Answering the Mobile T´┐ŻliPhone

by Gerry Blackwell

This Canadian VoWi-Fi film is focused on keeping users mobile, hoping that the cellular business model will work to keep customers talking at hotspots.

There are other VoIP providers out there that offer mobile service to customers with WiSIP (Wi-Fi Session Initiation Protocol) phones—BroadVoice comes to mind—but Montreal-based TéliPhone is the only one we know that led with a mobile service. Mobility is the company's raison d'etre, though it does now offer Vonage-like wireline VoIP services as well.

"We wanted to focus on the mobility option," says CEO George Metrakos. "We had [developed] a much more advanced [back office] mobile platform, and went with mobile as a way to differentiate ourselves in the market."

TéliPhone, which moved into the U.S. late last year after first launching in Canada, is also interesting for the innovative business approaches it's taking to ensure Wi-Fi phone customers can actually use their phones when they're away from home or office—and to lay the groundwork for the coming era of dual-mode celluar/Wi-Fi phones.

The company is a subsidiary of United American Corp. (UAC) , nominally based in Las Vegas, but also Canadian in origin. UAC has three other VoIP-related subsidiaries. One is a carriers' carrier with a point of presence in Haiti for serving the Caribbean. The group also includes an enterprise VoIP consulting firm and a financial services group. However, TéliPhone is responsible for "about 98% of the activity" at UAC right now, says Metrakos.

TéliPhone started test marketing the mobile VoIP service in Montreal in August 2004. It is now selling through several retail outlets, mainly in Montreal. Signed-up subscribers today number "in the thousands," Metrakos claims, though many are in the pipeline and not active yet.

"Today we're growing at about 100% a month," Metrakos says. "We obviously started with a small base so that may seem misleading, but we're exploding in terms of sales growth right now. About 75% of the customer base is wireless, but we think wireline is going to be 50% by March or April."

The mobile service will continue to be the company's flagship offering, though, Metrakos says.

TéliPhone is using a business model borrowed from the cellular industry to kick-start the market for mobile VoIP. It is using the same Taiwan-made WiSIP phone as Pulver Innovations (and others) in the U.S.—TéliPhone has exclusive rights to distribute the product in Canada—but where Pulver is selling the phone for $250, TéliPhone offers it for as little as $80 -- with a 12-month commitment to buy the company's VoIP service.

Customers pay a little over $16 a month for unlimited incoming and outgoing calling in the local coverage zone, which includes Montreal, Toronto and New York. The price includes a voice-mail box, caller ID and 60 minutes of free long distance calls. Additional long distance time is charged at rates that begin at 3.25 cents a minute for calls to the UK and other Western European countries.

For an additional $8 a month, TéliPhone subscribers can turn Canada and the U.S. into one big free calling zone. For $4 extra a month they can get unlimited free calling in just Ontario or Quebec.

Offering the handset as a loss leader is part of the company's strategy for making VoWi-Fi fly. The other part is working with hotspot operators to ensure that phones will work in public access locations. With the presence management features in SIP, the network can find a subscriber anywhere they have connectivity. This means TéliPhone can offer subscribers a follow-me call-forwarding service. It also offers another key capability.

"We can identify the hotspot where a call is made or taken," Metrakos says, "which provides some interesting marketing advantages."

Because it can track which hotspots originate and terminate calls, TéliPhone can and does offer revenue sharing to operator partners that agree to ensure the port settings at their hotspots are adjusted to enable VoWi-Fi. In many cases, WiSIP phones like TéliPhone's won't work in hotspots because of the network settings in place. The company can also provide a branding opportunity for hotspot owners—a message before a call is placed saying, "Thank you for using Starbucks," for example.

"It's an agreement that takes about 15 minutes to resolve with hotspot operators, and these partnerships allow us to get over the hurdles [of ensuring correct network settings for VoWi-Fi at hotspots]," Metrakos says.

The company has already established one partnership with Montreal-based Tadaa Wireless, which gives subscribers access to about 125 hotspot locations, mostly in hotels, cafés and restaurants in Montreal. "Now we have this agreement in place, we can look at other potential roaming partners, like Boingo and iPath," Metrakos says. "We can approach them with the same revenue sharing model. Boingo alone would open up 22,000 locations worldwide."

In the meantime, the WiSIP phones often do work away from a home or office Wi-Fi network. While the company doesn't promote the fact, it's possible to use the phones for free on many unprotected WLANs. "I travel frequently and I've used it all over," Metrakos says. "In some places you can use it as you would a cell phone there's so much open Wi-Fi from apartments and stores. But it's is almost like a black market, so we don't advertise the fact."

For customers that want to use VoWi-Fi but also want to ensure they can get calls wirelessly wherever they go, TéliPhone offers its iPCS service, which combines GSM cellular and Wi-Fi. For now, they must carry two devices—a cell phone and the WiSIP phone—but both have the same number. If the subscriber is in range of an Internet-connected Wi-Fi network when a call comes in, both will ring. They simply answer the WiSIP phone to avoid cellular charges.

The company resells GSM service from Rogers Wireless and has integrated back office functions so that customers get a single bill. It also automatically routes long distance calls made on the GSM phone over its VoIP network, so subscribers are charged for a local cellular call plus the applicable VoIP long distance rates, rather than much more expensive cellular long distance rates.

"It's a complex short-term solution," Metrakos admits. The two phone approach—which TéliPhone somewhat confusingly refers to as "dual mode"—will soon give way to single dual-mode phones, promised by most major cell phone makers for later this year. In the shorter term, the company will have PDA smart phones running VoIP software available within weeks.

Even further down the road, TéliPhone is eagerly anticipating the possibilities WiMax promises.

"WiMax starts to make outdoor public hot zones more viable," Metrakos says. "There is obviously no [phone] hardware available yet that is WiMax compatible, but we're planning a number of different initiatives. By 2006 and 2007, as WiMax becomes prevalent, we think it will become one of the main competitors for 3G cellular. And we should be in very good position to compete."

This article was originally published on Thursday Mar 10th 2005