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5/31/2007
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VoIP Startup Jajah Buddies Up To Telecom Carriers

Jajah's strategy is to work with telecom service providers so both companies can make money from VoIP calls.

If you can't beat 'em, join 'em. That's the position Jajah, a startup voice over IP calling company, is taking toward telecom carriers.

Jajah hopes to set an example for other VoIP providers, claiming that the investment it received from the corporate venture capital entity of Deutsche Telekom earlier this week is the first of its kind in which a large carrier has invested in a smaller VoIP provider. The investment is part of a $20 million investment round co-led by Intel.

Telecom carriers have been reluctant to embrace VoIP in fear that it would cannibalize their existing fixed and mobile networks. People can typically use a VoIP service to make free or cheap phone calls over the Internet, bypassing the carriers and the public switched network.

Jajah is trying a business model different from other VoIP service providers. Vonage, for example, requires users to replace their landlines with VoIP phone adapters and routers; the company charges a monthly fee just like a carrier. Skype requires users to download its software on a PC. Skype users can use the computer's microphone or speakers to talk with others, or they can purchase a headset. Skype users can call each other for free.

Jajah's approach is different in that it doesn't require subscribers to replace their landlines at home or purchase dual-mode cell phones with both Wi-Fi and cellular capabilities to make VoIP calls, said Trevor Healy, Jajah's CEO, in an interview. People can use their existing phones to make low-cost calls. Jajah subscribers can initiate calls directly from their mobile phones or computers by entering their numbers and the phone call recipients' numbers and hitting the "call" button. The calls travel over Jajah's servers, and subscribers are connected with the numbers dialed.

"Our position is that VoIP and existing networks should coexist, and it shouldn't be a replacement strategy, but an enhancement strategy. People like the existing infrastructure in their homes, and VoIP vendors like ourselves need to work with those infrastructures," said Healy. Jajah's vision is to interoperate with carriers and their networks because "the voice quality will be better, the carriers can make money, new companies can make money, and consumers can get a better deal," Healy said.

One notable drawback with Jajah's approach, however, is that subscribers are still consuming their mobile minutes if they're making VoIP phone calls from their cell phones, although long distance calls are typically billed at local rates. "It's so that telecom providers aren't disenfranchised," said Healy.

The whole idea behind dual-mode cell phones is to let users make free calls from Wi-Fi hot-spots when they're available instead of making expensive calls over cellular networks. But it's difficult for carriers and VoIP providers to find a healthy balance. VoIP providers either risk being blocked by carriers or losing subscribers to cheaper services.

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