Fixed Wireless Business

TheGlobe Does VoIP

A startup company with big ambitions is looking to medium-sized and small ISPs to be its distribution system. It's all part of the Internet's latest disintermediating trend.

by Gerry Blackwell [May 11, 2004]

voiceglo, an IP telephony company with an interesting past and a more interesting product (and a name written in lower case letters), wants to be your partner. And according to voiceglo president Edward Cespedes, a fair number of ISPs already want to be his partner too.

voiceglo, which came out of the chutes earlier this year with both a Vonage-like, hardware-based home and business phone line replacement product and an intriguing go-anywhere browser-based phone service, sees distribution and marketing as the only barriers to certain success—and even they're not really that big a barrier.

"The product is so scalable and the margins are so high that all we have to do is make the distribution deals," Cespedes says. "We've got hundreds of ISPs interested."

voiceglo has already made one intriguing distribution deal with FTSWireless, a Florida company building out a chain of retail stores in which it plans to sell voiceglo's products, plus hotspot and other Wi-Fi services to supplement its main business of selling mobile telephony products.

voiceglo sees all kinds of potential distribution partners. Cespedes suggests Walmart and American Express as possibles—though he is careful to make no claims of being anywhere near signing deals with either.

"I could walk into Walmart tomorrow, and with no capital expenditure and 40 percent margins they could start [selling the voiceglo products] the day after tomorrow," he says. "Anybody with a major customer base now can be in the phone business—because the Internet has removed the risk."

Anybody could be in the IP telephony biz, but apparently ISPs are voiceglo's main focus.

"There are a number of top-tier ISPs we're talking to," Cespedes says. "But the great bulk would be next tier companies. We've been pleasantly surprised at how hungry ISPs are for IP telephony."

He's expecting to announce "a number" of ISP distribution deals in the next 60 days.

For ISPs, of course, this may sound like déjà vu all over again. A few years ago, voice over IP (VoIP) equipment vendors and service providers tried to convince them that they could improve their ARPU (Average Revenue Per User) by offering VoIP services.

They could either resell service from an IP telephony specialist or provide their own using off-the-shelf VoIP infrastructure equipment. It sounded like a reasonable proposition, but few ISPs ended up doing it.

The reason: the service either wasn't very good, or it cost too much to provide. That was then, this is now. Cespedes is making all the same arguments, but they may make a little more sense now.

The spread of broadband access to homes and small businesses, the glut of cheap fiber for Internet backbone and managed IP networks, along with a drop in the price of VoIP infrastructure and customer premises equipment (CPE) have changed the quality and economics of VoIP.

Witness the success of companies such as Vonage, Net2Phone, and 8x8.

I've personally tried three different IP telephony services and they all delivered good enough voice quality and reliability to give even small business customers reason to consider them seriously.