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."
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.
SBC Communications is going to start testing 'naked' DSL, according to Dave Burstein in his latest DSL Prime newsletter. CFO Rich Lindner supposedly told analysts at a conference that he "expects [SBC] will do trials of naked DSL, especially bundled with wireless."
SBC hasn't yet confirmed these comments. And the company isn't saying yet when testing is likley to begin or when the service might eventually be available.
'Naked' DSL has become a hot topic, especially in light of the recenty proposed mega mergers between SBC and AT&T and Verizon and MCI. Consumer advocates have long complained about the phone companies requiring customers to keep their phone lines if they subscribe to DSL.
In order for people to really reap the benefit from third party VoIP services, they need to be able to get broadband without paying for a telephone line. Duh. It only makes sense that people don't want to pay for two phone lines.
Qwest was the first Baby Bell to see the logic in this argument, and it has already been offering Naked DSL.
The remaining Baby Bells -- SBC, Verizon, and Bellsouth-- have been reluctant to give up the power of their broadband bundle. But the sentiment has been slowly changing. Verizon has taken small steps toward getting "naked". It announced last month that in certain regions of the country existing voice customers could drop their landline, so long as they ported their phone numbers to some other voice services, like cell phones or VoIP services. But they aren't allowing new DSL customers to do this.
Could the third time be a charm for Verizon?
MCI has once again accepted VerizonÂ?s offer to buy the troubled long distance carrier. On Monday, Verizon said it would increase its bid for MCI to at least $26 a share, bringing the total price tag to $8.4 billion. Even though this price is still lower than QwestÂ?s latest offer, MCIÂ?s board has once again agreed to go with VerizonÂ?s offer. QwestÂ?s most recent offer is valued at round $9.74 billion.
This is the third time the board has accepted VerizonÂ?s offer to buy the company. So does this mean that the four month Â?who will end-up with MCIÂ? saga is finally over? Probably, not. Qwest could increase its bid again.
But even after a buyer is finally agreed upon, there are the regulatory hurdles that the companies must jump through. This story will likely be dragged out for most of the year.
Carlos Slim Helu is slick.
The Mexican telecommunications magnate, who is the largest shareholder in MCI, has managed to sell his minority stake in the company to Verizon for a price thatÂ?s 11 percent above what Verizon plans to pay the rest of the companyÂ?s shareholders.
And while everyone else will take their money mostly in stock, Slim will walk away with cash. Verizon also threw in another little perk. In one year, it will give Slim an adjustment based on appreciation of its stock price. In the end the price tag could exceed $27 per share, well above the $23.50 per share being offered to other MCI stockholders.
Not a shabby deal for a guy who bought his stake in MCI on the cheap as it was coming out of bankruptcy.
Over the past two months, Slim has played both sides of the MCI acquisition saga beautifully. By repeatedly stating publicly that VerizonÂ?s offer was too low, he gave legitimacy to QwestÂ?s continued bids for the company and helped pump up VerizonÂ?s offer and MCIÂ?s stock.
ThereÂ?s no doubt that Slim is the big winner out of this whole MCI drama. But what about the other shareholders? The fact that Verizon is willing to pay so much more for some shares versus others has raised some eyebrows. While Verizon eliminated a big obstacle in doing this deal with Slim, it might now have to raise its offer to appease the rest of the shareholders.
The backlash is already mounting. On Saturday after Verizon announced the purchase of SlimÂ?s shares, Bill Miller, CEO of Legg Mason Capital Management, who oversees 5.6 million shares of MCI, blasted the deal in a letter to MCI.
Â?There can be no reason for the Board to support an offer to MCI owners that is substantially inferior to what Verizon has just agreed to pay for a non-control block of stock,Â? he said in the statement. Â?Shareholders would be outraged if the board did less than insist that the identical terms be made available to all other owners."
Stay tuned for the next chapter in this ongoing saga.
Philadelphia officially released its business plan for "Wireless Philadelphia" on Thursday. The city-wide Wi-Fi network will use utility poles to mount wireless gear to provide service to city residents at about $16 to $20 a month.
The city plans to use a cooperative wholesale model, similar to one that has been proposed by UTOPIA, a consortium of 11 cities building a broadband fiber network in Utah. Under this model, the city will create a non-profit organization that will contract out to private organizations that will build the network. The non-profit organization will get its funding through foundation grants and bank loans. It will earn revenue by selling access to private Internet service providers at wholesale prices.
The network should be up and running by the end of summer 2006, said Dianah Neff, CIO for the city.
Philadelphia also plans to provide low income residents with new or used computers to take advantage of the new network. The city will work with established community groups to provide training for residents so they know how to use the equipment.
Can you hear me now, Qwest? Thanks, but no thanks.
The board of directors at MCI has once again rejected Qwest Communications' takeover bid, but the drama may not be over as Qwest plans to take its fight to shareholders.
Late Tuesday night, MCI announced it was rejecting Qwest's offer of $8.9 billion for Verizon's $7.5 billion bid. But Qwest isn't giving up just yet. The company looks to be preparing for a proxy fight with Verizon.
"We are confident that our offer is superior, and statements of support from many MCI shareowners indicate that they are in agreement with us," the company said in a statement. "Qwest will allow shareholders to dictate the next steps."
As I have said before on this blog, Qwest's unrelenting pursuit of MCI looks pathetically desperate. I understand that MCI is the number 2 long distance company in the United States. But the last time I checked long distance was a dying business. As for MCI's corporate business, AT&T is still considered the leader.
What's more, acquisitions in general are tough to pull off. Any CEO would tell you that the majority of them fail. Integrating different networks together is no easy task. I'm not sure why anyone would fight so hard for assets that may end up being more trouble than they are worth in the future.
Qwest already has a bad reputation when it comes to servicing its existing customers. In the 14 states where it operates its local phone business, which used to be called U.S. West, customers refer to it as U.S. Worst. Not a ringing endorsement in terms of service. And in the enterprise game, which I'm guessing is why Qwest wants MCI, service is crucial.
I suppose it will be interesting to see how the battle plays out. Will shareholders take Qwest's money and run or will they heed the board's advice and stick with the Verizon offer? Stay tuned as the drama continues to unfold.
