[image: Business Week Online] <http://www.businessweek.com/>
<javascript:self.close()> Close Window <javascript://> JULY 10, 2006
News Analysis By Susan McMillanNet Phoning for the Dial-Up Set
Efonica aims to sell Internet-based service in parts of the world largely
unreached by broadband, but many analysts are skeptical
Dina Bonnevie is no household name in the U.S. But to millions of Filipinos,
she's Angelina Jolie, Oprah, and J.Lo rolled into one. Dina, as fans know
her, has starred in dozens of movies, recorded a gold album, and hosted her
own daytime talk show in the Asian archipelago. She has also endorsed
products ranging from Pepsi to toothbrushes.
So when Fusion Telecommunications International set out to market its new
Internet telephony service, efonica, to the world's 91 million Filipinos,
including 7 million expatriates, naturally the company chose Dina as a
spokeswoman.
The Dina endorsement deal underscores efonica's aim to set itself apart in
the crowed market for Voice over Internet Protocol phone services. At a time
when VoIP service providers are courting mainly broadband-connected
customers in the U.S., Europe, and parts of Asia, efonica aims to provide
low-cost IP-based phone services to residents of countries that have scant
access to high-speed Internet, while wooing those nations' expats eager to
stay connected to home.
OVER THE NET. New York-based Fusion, which has offered private network and
Internet services since 1997, debuted efonica in Singapore in June at
CommunicAsia, one of the continent's largest communications trade shows.
Fusion has invested about $20 million and more than a year in efonica.
Among efonica's attributes: a worldwide Internet "area code" (10) that, when
used with a number dialed by an Internet-connected device, automatically
routes call over the Net. Other features include free Internet-based calling
with caller ID for registered users (calls to nonusers start at 1.8 cents a
minute). Efonica also offers fee-based services such as voicemail and
faxing.
Fusion is playing up efonica's ease of use. Rather than having to create and
remember online handles, efonica users can register their current phone
numbers. They can also use a range of devices other than a PC, including
their own phones, as long as they're outfitted with an adapter.
"If I have to turn on my computer, sign on, and click on a screen name, that
changes my habits to reach you," says Fusion Chief Executive Matt Rosen,
referring to competing products.
FRIENDS AND FAMILY. But perhaps the biggest selling point is efonica's aim
to reach parts of the world that some other providers overlook. "Seventy
percent of the world's Internet users are still on dial-up, but 90% of
Internet telephony is geared toward broadband," Rosen says. "What we've
decided to do is focus on the emerging markets and related populations of
interest around the world."
Those populations include millions of immigrants who regularly call friends
and family back home using calling cards or traditional telecom services at
rates ranging from several cents to more than a dollar a minute.
Rosen is mum on customer numbers and sales figures at this early stage. But
the company hopes to make money by pushing premium services alongside free
calling, while keeping marketing costs low. It aims to generate interest by
partnering with organizations such as chambers of commerce and by
advertising in foreign-language media. Endorsements by the likes of Dina
don't hurt either.
SKYPE'S WAY. With competitors like Skype and Vonage (VG <javascript: void
showTicker('VG')> ) to contend with, efonica will need all the endorsements
it can get. Acquired by eBay (EBAY <javascript: void showTicker('EBAY')>) in
October for $2.6 billion, Skype is VoIP's 800-pound gorilla. Like efonica,
it offers free calling between usersand it has scads of them (north of 100
million, in fact).
Skype is also available to dial-up users, and until the end of the year it's
offering free calling to any phone number in the U.S. or Canada (see
BusinessWeek.com, 5/16/06, "Skype Goes for
Broke"<http://www.businessweek.com/technology/content/may2006/tc20060515_240433.htm>).
"Chasing Skype is like chasing a comet," says Scott Cleland, president of
consultancy Precursor. "Anyone that chases Skype is going to eat their
dust."
And while courting dial-up users may help efonica carve a niche for now,
analysts say that's hardly viable as a long-term business plan. As soon as
broadband becomes available, users are likely to switch to VoIP providers
that offer services such as instant messaging and video.
"Frankly, I don't think they're thinking much beyond a three- to five-year
period," says Jon Arnold, principal at J Arnold & Associates. Cleland puts
it more bluntly. "Dial-up is a dying business," he says. "You don't shrink
your way to greatness."
HEAD TO HEAD. Skype executives aren't losing any sleep over efonica. "We
focus on our business rather than be distracted by other players in the
market," writes Don Albert, GM of Skype North America, in an e-mail. "The
fact that other companies are entering this space endorses our strategy.
Skype welcomes competition; it keeps us innovating at a rapid pace."
Where possible, Fusion hopes to avoid head-to-head competition with Skype
and other services. "We are trying to take a look at the marketplace and
take the best of what each has to offer," he says. That means combining the
call quality and array of features provided by Vonage and cable companies
with the low rates and online community of Skype and its ilk, Rosen says.
Smaller companies can hold their own if they can offer compelling
innovations, says Will Stofega, research manager for VoIP services at IDC.
"That's where the market is now," he says. But Fusion's offering may not be
new enough to stir excitement, says Arnold. "They can't really come to the
market and say: 'I've got something different and better than the Skypes of
the world,'" he says.
Rosen says he's undaunted by the grim prognostications. "This is not
something we're rolling out and hoping for the best," he says. "A world of
many billions of people has room for more than one telecom provider."
------------------------------
McMillan <[EMAIL PROTECTED]> is an editorial assistant in
BusinessWeek's Atlanta bureau
[image: McGraw-Hill Cos.]
Copyright 2000- 2006 by The McGraw-Hill Companies Inc.
All rights reserved.
--
http://www.mediakonsumen.com/index.html
[Non-text portions of this message have been removed]
Yahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/Indo-Linux/
<*> To unsubscribe from this group, send an email to:
[EMAIL PROTECTED]
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
