Iotum hooks up with AIM Phoneline

Ottawa-based Iotum, whose software allows phone networks to offer “presence”-based services, announced a partnership this morning with AOL’s voice-over-Internet service AIM Phoneline — details are here. Iotum CEO Alec Saunders, who blogs at, says that being part of AIM Phoneline will give Iotum access to the more than 43 million U.S. AIM users through AOL’s developer program. The Ottawa company worked with AOL on an API that will allow software developers and device manufacturers to easily build support for Iotum’s software into their applications.

In a email, Alec told me AOL will promote its partners’ applications and devices at an on online store users can access by clicking the “Shop” link in the AIM Phoneline dashboard. And next week at Jeff Pulver’s VON conference, AOL will be showcasing their new platform with their first three development partners, of whom Iotum is one. Interestingly enough, Alec also told me that the AIM Phoneline development team is located in Halifax. As he put it, “telecom seems to be part of our DNA in this country.” I wrote a piece for the Globe and Mail about Iotum earlier this year.

Iotum’s software is designed to function like a personal assistant, learning which calls go to which device and when, and which calls should be re-routed to voicemail (or the waste bucket). Iotum won a coveted “DEMO God” award at the last DEMO conference organized by industry guru Chris Shipley, and has signed deals with PhoneGnome — the VOIP device company — and others in the telecom sector. I wrote about Iotum and Tello (another presence-related venture) here. Congrats to Alec and Howard and the rest of the Iotum team.

Use VOIP to call your broker — and sell

And so we return to our story, to find our hero — the plucky little (or not so little) voice-over-Internet company Vonage — finally going public, after much back-and-forthing over the past year about when to issue stock and for how much, or whether to try and convince someone to take the company over. And what happens? The stock tanks, dropping by as much as 15 per cent at one point on Wednesday. Needless to say, that’s not what most IPOs are supposed to do (as Mark points out), especially since underwriters of initial offerings usually try hard to underprice the issue so that they get a little “pop” on opening day.

Well, Vonage definitely got a pop, but it was more like the sound a balloon makes before it deflates. Why? as Paul Kedrosky notes, it isn’t much of a surprise. While the term VOIP may be hot, industry watchers such as Om Malik have been warning for some time that Vonage is caught between a rock and a hard place — it has the name-brand value (courtesy of a very expensive marketing campaign) but it is being squeezed by free VOIP provider Skype on one hand and by cable providers on the other.

It’s true that by selling shares at $17 (U.S.) each, Vonage managed to raise a little over $500-million, giving the entire company a combined market value of over $2.5-billion. So we shouldn’t be holding any charity drives for CEO Jeffrey Citron, whose stake is likely worth about $1-billion or so. But at the same time, Vonage needs all that money to try and plug the gigantic hole in its balance sheet, which continues to drain money at a furious pace. Last year, the company lost $261-million, which was almost as much as it had in revenue.

The worst part is that Vonage’s costs are likely to remain roughly the same, or even increase, as the market gets more competitive — and yet its chances of becoming profitable are likely to fall, as Skype and the cable companies both put pressure on prices. Sound like a good recipe for an investment to you? Then Vonage would like to hear from you. Better use Skype to call your broker though, it’s cheaper. (Henry Blodget has a great anecdote from an AP story about a Vonage user who got some stock as part of the issue).

Skype lands a blow in VoIP battle

I originally wrote this for the Globe and Mail — and Mark even linked to it, which I thought was quite nice of him — but I thought I would reproduce it here for people who might not get to the Globe that often. For you tech-savvy blog readers out there, please ignore the dumbed-down parts designed for non tech-savvy newspaper readers 🙂

The bare-knuckle bout for VoIP supremacy is still in the opening round, but Skype has thrown what could be a haymaker punch. The voice-over-Internet pioneer that eBay acquired from founder Niklas Zennstrom last year for a mind-boggling $2.4-billion (U.S.) – and up to $4.1-billion if Skype meets certain performance targets – is now allowing users to make VoIP calls from their computers to any landline number for free.

The freebie for what the company calls “SkypeOut” calls is only a short-term offer, however. It expires at the end of the year, and is clearly designed to suck new users into the Skype vortex. But is it a smart move by eBay to build a customer base and take on Vonage, or a desperate move to justify that multibillion-dollar cheque it cut?

Skype said in its release that “completely free calling in the U.S. and Canada will expand Skype’s increasing penetration in North America and solidify Skype’s position as the Internet’s voice communication tool of choice.” And there are those who believe it will make the service – which is based on P2P or “peer-to-peer” technology originally developed for the Kazaa file-sharing network – a lot more appealing to non-geeks, since the previous free VoIP service only included PC-to-PC calls.

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Vonage: please buy some or all of us

Anyone who has been following the Vonage IPO story – as my friend and conference-organizing colleague Mark Evans has, and as Om Malik has – won’t be surprised that the voice-over-Internet pioneer is rumoured to be shopping itself around. The prospectus for its initial public offering, which was on and then off, then back on again, has been out there for months with little or no interest, or at least not enough to make it happen. That’s not a great sign.

As I’ve mentioned before – and others have too, including Mark and Om – Vonage’s IPO smacked of more than a little desperation to raise some cash while the iron was even slightly warm, and the story at CNN/Money fits with that. Whether an IPO or a takeover, Vonage needs money big-time. Its marketing costs have exploded, thanks in part to those Woo hoo! commercials (which I actually kind of like, if only because I like the song), and it needs a river of cash flow to pay for the expansion it needs to remain relevant.

As Om and others have pointed out, research shows that cable VOIP services are taking share away from standalones such as Vonage – and doing so at an increasing rate. That means the window is rapidly closing, and the risk for Vonage (which was started by VOIP pioneer Jeff Pulver, whose VON Canada I am appearing at next week) is that it could become the next TiVo, a pioneer that winds up winning the early battle but losing the war.

As someone told me once, the pioneers get the arrows and the settlers get the land. Alec Saunders says buying either Vonage itself or the stock would be the “ultimate triumph of greed and stupidity over common sense.” Of course, as we all know, that doesn’t mean it won’t happen 🙂

Get ready – it’s “VOIP tax” time

Continuing the theme of “network neutrality,” voice-over-Internet provider Vonage has raised the spectre of a “tiered” approach to the Internet in Canada in a filing with the Canadian broadcast regulator – the Canadian Radio-television and Telecommunications Commission or CRTC, the agency whose name is almost as long as some of its meetings. According to a press release from Vonage, it is protesting the $10 a month “VOIP tax” that Shaw Communications of Calgary charges customers to “improve” their service (the filing was actually made in December, but not publicized until now). It’s an issue that has been around for awhile now.

Shaw, one of the country’s largest cable concerns – which is controlled by the Shaw family – doesn’t charge extra if you want to use Shaw’s own VOIP service. But if you use Vonage or Babytel or one of the other services out there, you will be offered the $10 extra charge to “improve” the quality of your phone calls. You don’t have to pay it, of course. You’re free to use VOIP without paying extra, but the clear implication is that the service might be of poor quality, and that Shaw isn’t likely to be interested in your complaints unless you paid your $10 fee.

Maybe it’s just me, but this seems a little like the bad old days in Chicago or some other corruption-riddled city, where you were free to run your business without paying “protection” money to certain parties, but if you didn’t then you were likely to find your store burning to the ground some evening with the police and fire department standing around watching. It’s no big stretch from what Shaw is doing – or other ISPs — to a multi-tiered Internet that charges extra for things like peer-to-peer music downloading, but doesn’t charge extra if you use the music service marketed by your Internet provider.

Is that what the Internet is supposed to be like? Not according to Vinton Cerf, who helped invent the darn thing in the first place. Whether the CRTC will take any action remains to be seen. For more thoughts on the topic, both of Shaw’s move and network neutrality in general, see Mitch Shapiro’s post at the always excellent