In recession, VoIP makes strong case for cutting your home landline
In a recession, consumers are more than ever rethinking the expense of a home phone, mobile cellular service...or both.
What better time to give voice-over-IP a try?
For most telecommunications companies, that's cause for concern -- but for Primus Telecommunications, that's another door opening for new global business.
I spoke with Primus CEO K. Paul Singh about how VoIP is growing from the bottom up -- and how voice services can still thrive in a world dominated by texting and broadband Internet.
ZDNet: Many people aren't familiar with Primus. Give us a little background.
Paul Singh: Primus was formed in 1994. We started with the mission of building a global telecommunications company whereby Primus would operate the global infrastructure. We would have customers and a developed presence in developced countries.
We started in Australia, then Canada, U.S and Europe. In those days, there was no company like that. Deregulation in the 1990s allowed us to become a telephone company in those countries, and now we have very extensive network infrastructure.
We started with traditional voice services for businesses, consumers and carriers. As data services came up, we grew into four main services on the data side: broadband and high-speed, data centers, IP services and mobile data.
We cover small to medium size businesses, residential customers and 400 carriers, and we bring in $800 million in revenue each year across the company.
About 80 percent of our revenue comes from outside the U.S. In Australia we rank No. 4 in market share. In Canada, we're the largest alternative full-service carrier.
ZDNet: What does Primus have to offer in the VoIP segment?
PS: VoIP is becoming more acceptable. In 2005, VoIP was kind of a new thing. People need to feel comfortable with the technology, and adoption is pretty well in place. So now it's in the second phase: growth. Technology continues to improve every day. That helps with quality and putting up new applications.
We expect the market to expand. Plus the costs are lower.
ZDNet: What value does VoIP offer for customers? What's in it for Primus?
PS: One component to it is pricing in the marketplace, which is somewhere between $20 to $40 per month. The VoIP players can provide the service, and your savings come from [inherently] cheaper services. You are using the public Internet. We don't have to pay telephone companies for "the last mile" -- to originate the call.
Slowly and slowly, more international customers will go onto broadband, removing telephone companies on both sides.
ZDNet: But the Internet is available to everyone. How do you differentiate yourself in the market?
PS: Primus began investing in VoIP in 2004 when it was new. Vonage and Lingo were the first two. Our starting point was to offer free unlimited calls to 22 international countries and unlimited calls in the U.S. We've kept with that, leveraging our international infrastructure. It's unique to us.
The second is the network we use: BroadSoft, which has the largest market share of VoIP services globally. The reliability and robustness of that is very strong, and when they add services, we get them.
(Ed's note: It's at this point in our interview that our call, conducted using wired VoIP phones on both sides, cuts out. Clearly, nothing's perfect.)
To use VoIP services, you must have broadband. The quality of it is improving, the speed is going up, VoIP quality has gone up. Those are the underlying drivers.
Why use it? Reason number one: you save money. You can displace your Verizon phone at home with the Lingo phone at home and you have the same services. Right there, you save money, even if you make no long distance calls. If you make calls to any of 80 countries, you save more. And you still get caller ID, 911, forwarding calls, etc.
Reason number two: there are about 25 to 30 features that come with the price, and most you can't get phone home phone service today.
Reason number three: You get applications. They make the service very sticky [to consumers].
Let's say you are a U.S. business and you want to become global. We can offer you local phone numbers in 28 countries and it will ring wherever you wish it to ring. Overnight, at $50 to $10 a month, you have a global presence.
Let's say you work at home. You can take your phone home, or on an African safari, so long as you have DSL.
That's what changes the dynamics of the business itself.
ZDNet: What about people who'd prefer to switch to cell phones altogether? How do you address them?
PS: We have Lingo Unwired. When you buy Lingo, you can register your phone with us, and you can make the same calls from your cell phones and enjoy the same international rates [on your cell phone as you do on your VoIP home line]. The Lingo service itself would reroute incoming calls where you want them.
We realize that people want to make calls from their cell phones.
The game plan is going deeper and gaining more market share in the areas we're already in. We're expanding into broadband and hosting and IP services and adding the wireless component to it. Wireless is the way people are going to talk. In the U.S., we're looking to take Lingo and make a bundle with broadband or even satellite TV service.
The trend is toward bundles, as you see with cable companies.
Companies want to sell the TV part first, the most pricey part. Once you have the customers, you can offer them broadband, and then voice. You're saving money -- you only need to bill them once, et cetera. Customers save more money, but it's also cheaper for you to serve them, and the profit margins are higher.
Broadband is basically your connection to the content. If you have broadband, I can sell you movies I can sell you TV and so on. That's where the future is.
ZDNet: And the worries that VoIP isn't stable enough to replace a trusty landline?
PS: Underneath it all, everything is improving. Reliability and uptime has improved.
It's a global phenomenon. People are going global, businesses are going global. The fundamentals are in favor the service.
We're going to use our scale and scope and global presence to differentiate ourselves. You have customers in different countries talking to each other all day long without paying extra because they're all connected on broadband. That can create global communities.