deltathree Hopes Shakeup Spells Success

“We probably should have diversified resources among current and potential business,” Shimels said. joip is a VoIP service consumers use with Panasonic’s hybrid phones.

Still, one year out of the eight that deltathree has been a VoIP provider (it was a minutes wholesaler from 1996-2000) wouldn’t necessarily call for restructuring. Nonetheless, as investors seem to lose faith in VoIP as a TDM alternative, deltathree has to prove its place in the market. It hopes to do that by adding more incumbents, ISPs, cable companies and other VoIP providers as customers. Many of those sources are unproven, though, deltathree warned in its annual report, filed March 31 with the Securities and Exchange Commission.

Shimels said deltathree also is going to try to land more end users through its service provider and reseller channels.

Analysts seem skeptical. deltathree’s channel partners compete against the likes of Vonage Holdings Corp., Time Warner Cable and Comcast Corp., all of which spend “significant sums” on marketing, Monaghan said. “Smaller resellers who don't have big dollars to spend on marketing are at a huge disadvantage. It wouldn't surprise me if there comes a time where the only pure-play VoIP provider out there is Vonage,” he said.

Zimels doesn’t see it that way. deltathree, he pointed out, sells worldwide – Vonage doesn’t.

Stéphane Téral, principal analyst for Infonetics Research, was unconvinced. deltathree should be more specific about its global strategy, he said. “I think of wholesale VoIP and it’s already a crowded space with now iBasis that has emerged as the world’s third-largest VoIP wholesale carrier, behind AT&T, and Verizon.”

If global reach is deltathree’s sole distinction from competitors, it will need to do more than offer low-priced VoIP to more people to survive. Only deltathree can say whether it’s aware of that. Yes, it wants to market to more potential customers, and according to the annual report, is eyeing more acquisitions. deltathree bought the assets and customers of Go2Call.com Inc., a privately held VoIP provider, for $7 million, in February 2007.