Answering the Mobile T�liPhone

There are other VoIP providers out there that offer mobile
service to customers with WiSIP (Wi-Fi Session Initiation Protocol) phones—BroadVoice
comes to mind—but Montreal-based TéliPhone
is the only one we know that led with a mobile service. Mobility is the company’s
raison d’etre, though it does now offer Vonage-like wireline VoIP services
as well.

"We wanted to focus on the mobility option," says CEO George Metrakos.
"We had [developed] a much more advanced [back office] mobile platform,
and went with mobile as a way to differentiate ourselves in the market."

TéliPhone, which moved into the U.S. late last year after first launching
in Canada, is also interesting for the innovative business approaches it’s
taking to ensure Wi-Fi phone customers can actually use their phones when
they’re away from home or office—and to lay the groundwork for the
coming era of dual-mode celluar/Wi-Fi phones.

The company is a subsidiary of United American Corp. (UAC) , nominally based in Las Vegas, but also Canadian in origin. UAC
has three other VoIP-related subsidiaries. One is a carriers’ carrier with
a point of presence in Haiti for serving the Caribbean. The group also includes
an enterprise VoIP consulting firm and a financial services group. However,
TéliPhone is responsible for "about 98% of the activity" at UAC
right now, says Metrakos.

TéliPhone started test marketing the mobile VoIP service in Montreal in August
2004. It is now selling through several retail outlets, mainly in Montreal.
Signed-up subscribers today number "in the thousands," Metrakos
claims, though many are in the pipeline and not active yet.

"Today we’re growing at about 100% a month," Metrakos says. "We
obviously started with a small base so that may seem misleading, but we’re
exploding in terms of sales growth right now. About 75% of the customer base
is wireless, but we think wireline is going to be 50% by March or April."

The mobile service will continue to be the company’s flagship offering, though,
Metrakos says.

TéliPhone is using a business model borrowed from the cellular industry to
kick-start the market for mobile VoIP. It is using the same Taiwan-made WiSIP
phone as Pulver Innovations (and others)
in the U.S.—TéliPhone has exclusive rights to distribute the product
in Canada—but where Pulver is selling the phone for $250, TéliPhone
offers it for as little as $80 — with a 12-month commitment to buy the company’s
VoIP service.

Customers pay a little over $16 a month for unlimited incoming and outgoing
calling in the local coverage zone, which includes Montreal, Toronto and New
York. The price includes a voice-mail box, caller ID and 60 minutes of free
long distance calls. Additional long distance time is charged at rates that
begin at 3.25 cents a minute for calls to the UK and other Western European
countries.

For an additional $8 a month, TéliPhone subscribers can turn Canada and the
U.S. into one big free calling zone. For $4 extra a month they can get unlimited
free calling in just Ontario or Quebec.

Offering the handset as a loss leader is part of the company’s strategy for
making VoWi-Fi fly. The other part is working with hotspot operators to ensure
that phones will work in public access locations. With the presence management
features in SIP, the network can find a subscriber anywhere they have connectivity.
This means TéliPhone can offer subscribers a follow-me call-forwarding service.
It also offers another key capability.

"We can identify the hotspot where a call is made or taken," Metrakos
says, "which provides some interesting marketing advantages."

Because it can track which hotspots originate and terminate calls, TéliPhone
can and does offer revenue sharing to operator partners that agree to ensure
the port settings at their hotspots are adjusted to enable VoWi-Fi. In many
cases, WiSIP phones like TéliPhone’s won’t work in hotspots because of the
network settings in place. The company can also provide a branding opportunity
for hotspot owners—a message before a call is placed saying, "Thank
you for using Starbucks," for example.

"It’s an agreement that takes about 15 minutes to resolve with hotspot
operators, and these partnerships allow us to get over the hurdles [of ensuring
correct network settings for VoWi-Fi at hotspots]," Metrakos says.

The company has already established one partnership with Montreal-based Tadaa
Wireless
, which gives subscribers access to about 125 hotspot locations,
mostly in hotels, cafés and restaurants in Montreal. "Now we have this
agreement in place, we can look at other potential roaming partners, like
Boingo and iPath,"
Metrakos says. "We can approach them with the same revenue sharing model.
Boingo alone would open up 22,000 locations worldwide."

In the meantime, the WiSIP phones often do work away from a home or office
Wi-Fi network. While the company doesn’t promote the fact, it’s possible to
use the phones for free on many unprotected WLANs. "I travel frequently
and I’ve used it all over," Metrakos says. "In some places you can
use it as you would a cell phone there’s so much open Wi-Fi from apartments
and stores. But it’s is almost like a black market, so we don’t advertise
the fact."

For customers that want to use VoWi-Fi but also want to ensure they can get
calls wirelessly wherever they go, TéliPhone offers its iPCS service, which
combines GSM cellular and Wi-Fi. For now, they must carry two devices—a
cell phone and the WiSIP phone—but both have the same number. If
the subscriber is in range of an Internet-connected Wi-Fi network when a call
comes in, both will ring. They simply answer the WiSIP phone to avoid cellular
charges.

The company resells GSM service from Rogers Wireless and has integrated
back office functions so that customers get a single bill. It also automatically
routes long distance calls made on the GSM phone over its VoIP network, so
subscribers are charged for a local cellular call plus the applicable VoIP
long distance rates, rather than much more expensive cellular long distance
rates.

"It’s a complex short-term solution," Metrakos admits. The two
phone approach—which TéliPhone somewhat confusingly refers to as
"dual mode"—will soon give way to single dual-mode phones,
promised by most major cell phone makers for later this year. In the shorter
term, the company will have PDA smart phones running VoIP software available
within weeks.

Even further down the road, TéliPhone is eagerly anticipating the possibilities
WiMax promises.

"WiMax starts to make outdoor public hot zones more viable," Metrakos
says. "There is obviously no [phone] hardware available yet that is WiMax
compatible, but we’re planning a number of different initiatives. By 2006
and 2007, as WiMax becomes prevalent, we think it will become one of the main
competitors for 3G cellular. And we should be in very good position to compete."

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