15 Comments

Summary:

While most of the media attention at TechCrunch’s annual startup showcase in San Francisco was focused on the latest and shiniest startups, I ended up spending most of my day walking the demo pit, quietly checking out what was on display. And after that I checked […]

While most of the media attention at TechCrunch’s annual startup showcase in San Francisco was focused on the latest and shiniest startups, I ended up spending most of my day walking the demo pit, quietly checking out what was on display.

And after that I checked on the health of the alumni of 2007. I was most interested in Pat Phelan’s company Cubic Telecom, which got a reluctant and very partial thumbs up from me a year ago. To jog your memory, Cubic has a service called MAXroam, which sells you a SIM card that saves you crazy amounts of money when roaming overseas. Instead of paying the outrageous rates to incumbent carriers, MAXroam uses a VoIP-based architecture to offer calls at pretty cut rate prices. 

Phelan is an odd man out at these Web 2.0 events. For starters, like me, he was in his 20s a long time ago. He is a telecom disrupter. And he is obsessed with real-world metrics such as revenues and profits. Now that’s old school! Perhaps that’s why I enjoy the company of this acerbic Irishman with a heart of gold. 

When I showed up at his booth, he was all flustered. Pat had just busted Michael Arrington’s iPhone. He was showing off a new iPhone SIM-unlocking hack that allows you to use any service on the iPhone including data, not just the carrier who sold you the iPhone. Something went wrong and it took about 30 minutes to get the iPhone working again. And that was long enough to have Pat reaching for those nasty things I gave up in January. After giving him hell for sucking down on the coffin nails, I asked him, how is business?

Pretty good, he said.  And it was about to get better. MAXRoam now has over 100,000 paying customers. The company is bringing in substantial revenues (and some profits.) It is enough that Phelan has no plans to raise more capital for his company. He has announced Version 2 of its service, which includes data roaming and U.S. roaming. Overseas travelers could pay 40 cents a minute for roaming in the U.S., a huge savings when compared to roaming charges of around $2.99 for every minute of talk time.

Will that be enough? I don’t think so. 

My argument last year was: Selling discount minutes is a tough business and making money off it is even tougher. What you need is scale. Phelan thinks he will get thereir by selling MAXroam V2 as a white-label solution for other consumer brands. For instance, Phelan is very close to announcing a deal with one of world’s largest travel agencies, which will sell branded MAXRoam-powered service in places like India. He feels that by working with such well-known consumer brands he can accelerate the number of people making calls using MAXroam, which would allow the company to make more money. We will check in with Pat in a couple of months and see how he’s doing. 

You’re subscribed! If you like, you can update your settings

  1. I hope he does well with this product. I used his international long distance circumventing products (two iterations) and was happy with them. It’s a shame they were shut down.

    Small typo, sir:

    “Phelan thinks he will get their by selling MAXroam”

  2. Data roaming?! Now I’m interested. Anytime I take my Canadian Blackberry to the US, I get slammed with outrageous data rates. And with the near monopoly situation up here, that’s not likely to change soon. This is a pain lots of other people feel too.

  3. @ Raymond

    Thanks for the correction. I fixed that. I know Pat is going to get this right. He knows what he is doing.

    @Shai,

    It might be worth checking out. I have not checked out just yet. Sometime today perhaps.

  4. These are the kind of businesses I would love to hear more about at these conferences (TC50, DEMO). Being in NYC, I know a lot of travelers that would be interested in this. I definitely will check this out.

  5. @JP, while you are at it, check out rebtel as well, especially if you make a lot of long distance calls.

  6. @JP… i meant international long distance calls. Sorry – hit post before I could say post.

  7. G’wan the Irish. Nice coverage Om.

  8. If you are in Canada, check out Alligato Mobile for long distance calling as well. Unlike Rebtel, no client or dataplan required.
    Cheers, GD.

  9. he might face competition from dual sim phones and pdas, more and more popular for the very same reason like his product. but keep going !!!

  10. I think if MaxRoam.com put their charges in USD, indeed, any user’s local currency on their site, it would be easier for people to weigh up the merits of the service. I think they might also look at reducing the delivery costs and lead times for getting the SIM cards out to you, by perhaps using forwarders or drop-shippers.

    Tying in with travel web sites is a great way to scale things, but I think tying in with conferences that draw an international audience, and corporate travel providers might also be fruitful.

  11. Maxroam is far from the only company selling this type of product. Look at United Mobile, TravelSIM, ekit, SIM4Travel and many more. There is already consolidation in this space CoSpeed bought both Callkey and Callblue this year and Truphone bought SIM4Travel.

    United Mobile raised $15 million earlier this year, so you would expect to see some interesting product improvements, or customer growth out of them. They do data too, with really good rates in Europe from $2.20/MB.

    ekit has its new travel journal which uses the SIM to track your movement and seems to work with FireEagle from Yahoo too.

    MaxRoam’s main differentiator is the big range of local numbers you can attach to the SIM, although having to send text messages to a different number in Israel limits the value of that.

    Like you said Om, it’s a tough gig.

  12. I’m interested to learn more about their white-label solution… gonna drop em a line…

  13. @gary andrews
    Agree its tough out there but United Mobile, TravelSIM, ekit, SIM4Travel are all playing the same tune, Premium numbers attached to a sim
    why would you give your friends a premium UK mobile number, a Lichtenstein mobile number or an Estonian mobile number.
    This is only moving the bill and stiffing your friends to help you save money.
    MAXroam uses traditional fixed line numbers, we also have a number of free call forwards on our back end to help you roam for zero.
    We are working on closing the loop on the Israel sms issue
    We are also the only company to have discounted roaming in the USA, one the worlds largest travel destinations ad to have roaming data on one sim not two different sims.
    Thanks for the post Om

    1. quote: … are all playing the same tune, Premium numbers attached to a sim
      why would you give your friends a premium UK mobile number, a Lichtenstein mobile number or an Estonian mobile number.
      This is only moving the bill and stiffing your friends to help you save money

      Why indeed? And given your history of such comments on termination fees, why switch to a mobile number from the Belgian network Base?

      And how much would it cost to replace 100,000 SIM cards?

      And how long to forward the old DIDs? Or is it difficult to persuade your previous supplier to allow them to be ported?

    2. I forgot to say: the replacement SIM came in a handwritten envelope, with an ordinary stamp stuck on.

      Some people might think that looks odd, even a little amateurish. Would it not be likely to cause repetitive strain injury if carried out 100,000 times?

      Or is Pat Phelan’s claim to have 100,000 customers a load of moonshine? Perhaps the number is nearer the more modest target he set himself in an interview earlier last year.

      Global Roaming Distribution, the joint operation set up by Celtrek and Maxroam, seems to have been folded up, with a share deal rescissed, and 3 directors resigning in January. GRDB’s earlier accounts show that an order for $450,000 worth of SIM cards was not fulfilled.

      Celtrek has changed its outward branding to Global Roaming, and has made adverse comments on the service of its erstwhile suppliers, which Maxroam shared, and which continues to provide for other trade customers.

      Maxroam seem to be having some difficulties transferring the existing credit balance and DID numbers to the new SIM cards, which has so far taken a month or so. Surely it should have relatively easy to back up the call records before the end of the old deal?

      And the new published call tariffs are mostly higher than on the old SIM, and multiples higher in Europe than the Eurotariff the regulators worked so hard for.

Comments have been disabled for this post