ViaTalk – 2 years of VoIP Phone Service for $199

Comments

1. bigmouth says

   August 17, 2006 at 2:13 am

   Johnathen, have you ever thought why these VoIP companies would sell two year unlimited plans for $199? How are they going to make money on $8.29/mo unlimited callings?

   Technically, all US domestic termination cost is about 0.5 cent to 0.8 cent/min. International rates will be higher. That’s just the termination cost, there will be other costs like equipment cost, support staff operation, co-lo Internet bendwidth (all the voice are tranmitted from their internet proxy to some remote phone exchange or carriers). These will push their cost of per minute usage to over 1-2 cent/min. In the end, they are probably losing quite a bit money on customers who’s making more than 830 minutes call per month. I suspect that average VoIP users place more than 1000 minutes of phone calls each month.

   So, why are these companies doing a sure lose business?

   The only possible explanation is that they are trying to borrow money from you! Think of it, they get $200 up front, that’s a lot of cash if they get a lot of sign ups all at once. They then use this “interest free” loan to buy advertisement, fund their staff, and buy more equipment and bandwidth. This is easier than get funding from VC. There’s nothing wrong with that, except that they are still losing money, possibly big money, especially in the long run.

   So, I am not quite sure if this is necessarily a good thing for consumers. Who knows if in 12 months these start-up VoIP companies are still in business?

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2. mc says

   August 17, 2006 at 8:55 am

   Regarding the above which may be true there are other users like myself who have the unlimited plan for one year who most months don’t use more than 200-300 minutes. It is cheap enough for unlimited that I don’t have to concern myself with minutes. I paid $175 for one year with the DSL reports coupon for ViaTalk. When my term comes close to expiring they usually let you add another year for $99 for existing users with these specials. I have seen posts that say VOIP is cheap enough for the companies offering them that $8.00 per month is their break even point. Unlike Vonage, Viatalk does not spend HUGE amounts of money on ads. Vonage does not make money as they spend so much on advertising. This is why the price of their recent IPO has fallen so much from their IPO price.

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3. Jonathan says

   August 17, 2006 at 12:44 pm

   bigmouth – I am sure that you are right in that they would rather have the money now vs. over the long run to fund operations, but this way they also have a customer on the books for 2 years to show all those current investors.

   I really don’t know about the techy stuff… I just know at $100 a year I’m profitable after only 3 months vs. a landline.

   Reply
4. Bigmouth says

   August 17, 2006 at 12:56 pm

   Vonage IPO was bad, but if you look at all the IPOs during the same period, almost all of them, no matter what industry they came from, all look pretty bad.

   Reply
5. Sri says

   August 17, 2006 at 9:50 pm

   Do you get a free phone with this deal?

   Reply
6. ProfessorB says

   August 19, 2006 at 4:46 am

   Good point Jonathan on the fact that this and other $199 VoIPs are a bargain after you’ve been with the service for three months. The taxes and fees that landline phone companies charge are so high. I used to have a $25 per month landline that added $15 in taxes and fees for a $40 monthly bill. Now I have a VoIP that’s less than $9 a month.

   Reply