The price of voice calling has long been moving towards zero
, making the "cheap phone calls" business model a fairly unattractive one. But, as Om Malik points out, that doesn't stop VoIP startups from traveling down the same path as previous failures by trying to use "free calling" offerings
to build a business. The latest is a company called Jaxtr, which is touting a service
that allows its users to call each other for free (how original!). But it's not so straightforward: in addition to both people on a call having to be Jaxtr members, the service gives each of them a special local number to call to reach the other person. So instead of just dialing, or clicking on a user in a buddy list, this is the process:
Jaxtr members simply enter the number of the jaxtr member they wish to call. Jaxtr will then give them a local number to reach that person. Once they initiate the call, jaxtr notifies the person they are calling, and will give that person a local number to call, too -- allowing the parties to connect directly. They can then talk for as long as they like, free of any charge from jaxtr. These assigned local phone numbers can also be used again by the same parties on an ongoing basis.
Two points: it still requires members to have their own phone service and make a local call, and, as Om notes, it's the same kludgy
approach that's been tried before
by other VoIP companies, with little success. Prices of voice calls are falling across the board, making the inconvenience of systems like this a huge barrier for users to overcome when compared to direct-dialing or other voice-calling or voice-chat services. But Om hits the nail on the head when he asks how VoIP companies can make money from free calls. Jaxtr says its plan is to convert free users to paid customers; they should check out how that's fared so far for Skype
, even with its tens of millions of users.