By James Wanless
President & COO of Talkster
I continue to be surprised by the number of companies that emerge offering “free” calls. Most of these, including one that I saw today — “FreeBuzzer” — initiate calls from a web browser. Basically, enter your number and the number that you want to call and they initiate 2 outbound calls and connect them (sound like JaJah?). The math doesn’t work and never will. So how can it be free? The cost here involves 2 outbound calls. If you are calling USA to USA then at 2 x 1 cent a minute for call termination, it’s quite cheap. I have had numerous conversations with others in the industry about where the pain point is for the consumer telephony market. The general consensus is 5 cents a minute. Up to 5 cents a minute nobody cares. Over that, people increasingly do care. What this means is that nobody cares about services like this unless they offer free calls to mobile phone where the cost typically is 15 or more cents a minute. In this scenario this “free” calling method makes no economic sense, and advertising revenues can NEVER cover a cost of 15 cents a minute. The only way to make this free or close to free is to eliminate the termination costs.
For an example of this, take a look at a service Talkster recently partnered on http://freeringer.biz where you can initiate a call from your PC (eliminate one termination charge) and have your friend connect to you by calling a number for you that is in his local calling area (eliminate the second termination charge). Now that’s an ad supported model that works and which makes sense for the consumer (and Talkster has connected millions of calls in this fashion to prove my point).
So, while the “free” calls offers may keep on coming out of the woodwork, they are usually loss leaders to pay VoIP services (just as FreeBuzzer turned out to be). As my grandfather said, “If it looks too good to be true, it usually is too good to be true” Translation: It’s not true!
