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Voice, Now Nearly Free

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First it was Skype, then came Jajah, and now it is the turn of Gizmo Project to offer almost free voice calls to the old PSTN numbers. We are seeing the price of plain vanilla voice collapse to almost zero. (Some argue, with Skype to Skype calling, those prices are already zero.)

Gizmo, infact is going one step further and offering free dialing to old-fashioned phone and mobile numbers in 60 countries. When you sign up for Gizmo Project, you fill out your profile and add your work; mobile, and home phone numbers to that profile. These are the numbers that can be called for free.

To be eligible for All Calls Free, users have to log in to their account and make a call using Gizmo Project to attain “active” status. The countries included in this plan are China, the United States, Brazil, Japan, Germany, Thailand, France, the United Kingdom, Italy, South Korea, Spain, Canada, and more. (Sadly, calls to India are not part of the plan, so calling mom is still going to cost a lot of cash. Acceptable expense, I would say!)

This free voice movement had me thinking – what kind of a loss is acceptable to these companies? Though it is hard to get a straight answer, Jajah officials say they can make up all the losses in premium services such as scheduled conference calling, or other such services.

“Wholesale PSTN rates are sooo cheap these days that it’s not much different than the cost of bandwidth back when I started,” says Jason Droege, chief executive of SIPphone, the company behind Gizmo Project. “In the last 12 months I’ve seen wholesale PSTN costs drop dramatically and I expect this to continue. ” (I would need to check on that – its almost midnight, so cannot hassle folks at Telegeography just as yet!)

Like Jajah, he believes that there are many other ways to make money off usage here – pay-per-call ads, premium services, calling to non-covered countries, virtual numbers. Still, being a believer in the age-old dictum that there are no free lunches in life, I suspect that many of the VoIP companies (including Skype) are finding that attracting users beyond the early adopter set is hard, and needs major marketing dollars.

Random though – more trouble for Vonage perhaps?

15 Responses to “Voice, Now Nearly Free”

  1. PanMan

    There is a pretty big “if”, that is mentioned but quickly overlooked: the people that you call need to be on Gizmo as well. So no free phonecall’s to your mom, unless she installs it as well. And if you both have it installed anyway, why not call PC 2 PC, which was free anyways. I guess they take the few cents for the free calls as subscriber aquistion costs, for another install.
    With the Skype deal, this isn’t the case: here you can call all US numbers (but only from the US).
    Voipbuster used to have free calls to a lot of countries (and still does!), but now you need to deposit $10, which lasts for 3 months, at most.

  2. Talking of innovative business models for VOIP… check out

    They offer various categories of UK DIDs (regular phone numbers on which you can receive incoming VOIP calls) – free to their users. When PSTN callers calls such DIDs, their carrier would pay some termination fee to – so no extra cost to the caller or the receiver. has created a pool from such termination fees received and allows their users to use the pool to call regular PSTN nos. in 30 countries!! So essentially… free calling world-wide for VOIP users.

  3. AOL is giving away free dial-in numbers; I tried it and found it worse than useless. Over the course of a week, I got about 10 calls to the number — before I’d told anyone about it. All wrong numbers, of course. I think AOL doesn’t understand the concept of number aging.

  4. The fine print in this offering is significant. The people you can call for free need to be registered with Gizmo (and have downloaded the client). If this promo works, a not small fraction of the free world users will be placing calls via IP, with no transport to Gizmo at all.

  5. Actually, Aswath, that’s not really accurate. What you can charge for pay per call is not determined by what the cost of the technology is. You can charge more for cost per call if merchants believe that a person who they have on the phone (and they can talk to, provide targeted information, potentially cross sell and upsell) is more valuable than someone who clicks in and, without the merchant having an ability to try to sell them, clicks away again.

    There are many types of merchants who would pay a lot more (by a magnitude) for a call than a click. The more complex the buying decision, this number goes up.

  6. Aswath, pay-per-call advertising doesn’t have to do with per minute calling costs or audio advertising, it has to do with providing sales leads for businesses. For example, if I need a plumber I use the yellow pages and the plumber pays to be in the yellow pages. Same idea here except the plumber pays per lead generated from the lead generator (Gizmo Project). Ingenio provides this type of advertising to publishers today.

  7. If PSTN termination costs are indeed insignificant, then there is no market for pay-per-call ads. Also why would somebody listen to an ad before the call is completed? By the way isn’t AOL (or is it somebody else) who is giving away for free “In” numbers (virtual numbers)?

  8. Robert

    trouble for Vonage?<<

    Pretty devastating I would think. This will have a direct impact on their churn rate, and it’s volumes of users that was their business plan. This puts them on the backfoot and management now need a complete rethink.

    It’ll be interesting to see the effect on stock price when the markets open today. Got to take a bit of a tumble you’d think. They’re in desperate trouble.