Vonage Aims to Turn iPhone Into an International Pay Phone
Recognizing that more calling is going mobile, Vonage is announcing on Wednesday a new service designed to help it better compete against Skype and other rivals.
Time to Call is an iPhone app that allows users to make 15-minute calls to any of 100 countries for just a buck or two. Another 90 countries can be dialed for up to 15 minutes for under $10. The service is done on a pay-per-call basis with the money deducted from a user’s iTunes account as an in-app purchase.
“It will be the absolute easiest way to buy and make international calls,” Vonage CEO Marc Lefar told AllThingsD. The app works worldwide over Wi-Fi and in the U.S. and Canada over 3G (though data charges may apply for those on tiered plans).
Although perhaps less simple than just using the iPhone’s built-in phone app, savings using Time to Call can be significant, Vonage says. The company says a 15-minute call from the U.S. to Mexico costs $2, as compared to nearly $10 on a typical wireless carrier. When traveling overseas, the savings can be even greater for those who have Wi-Fi access. The company notes that a 15-minute call from Japan to South Korea using Time to Call is just 99 cents as compared to more than $34 when made via a traditional wireless call.
Lefar notes that three in five international calls are still made directly through a wireless or wireline carrier, typically at rates three or four times higher than is necessary.
Of course, Vonage is not just competing with direct-dial calling but also a host of VoIP companies, including Skype, that have been faster to move to the mobile phone.
“Skype, the biggest name that is also in this space, came at it from a PC-to-PC space,” he said. “We’re meeting in the middle at mobile. That’s where the battle will be fought over the next couple of years.”
Vonage plans to launch Time To Call in more than 80 countries simultaneously in the iTunes App Store, part of the company’s effort to expand into regions beyond the United States. Those who download the app will be able to try the service for free, with one free call to any of the 100 countries where 15-minute calls are priced at either 99 cents or $1.99. That, Lefar notes, is the same as the cost of other impulse buys, like a song or TV show.
Lefar said that if the shift to mobile is a marathon, he thinks the industry is only at the quarter-mile mark.
Just last week Vonage introduced another mobile product. That one, dubbed Vonage Extensions, is designed to allow the company’s home-calling customers to make free calls using their mobile phones.
“It’s an extremely important part of our strategy,” Lefar said of the mobile efforts. Vonage, he said, was near bankruptcy back in 2008 and had to refinance its debt in the middle of the financial crisis. Since then, he said, Vonage has managed to turn itself around as a profitable company with substantial cash flow.
“The focus now for the organization is really on growth,” he said.
Just how well Vonage is doing on that front should become clearer later on Wednesday, when the company reports quarterly earnings.