and contract duration may not be the best way to win friends and attract more business, given the soft economy and the cloud of bad tidings around early termination fees in the wireless and wireline arenas. Qwest is being sued for its early termination fee on broadband services.

For more:
- DSLreports piece on Lingo doubling contract and termination fee. Article.

Vonage having trouble selling its debt

Pete Wylie — Fri, 17 Oct 2008 16:11:06 -0400

Vonage Holdings announced Thursday that is extending its offer to purchase its convertible debt for a fourth time - not really good news.

Amid the recent credit crunch, Vonage has had no luck getting rid of the $253 million in 5 percent senior unsecured convertible notes, which mature in 2010. The tender offer is valid until Nov. 3, or until Vonage has to extend it again because no one is impressed with their future prospects at the moment.

In a release dated Oct. 7, 2008, John Rego, Vonage Chief Financial Officer, said, "We continue to work diligently to complete the refinancing of our convertible notes and are encouraged by our progress to date. We believe the updated structure we are announcing today will provide the necessary funding to operate our business for the foreseeable future."

Vonage gained subscribers last quarter and reduced churn a bit, but it doesn't look like the funding Rego mentioned is coming from repurchase of the debt in the foreseeable future. So what other options does Vonage have left, besides hoping they can rapidly erase a $7 million operating loss? Could Vonage be one of the first economic downturn casualties in the VoIP space?

For more:
- see the tradingmarkets.com article here
- see the previous Vonage release here

LG Dacom nets 1 million VoIP customers

Pete Wylie — Mon, 13 Oct 2008 10:52:46 -0400

South Korean telecommunications company LG Dacom announced continued success converting consumers in South Korea to its myLG070 residential VoIP play. Since launching the service in July 2007, LG has attracted 1 million subscribers, according to company figures. Adding to LG's momentum in the space, the South Korean government this month enabled a service for customers to maintain their existing telephone number while they migrate from legacy services.

LG also announced this week bullish projections on continued subscriber growth, due in no small part to the government's plan. Taking out impediments to service-switches, like maintaining the same home phone number, looks like a sure-fire win for VoIP services encouraging customers to make the switch. Korea Telecom has got around 90 percent of the South Korean landline market, so LG, the third-largest largest telco in South Korea, saw a good spot to build market share in an increasingly attractive segment with this VoIP push.

For more:
- see the article here
- for good background on the South Korea VoIP market, see the Korea Herald article here

EQO – Latest of the Voice/Phone 2.0 facing imminent disaster

Doug Mohney — Sun, 12 Oct 2008 20:10:46 -0400

Canadian-based EQO communications has cut back its staff from 35 to 12 employees. Is it the latest unfortunate canary in the coal mine?

EQO was/is a VoIP/social networking play offering a free application that provides free IM, cheap calling and cheap texting to your mobile phone. The problem is EQO was like about a dozen other companies on the market with the same business plan triangle of free client/cheap calls/on mobile phones, including Jangl, Jajah and TalkPlus.

EQO may have lasted longer than Jangl and TalkPlus to this point, because it managed to raise $13 million in venture capital to Jangl's $9 million and TalkPlus's $5.5 million. Jajah, on the other hand, figured out it is better to play with the big boys by providing outsourced VoIP services to the likes of Yahoo and others.

For many start-ups - VoIP and others - tightening credit markets translate to swim (make money) or die. Regrettably, many VoIP start-ups lost sight of the prime lesson out of the dot.com/dot.bomb era: Cash flow positive is not a luxury. EQO won't be the last company yielding to the ax over the next quarter.

For more:
- Techvibes reports on EQO staff cuts
- GigaOm speculates on what might happen to EQO and other VoIP startups

Wii getting VoIP'ed

Doug Mohney — Sun, 05 Oct 2008 22:00:39 -0400

Nintendo rolls out a VoIP phone for the Wii, with the Wii Speak hardware and a bundle with the "Animal Crossing" game expected to hit shelves in Japan on November 20.

Wii Speak is a pretty simple piece of hardware, plugging into the Wii through a USB jack on one end. There's a grey box in the middle of the cable and a microphone unit that clamps on to a video display. Wii Speak will allow discussions with up to four "rooms" between Animal Crossing users.

Initially, Nintendo managers planned to keep Wii Speak and the "Animal Crossing: City Folk" together as a bundle, but have decided to offer both the game and the WiiSpeak hardware as separate items.

According to Wikipedia, there's also a Wii Speak channel for simple chatting; the new channel will supposedly launch on November 16. Users will be represented by their "Mii" avatar and the Mii will lip sync to their spoken words. Users will also have the ability to leave audio messages for other users and add audio comments for stored photos.

For more:
- Tech Radar picks up Wii Speak motion on their screens. Article.
- Wikipedia's most recently updated WiiSpeak entry.

Related articles
VoIP Phones: Nintendo DS Image - FierceVoIP

Microsoft Live Messenger VoIP arrives (again)

Pete Wylie — Fri, 03 Oct 2008 14:30:43 -0400

Microsoft has re-introduced VoIP functionality to Windows Live Messenger, after removing the feature earlier this year.

Outbound calls can now be made through the messenger with Telefonica's Voype service. Microsoft had previous agreements with Verizon and Net2Phone for VoIP service on the Live Messenger. Telefonica is offering the dial-out service for $0.014 cents a minute, compared with $0.021 cents a minute for SkypeOut. However, Telefonica does not have a comparable offering to SkypeIn, so that could be one barrier to widespread use of the voice feature.

For more:
- see the tmc.com blog post

Will Ebay auction Skype?

Pete Wylie — Fri, 12 Sep 2008 14:09:12 -0400

EBay admitted that it paid far too much when it acquired Skype in 2005 for $2.5 billion. Today, analysts and investors are clamoring that Skype's lagging growth and growing competition may require a sell-off of the VoIP/IM/video company.

When first purchased, EBay expected Skype to fuel its online auction business by providing an ultra-cheap ways for buyers and sellers to connect directly online. But the two companies have remained apart and failed to build a joint story

Skype continues to face increasing pressure to perform beyond even reasonable expectations, as EBay's growth slows and adoption of Skype for auction communications proves to be marginal. Granted, Skype has had six consecutive (but marginally) profitable quarters and plans new iterations of its trademark offering that has already won hundreds of millions of users. But that might not be enough for EBay to continue to hold on to the Luxembourg-based company.

Rumors abound that EBay seeks to spin Skype off to another suitor and Google is not surprisingly at the front of these M&A rumors.

Any potential sale also will be shadowed by rumors of the Skype backdoor, narrowing market cap and potential security issues with payment plans.

For more:
- read the full report at businessweek.com. Article.

SPOTLIGHT: iPod Touch finally VoIP-able

Pete Wylie — Fri, 12 Sep 2008 13:04:45 -0400

Clever hardware buffs have found a pathway to enable VoIP calls on the newly released iPod Touch and Classic. Apple enabled the headphone jack to accept external microphones, with the intention of letting clients record voice memos on the devices. But with the right application, users could manipulate the external microphone capability to enable VoIP calls over WiFi through clients like Jajah and Skype.

Apple has yet to clarlify on its stance on VoIP calls over WiFi; the company expressly forbids VoIP calls using either the EDGE of 3G networks.

For more:
- see the blog post on macrumors.com

FierceVoIP Leaders: Jonathan Christensen, GM of audio and video for Skype

Pete Wylie — Thu, 11 Sep 2008 11:38:50 -0400

Jonathan Christensen will be speaking at ITEXPO next week.

FierceVoIP: Jonathan, tell us a little about Skype's current offerings.

Christensen: Well, we are using Skype technology right now to place this call. I dialed my PR representative in London to chat briefly before this interview began. We then dialed into the bridge we are on currently through Skype.

Skype is shifting from pure VoIP and IP telephony to offering rich, multi-modal communications. In the past, on the old telephone system, it was voice and voice only. Now, customers want the ability to text, file share, access rich audio and video in one communications interface, and Skype wants to position to provide these services.

FierceVoIP: What would a good example of the benefits of rich communication be?

Christensen: For instance, earlier today I had a conference call with some of our product developers. While we were engaging in the discussion, I sent them a PowerPoint presentation over the same connection, which we were then able to discuss in real time. They responded by sending me an Excel spreadsheet of some of their results, which we also discussed real time. So I think you can see the benefit of this rich communication, both in this enterprise setting, and for the individual consumer as well.

FierceVoIP: What has Skype done to set itself apart from competitors in the space?

Christensen: At first, Skype was purely a voice tool. But it had great mass appeal because it was free, easy to use, and easy to download. Then, we improved the model by solving scalability issues, audio issues and packet loss problems, so that we were always responding to customer feedback and improving the offering.

FierceVoIP: Will Skype remain primarily a voice company, or can we expect major changes, such as new market entries or products?

Christensen: I think we will continue to iterate the flagship offering, because we continue to see good revenue and think there is a lot of room for growth there. We are also looking into the enterprise space, and we are putting increased focus on mobile applications and continuing to develop down that path. I can't comment on specific platforms, but rest assured, we are looking at adopting Skype technology to the relevant ones.

FierceVoIP: What do you think the next three to five years hold for the industry?

Christensen: I think the continued development of scalable, robust solutions involving VoIP. I think the business UC sector will be a good indicator of the prospects in the mass market. The traditional limiters, such as battery life and CPU power, will probably get solved or continue to hinder in that sector, which will speak volumes about commercial applications. I think Skype's revenue possibilities in this space are fantastic, and I think we have a great leadership position in the area to continue growth. In three years, I think Skype will be a larger, more profitable company still offering the same rich communications experience to a global customer base.