However I use the free service as well as the paid service. Why? When calling a mobile and someone who understands Rebtel I ask the person to call me back to save anything from 10 cent per minute to USD 2 per minute. If only calling a land line I figure what the heck I can pay one or two cents per minute for a long distance call so I only use the local number and do not ask the friend for callback…. I talk a lot and spend money with Rebtel. I have a lot of expat friends who also use Rebtel and their friends etc.. My guess is that Rebtel is doing quite well.

Regards SG

There is another little VOIP company that is still quietly growing, that isn’t mention above: PhoneGnome. We use the “free” calls as our marketing costs. We don’t spend any other marketing money, so that’s probably one reason why we didn’t get mentioned here. This makes our customer acquisition costs very very low. Even paid minutes are almost like free – it’s almost like a community service – but customers demand an integrated/branded option, so you’re compelled to offer minutes to attract and retain customers in hopes that they will subscribe to more profitable services. As I said, it’s almost like a loss-leader to improve customer acquisition costs – but it’s at the expense of lifetime value due to the poor margins. So not only do customers have to convert to paid minutes, you better hope enough convert to paid higher margin services too. Even if a large percentage convert to paid minutes, there’s still just not enough lifetime value in these customers to make it a viable business. So PhoneGnome’s answer for now is slower growth, extremely low marketing expenses, and then leveraging the platform for white-label and other services in addition to using the free service to build brand and attract customers. As a result we’re not burning through cash – but we’re also not high on the web 2.0 buzz list.

SG

• there are half a million developers worldwide that can get a cheap internet calling service running in less than a week. so where are the entry barriers?

• the mantra seems to be this: a fancy little twist + some marketing dollars + scale

• scale is needed because you are essentially running a low margin game. and that is where things go wrong. a startup cannot rely on scale+low margin game.

• startups prosper ONLY if they are able to command high margins

• in most countries, agriculture is one of the safest low-volume-high-margin segments. better than a voip business for sure.

any idea whats jajah revenues?

I think OM is being overly critical here in the sense that this is no way Free Calls (in the ‘Free’ as free beer sense).

If anything Jaxtr can be blamed for a ‘Me Too’ mentality.

What they currently offer: -Local Number for International Calls on pay per minute basis(similar to Rebtel, MobiVoX) -Click to Call on a pay per minute basis (similar to Jajah) -FreeCallConnect is free between members (but just like Rebtel and Talkster it requires the other member to also call into an access number…hence since both sides are calling in, there is no cost to Jaxtr short of bandwith)

If Jaxtr is doing anything, they are copying the models that have managed to stay afloat (Rebtel, Talkster, MobiVoX, Jajah) so it may not be as doom and gloom as OM notes above.

All that said, I’d be much happier with something new, rather than a ‘me too’ offer

“Free” does not generate profits. Does anyone who builds a “free” based business model work for free?

As the adage goes, why buy the cow if the milk is free ….