Freshtel has major retailers in its sights

While its Australian customer base includes users who have purchased Freshtel-branded hardware and services, Freshtel's business plan is built around wholesaling its IP telephony offering through other retailers. "We haven't spent any material amount on marketing for the retail market," corporate affairs director Peter Warner told ZDNet Australia.

In the UK, Freshtel has a wholesale deal with supermarket giant Tesco, which sells Freshtel products and services under its own brand. Tesco, which holds a six percent stake in the company, has marketed the product to customers of its existing broadband service and recently began a major prime-time TV campaign in the UK.

Warner said that the company had been actively pursuing a similar arrangement for Australia, and hoped to have a product launched in the marketplace this year. While Warner would not reveal which retailers had been involved in negotiations, the obvious targets would be Coles Myer and Woolworths, who dominate the Australian supermarket scene and who have been increasingly promoting their own branded goods.

Warner said that the white label approach would help Freshtel survive tough competition in Internet telephony, where call costs have been steadily declining, since it would not have to spend money on establishing its own brand and would receive revenues from hardware sales and customer signups as well as a cut from call fees.

The company is also expanding its reseller base for its own branded product. Referral schemes for popular Web sites (offering a fee for each signed-up customer) and deals with resellers dealing with SMB customers are both under development, according to national reseller manager Scott Conley. Freshtel has around 280,000 customers in total, with roughly a quarter each coming from Australia and the UK, according to Warner. He did not specify what percentage of customers were making paid calls on the service, rather than simply using Freshtel's Firefly software, which offers free calls between Firefly users.