T-Mobile USA said Thursday it's testing a new Internet telephony service in Dallas and Seattle that will replace consumers' wireline home phone service.
Subscribers will be able to connect any regular home telephone to a T-Mobile router that will send calls over the Internet much the same way as services like Vonage operate. The service costs $10 a month plus taxes and fees for unlimited domestic local and long distance calls. But customers also have to be signed up for a T-Mobile wireless service costing at least $39.99 a month. The required router, which also provides access to the Internet, costs $50 after rebates. T-Mobile said existing phone numbers can be ported over to its service.
The company had been rumored to be working on a voice over IP wireless router since this summer when it was discovered that the company had filed plans for the device with the Federal Communications Commission.
T-Mobile, which is the fourth largest cell phone operator in the U.S., is upping the ante as it competes against, AT&T and Verizon Wireless, the No. 1 and No. 2 cell phone operators in the U.S. Aside from having more customers and larger network footprints than T-Mobile, these two operators also offer regular landline phone service to consumers. T-Mobile, which is owned by the German operator Deutsche Telekom, does not own landline infrastructure in the U.S. This makes it difficult for T-Mobile to compete against these players when it comes to bundling services and enticing customers to drop their existing phone service for service with T-Mobile.
But the new Talk Forever Home Phone service along with another T-Mobile service called HotSpot AtHome, which was launched last year and enables T-Mobile subscribers to use their home Wi-Fi network to talk on their wireless phones, are designed to entice consumers to abandon their traditional telephone service for T-Mobile's service.
Both of these services fit into T-Mobile USA's bigger strategy, which is to expand its network footprint and add capacity to attract more customers. This year the company is expected to upgrade its network and roll out new services using spectrum it acquired in the Advanced Wireless Services spectrum auction run by the Federal Communications Commission in the summer of 2006.
Earlier this week, T-Mobile also announced that it would offer an unlimited voice, data and text-messaging cell phone service for $99.99 a month. This announcement came after competitor Verizon Wireless announced a similar plan. AT&T also announced it would offer unlimited voice and data for the same price.
Sprint Nextel and Verizon Communications both see an opportunity to make a buck on their IP telephony patents after successfully suing Vonage Holdings last year.
On Thursday, Sprint Nextel said in a U.S. District Court in Wichita, Kan., that it was suing four small phone companies. Sprint alleges that Nuvox Communication, BroadVOX Holdings, Big River Telephone, and Paetec Communications are infringing on six of its patents.
Those patents, part of a larger portfolio of patents that cover voice over IP technology owned by Sprint, are the same ones used to successfully sue Vonage. The two companies eventually settled the dispute last year. And Vonage agreed to pay Sprint a total of $80 million, which includes $35 million for past use of the license, $40 million for a fully paid future license, and $5 million in prepayment for services.
Verizon Communications, which won a $120 million settlement from Vonage last year, is also asserting its patent claims. Earlier this month the company filed a suit in the Eastern District Court of Virginia against cable operator Cox Communications for infringing on eight patents that had to do with voice over IP technology. Two of the patents in the Cox case are the same ones Verizon successfully sued Vonage for infringing.
Since Sprint and Verizon have already successfully asserted these patents, it certainly strengthens their new cases. And it's very likely the companies will either win in court or be able to pressure these companies and any other VoIP providers into licensing deals.
This is very good news for Sprint, which would benefit greatly from turning its existing patent portfolio into a cash cow. The beleaguered cell phone carrier has been bleeding customers and is in desperate need of new revenue growth to boost earnings.
Start-up IP telephony providers Jajah and Jangl are teaming up to take on the competition, the companies said Thursday.
The companies are part of a new generation of voice-over IP providers that have crept up recently hoping to replicate the success story of Skype, which was bought by eBay two years ago for $2.6 billion. The market is already crowded with dozens of these small players. Typically at this stage of the game, start-ups are too busy duking it out against each to forge partnerships, but executives at Jajah and Jangl say it makes sense for them to partner even though some of their products may overlap.
"It is rare to see companies at this stage do something like this," said Michael Cerda, CEO of Jangl. "But it's such a confusing market out there and the press and VCs often lump all VoIP providers together. But our strategies and technologies are really very different. And when we sat down together, we realized they're actually complementary."
Jajah is focused on providing low-cost international calling. Already it has the ability to terminate calls or transfer calls from the Internet to the local telephone network in more than 122 countries around the world. Earlier this year it received funding from the German phone company Deutsche Telekom. And it has ambitions to grow into a major telecommunications platform provider in the future.
Jangl, on the other hand, is focused on providing secure phone calling for social-networking and dating Web sites. The service essentially provides alternative local phone numbers that can mask a person's actual phone number, so that they don't have to give out a personal telephone number to strangers.
But while their focuses may be different, Cerda and Frederik Hermann, director of global marketing for Jajah, say they see benefits in working together for both companies. For example, Jajah is about to launch an in-call advertising platform. The way it works is when a user is being connected to a call, he has the option of listening to a short 10-second advertisement. As a reward for listening to the commercial, the user earns credit, which can be used to defray the cost of making future calls over the Jajah network.
Jangl, which claims to be on some 40 million social-networking profiles on sites such as Match.com, says it brings an important target audience to advertisers because its service is already integrated into the media-rich social-networking world.
"Jajah brings the ads and we bring the customers," Cerda said.
Also as part of the deal, Jangl will be able to terminate calls onto the regular phone network from the Internet in all of Jajah's 122 countries. Today Jangl only offers termination service in 32 countries.
"Over the past two years, we've built a huge back-end system for terminating calls all over the world," Hermann said. "So we're able to allow Jangl to use that resource and we recover a small margin on that."
But Jajah and Jangl's main competitor Jaxtr says the companies are merely running scared. "I see it simply as the weak banding together," said Konstantin Guericke, CEO of Jaxtr.
One thing is for certain, partnerships are tough to manage no matter the size or stage of growth of the companies involved. But who knows? Maybe this partnership will be a prelude to a merger. Executives from Jajah and Jangl haven't ruled out the possibility, but they each say it's not on the table right now.
"Merging the two companies might make sense at some other juncture in the future," Cerda said. "But both companies are still so young. And they have something they want to be when they grow up. And we have something we want to be when we grow up."
Talkster has been getting some buzz from fellow CTIA-goers. The new international dialing service is offering free global calls in exchange to listening to a few ads. The VoIP-based, phone-centered service feels like the perfect Skype (download) and Pincity mashup. It's free like Skype, and also relies on a VoIP backbone, but like Pincity, Talkster makes use of local numbers to initiate mobile and landline calls.
It sure sounds irresistible, and I've read a few glowing reviews, but in actuality it's a bit tricky. Talkster members enter their number and the number they're calling, and Talkster assigns a new, local number for callers on each end of the line. Say what?
If I want to call my sister in England, I enter both our phone numbers and receive a third number in my 415 area code. That's my permanent number for the phone number I just entered. My sister will get a number for me too. If I want to catch her at home, work, and on her cell phone for free, I'll need to enter each phone number and get three separate Talkster lines.
It wouldn't be so confusing if that were all, but of course it's not. Initiating a call isn't merely the result of dialing one of my Talkster-issued local numbers. There's an order to the calling system. Let's say I initiate the call to my darling sib using a Talkster phone number. I dial the appointed number in my area code and she picks up. But we can't talk yet. She first has to hang up while I stay on the line. My sister then quickly locates her local number, and while Talkster servers do some speedy math to connect our loose ends together, we both listen to an ad. Or that's the plan as soon as Talkster's ad deals are in place.... Read more
Despite SunRocket's recent implosion, venture capitalists are hot to invest in voice over IP start-ups.
A company called Jaxtr announced Tuesday that it's raised $10 million. The company, which hopes to emulate the success of eBay's Skype, actually attracted some of the same investors as Skype. Draper Richards, Draper Fisher Jurvetson and Mangrove Capital, all early stage investors in Skype, contributed to Jaxtr's first round of funding.
Jaxtr is one of a growing number of IP telephony start-ups hoping to make it big. These companies are leaning more toward Skype's business model as a complementary voice service rather than billing themselves as a replacement to traditional telephone services. This was the strategy that Vonage and SunRocket took when launched. Now SunRocket is out of business, and Vonage is gasping for air.
But the new crop of start-ups are cleaning up in terms of funding. Rebtel has raised $20 million, Truphone got $23.4 million, Jajah score about $20 million and Ashton Kutcher's Ooma raised $27 million.
Jaxtr allows people to make free international calls from their cell phones by assigning users with a local number. Callers use this number, which routes calls over the Internet. Jaxtr's CEO Konstantin Guericke co-founded LinkedIn, and the service actually incorporates social networking by creating a widget that allows people to embed the number on their blog or social-network profile, such as MySpace and Facebook.
Vonage may finally be catching a lucky break. A Supreme Court decision handed down on Monday may help save Vonage in its patent infringement appeal against Verizon.
On Tuesday, Vonage asked the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., to send the patent infringement case back to the lower court to be retried based on the Supreme Court's decision in the KSR International v. Teleflex case.
The court's decision, handed down on Monday, implied that the patent system has tilted too far toward protecting patents that in many cases were filed for technologies that were obvious and not worthy of being patented. In this case, KSR International was defending itself in a patent infringement suit brought by Teleflex, which owns a patent that combines sensor technology that adjusts the height of vehicle control pedals to suit drivers of different sizes.
Vonage, which is appealing a patent infringement suit that Verizon won in March, is using this Supreme Court ruling to argue that Verizon's patents for mapping IP addresses to phone numbers are invalid because they combine well-known concepts of Internet telephony.
"We are very encouraged by the Supreme Court's decision and the giant step it represents towards achieving much-needed patent reform in this country," Jeffrey Citron, Vonage chairman and interim chief executive officer, said in a statement. "The Supreme Court's decision should have positive implications for Vonage and our pending patent litigation with Verizon. We are also hopeful that this case will protect legitimate innovators and the value of their inventions, unlock the innovation process, and provide that companies are better able to conduct business without the encumbrance of meritless patent claims."
Qwest Communications Chief Executive Officer Richard Notebaert just doesnÂ?t know when to give up.
Earlier this week, MCI accepted VerizonÂ?s new and improved acquisition offer for the third time. Notebaert graciously said he was pulling out of the three-month bidding war. But now, the Denver Post is reporting that he may still try to pursue a deal with MCI. The paper reports he has not ruled out the option of a hostile takeover by the shareholders.
In dating circles, Notebaert could be labeled a stalker. The guy just doesnÂ?t take "no" for an answer.
Here is how I imagine Notebaert trying to woo MCIÂ?s board of directors as he asks them for a date.
Notebaert: Â?MCI, I think weÂ?d make a good couple. Will you go out with me?Â?
MCI: Â?No, IÂ?m already going out with Verizon. So thanks, but no thanks.Â?
Notebaert: Â?Seriously, will you go out with me? I know youÂ?ve been through the ringer, but youÂ?re hot.Â?
MCI: Â?I said no, and I mean it. Now get lost!Â?
Verizon tries to diffuse the situation: Â?Look, MCI doesnÂ?t want you. Now buzz off and let us live happily ever after.Â?
Notebaert: Â?Well, IÂ?m not giving up without a fight. I am going to go around to all your friends bad-mouthing you and offering them money so they will force you to go out with me. Mark my words, MCI, you will be mine, oh, yes, you will be mine!Â?
Now, I donÂ?t fault Notebaert for his tenacity. I mean, weÂ?ve all been there. No one likes rejection, and sometimes we all hang on a little too long to things we know probably wonÂ?t work out. But this is a bit extreme. So my advice to poor Dick Notebaert is to face facts. MCI is just not that into you. Move on. YouÂ?ll find your perfect merger someday.
SBC is going to get "naked." An SBC spokesman confirmed comments made by the company's chief financial officer at an investor conference this week that SBC is planning to trial "naked" DSL. He said testing will begin this summer in select locations, and the service will be rolled out more widely later this year. A story will be posted on News.com shortly that discusses "naked" DSL in more depth.
SBC Communications is working the regulatory circuit as it tries to avoid complying with federal and local regulations on its next-generation services.
On Thursday, the FCC rejected the Baby BellÂ?s request to have its voice over Internet Protocol, or VoIP, service freed of traditional phone regulation, reports Reuters. The FCC rejected the request based on procedural issues, but it could take up the issue again at a later date, said Reuters.
SBC is also looking to be exempt from regulation on its proposed Internet Protocol TV service. The company has been publicly pushing its stance, saying that its new IPTV service is different from traditional cable TV and therefore should not be subject to the same rules as cable services.
Today, cable companies must pay franchise fees to local and state governments to provide their services in a particular market. SBC and Verizon, which also wants to get into the TV game, have been arguing that franchise rules should not apply to them. The debate over local franchise fees is just starting to heat up, so stay tuned.
Soon customers of BellSouthÂ?s DSL service will be able to chat face to face with their friends and family over the Internet. The regional phone company announced yesterday that it is trialing a video chat service that allows customers with a Webcam and microphone to chat through the BellSouth instant-messaging client.
Call me old fashioned, but I think IÂ?d rather stick with the kind of IM where no one has to know that I am sitting at my computer in my pajamas.
