March 27, 2006 10:59 AM PST
New Internet telephony players emerge
Internet search portal Lycos, owned by Korean company Daum Communications, began offering its Lycos Phone service. And Jajah, a start-up with backing from Sequoia Capital, a major Silicon Valley venture capital firm, launched its VoIP (voice over Internet Protocol) service in the U.S., after several months of offering it in Europe.
The two newcomers are entering an increasingly crowded market with players such as eBay's Skype, Time Warner's America Online, Google, Microsoft, Yahoo and EarthLink already fighting for a piece of the market. But Lycos and Jajah are betting that consumers will value how they've differentiated themselves from the pack.
Lycos says its biggest differentiator is its multimedia offering. In addition to free PC-to-PC calling, instant-message chatting and video chatting, Lycos Phone offers video on demand and an MP3 player. Globe7, which is partnering with Lycos, provides access to video content from Reuters and Bloomberg, as well as movie trailers and sports highlights.
Lycos is also trying to differentiate itself by undercutting its competition. Like other companies offering PC-based VoIP services, Lycos charges for calls made from PCs to regular telephone lines or mobile phones. As a promotion, it's offering 100 free minutes of PC-to-landline or PC-to-mobile phone calls.
To entice users to stick with Lycos, it's charging less than 1 cent for PC to phone calls made within the continental U.S. The SkypeOut service costs about 2 cents per minute, and Yahoo Messenger with Voice charges between 1 cent and 2 cents per minute.
Lycos is also offering several features for free--features for which Skype and Yahoo charge a fee--including U.S. phone numbers, fax service, and transmission of voice mail messages to e-mail. Lycos also allows users to receive calls from traditional landline phones and mobile phones for free, while Yahoo, for example, charges $2.99 a month, or $29.90 a year, for that service.
Jajah's big differentiator from its competitors is its simplicity. Unlike all the other companies, which require users to download software, Jajah's service doesn't require a software download or additional equipment, such as headphones, for their PCs. Instead subscribers use their existing phones.
The way it works is that users enter their own phone number and the one they're calling on the Jajah Web site. The Jajah server then calls the number of the person initiating the call. After the caller picks up, it calls the number of the other person. Once that person answers, an Internet connection is established between the two callers and the conversation, which has been converted into IP packets, travels over the Internet.
U.S. domestic calls cost about 2.2 cents a minute. International calls vary. For example, a call from the U.S. to Austria costs between 2.6 cents and 3.2 cents per minute.
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