Are Designer Phone Companies the Future?

This phenomenon already is happening in the wireless world, which is no stranger to big brands like ESPN and Disney becoming mobile virtual network operators as a way to deliver their content to die-hard fans’ wireless devices as well as earn some money for the airtime traffic.

Now, VoIP is making it even easier for companies big and small and even nonprofits to start their own private-label phone companies. The global market for VoIP services was 16 million in 2005, and is expected to grow to more than 55 million in 2009, says In-Stat, noting that new entrants including Google and eBay Inc. will play significant roles in driving growth.

While these designer phone companies are giving incumbents reason for pause, enabling them is another distribution channel for wholesalers that have facilities but lack the branding to gain quick traction with customers. VoIP services can be purchased, repackaged, rebranded and sold with ease by a third party that may not have ever seen a Class 5 switch or a data center. And wholesalers can offer the required interconnections to the PSTN.

Google is the poster child for the custom phone company. The online giant has not only launched voice services in connection with its IM services, but also is looking to incorporate voice into its primary business: Web search and advertising. Google said it is trialing click-to-talk so that users can click on a phone number in a search result or in an advertisement, and be connected with that business. The early trial apparently involves services from VoIP Inc., although both companies have been reluctant to talk details of any kind. In this case, Google appears not to have deployed much infrastructure of its own, but rather intends to support the service using VoIP Inc.’s, or another wholesaler’s, infrastructure. If such a service is deployed fully it will need extensive support, such as VoIP interconnection to the PSTN and SIP servers.

“The portals of the world — Yahoo!, Google, eBay — they will not charge for voice but will use it for other things,” says Hank Carabelli, CEO, Pac-West Telecomm, a service provider that fancies itself an enabler for custom phone companies.

Carabelli says other businesses could add voice in nontraditional ways. For example, as automobiles add communications capabilities with cellular and/or Wi-Fi links in vehicles, manufacturers could offer voice services with cars. Further, they could collect data on car performance and use VoIP to automatically notify customers about maintenance, new features or even recalls.

He also believes large companies may want to “offer voice to their downstream suppliers, something like voice extranets.” The advantage is that such services could be an adjunct to existing data extranets, which many companies already use. Adding VoIP to a data infrastructure that already functions at a high level is not onerous.

Pac-West also has explored adding voice for an online dating service that may add voice capability to its Web site. Rather than leaving the site to call a prospective date, members could click on a link to call that person directly from the Web site. The members of the Web site would be able to control who has permission to call, even screening out individual callers, if they wish.

One company already planning to link its customers with VoIP is eBay. With its purchase of Skype, the online retailer not only picked up an international telephone service with millions of users, it also acquired technology that it can use in unique ways. eBay CEO Meg Whitman has articulated uses, such as providing clickto- call links for sellers, so prospective buyers can call them easily to ask questions, ostensibly speeding trades.

The combo opens up new lines of business for eBay. For example, ecommerce communications could be monetized on a pay-per-call basis through Skype. Pay-per-call communications would enable eBay to charge for leadgeneration services for professional services, travel agencies, auto dealers and real estate agents.

This kind of PC-to-PC service might be used sparsely early on simply because consumers are not used to using the Internet to make phone calls, and many don’t have headsets or USB phones that would make the experience more like making a traditional phone call. Offering a more PSTN-like service, then, could transform these offers. Already, Skype has a service, SkypeOut, which enables PC callers to reach PSTN phones and Skype In, which provides phone numbers to Skype users.

Similarly, MCI Inc. (now Verizon) is helping enable MSN’s PC-to-phone service and likely also a phone-to-PC service. The new service, called Windows Live Messenger, will provide PC-to-phone calling. Microsoft also might be planning to provide users with incoming phone numbers, to enable users to receive calls from the PSTN. The MCI announcement described a beta testing period 2.3 cents per minute to select countries and a full launch in 2006 with calling to more than 220 countries.

VoIP wholesalers are touting capabilities to enable PSTN interconnection and revenue generation from connectivity. In January, Pac-West, for example, announced an agreement to bundle VeriSign Inc.’s signaling and database services with its network to create a VoIP service bureau that features LNP, E911, director listing, customer ordering and service interfaces. XO Communications Inc. also recently teamed with NeuStar for similar functionality in its markets.