Mirror numbers are a nice way to circumvent high calling rates. But they are best applied to apps like Jangl etc (provided you have luck monetizing the service). So when Jaxtr announced â€˜offnetâ€™ calling to any phone number for low price, I was a bit disappointed. After all there are over a million companies out there offering convenient low cost long distance calling service.
A 2.0 company such as Jaxtr leads you to believe for a while that we are communicating in (additional) new ways that is something out of this world and then offers simple low cost telephony. I bet you a thousand dollars that Jaxtr did not have plain old telephony in the original business plan. Jaxtrâ€™s offnet calling is somewhat analogous to SkypeOut type services. And yet if you think about what is wrong with Skype, it is the dependence on those termination revenues.
If Skype had sought an alternative direction for monetization, we could have had a true Voice 2.0 company today. Termination business has made Skype complacent and at the same time threatened its prospects due to thin margins. There is something not so graceful about a Voice 2.0 company offering simple termination. This is emerging merging with the ordinary.
True, the PSTN is just too massive to ignore. But the value of your network is proportional to the number of people that are inside that network, not outside that network. Look at the most successful IM clients. Although PSTN termination looks like a natural extension to them, they have been successful without it.
I donâ€™t think an emerging voice technology company needs to succumb to the pre-eminence of PSTN in order to be successful. In fact, as numerous VoIP companies have shown in the past, PSTN breakout can over time become a serious liability. The emerging voice companies that are offering services off the web direct to the consumers and offering services largely for free, need to seek other ways of monetization than the simple termination (just because termination sounds like an easier feature to enable). If Linkedin can charge $19 dollars for 6 emails, surely there is hope for Voice 2.0 monetization.
But I can see why Jaxtr gave in. The recent downfall of Jangl must have been a factor. Jangl applied mirror numbering to dating etc. There could have been several such application areas. Perhaps Jaxtr might reveal them in due course. Another factor is the costs associated with renting numbers from the relevant companies and authorities. Out of the 10 million customers that Jaxtr has signed up, majority (let us say 6 million for argument sake) must be those who just signed up and never returned as active users. Six million non-active users means 6 million useless, never-to-be-used, phone numbers that were allocated to these users. Jaxtr would be a fool to keep paying for these numbers for nothing.
While we are doing the number crunching, paying for life-long phone numbers is not the only expense. Jaxtr has a VoIP set up to pay for in form of equipment. In fact while a normal VoIP provider needs a single VoIP hardware port to do the TDM/IP translation for a call, Jaxtr needs two ports for a single call because the call is comprised of two separate call legs. So it is literally paying double the switching cost that someone like Vonage pays (in terms of capex).
If the call is between two Jaxtr members, the company has to secure high enough ad rates to recover those cost components. If the member uses offnet calling facility Jaxtr has to pay for termination on the far end in addition. It will no doubt have the customer pay for that. But for 1 cent / minute revenue (minus the cost components we defined above and some termination fee) I donâ€™t see why Jaxtr should bother.
The VC pressures for immediate monetization is one of the factors why I think Voice 2.0 apps will ultimately be delivered through established telco channels.