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Throwback – Broadvox days

Broadvox has big vision for voice-over IP

By CHRIS THOMPSON CrainTech.com
4:30 am, December 16, 2002

 

group of seasoned entrepreneurs is betting that ‘voice-over IP’ is the next big thing.

 

 

The entrepreneurs have formed BroadVox Ltd. of Garfield Heights to take advantage of the growing trend of moving long-distance voice calls off traditional telecommunications networks and onto the Internet.

 

BroadVox has two business models poised to take advantage of the growth of voice-over Internet protocol, or IP, technology. The first is a second-tier long-distance carrier that sells wholesale access to its equipment and network to telecommunications companies so they can originate and complete phone calls. The second offers businesses an Internet-based alternative to their traditional Centrex phone system.

The wholesale business launched earlier this year and is operating in 19 markets. The company plans to be in 30 markets by the end of the first quarter of 2003, said Jeffery Williams, vice president of marketing and channel development for BroadVox. Mr. Williams is the former owner of Now Online, a large, regional Internet service provider that he sold last year. He joined BroadVox in March, joining forces with Andre Temnorod, the chief executive.

Long-distance carriers that want to reduce the cost of delivering phone calls use voice-over IP, also known as VoIP, on a regular basis. Many long-distance calls travel, at least in part, over the Internet, rather than traditional phone wires. Sophisticated equipment is used to switch calls from the Internet to the phone network without any significant delay in the delivery of the call. The research firm Frost & Sullivan of Mountain View, Calif., predicts that 75% of all voice traffic will be handled by voice-over IP services by 2007.

BroadVox has been growing its business quickly. As of October, it had $3.1 million in annualized revenue, and it broke even for the first time in the month of September.

‘That’s impressive considering the state of the telecommunications market,’ Mr. Williams said.

Mr. Williams and BroadVox’s other managers have invested about $5 million of their own money in network gateways and other equipment needed to handle the telephone traffic.

Mr. Williams, who also acts as spokesman for the company, said seeking outside investors hasn’t been necessary but is a possibility.

‘Sometimes outside funding makes a lot of sense and sometimes it doesn’t,’ he said. ‘We have the capacity to move forward as we are.’

Moving forward includes launching the second half of its business last month. BroadVox is beginning to offer phone services directly to businesses. BroadVox markets a phone system that essentially can replace the Centrex systems many businesses now rely on for their phone service. It initially will target businesses in Cleveland, New York, Dallas, Chicago, San Francisco, Los Angeles and Miami. It plans to spend about $1 million promoting the new service.

Although in its infancy, the IP-Centrex phone business is expected to be a multibillion-dollar industry in the latter half of the decade, according to various projections by industry researchers.

Instead of using a traditional phone system, BroadVox phones will connect directly to the Internet. The calls will be handled much like the long-distance calls are handled using voice-over IP technology.

Added features of a voice-over IP phone include the capability of using a BroadVox web site to program the phone to handle incoming calls differently depending on where the call is coming from and at what time of day it is received. For example, the system can be programmed to send calls from unknown callers directly into voicemail, while calls from family members ring directly to the user’s cell phone.

Also, companies that have multiple offices are able to connect with each other without incurring long-distance expenses because the calls stay on the IP network. Such a system has been working perfectly for Vadim Kleyner, president of Cost Update. The Cleveland-based company operates a web site that helps people determine the lowest prices on various electronics parts.

Cost Update has an office in Russia and is able to connect to that office simply by dialing an extension on its voice-over IP phone.

‘It’s perfect,’ Mr. Kleyner said. ‘It’s just like another phone system’

Cost Update was one of about a dozen companies that tested BroadVox’s service for several months.

BroadVox relies on third-party distributors to sell the phone service

‘We’d like to have 15,000 phones (installed) by this time next year,’ he said. If BroadVox reaches that goal, it would translate into nearly $8 million in revenue on an annualized basis.

CEO Mr. Temnorod previously built and sold two technology-related companies, PC Importers and Nexbell Communications LLC. Mr. Temnorod and three other executives who had worked with him in his other businesses formed BroadVox in August 2001. The company now employs 33 and is considering a move downtown. Mr. Temnorod declined to be interviewed for this story.

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