The Free PSTN Call

December 18, 2005

For those of you who are unfamiliar, DialPad was the first company to offer free US calling over the Internet from anywhere in the world. The service worked over dialup but as you might imagine the quality was better over broadband. At its peak the company had just under than 20 million registered users! DialPad is now owned by Yahoo. I got to thinking about the company and how the time may be right for another company to copy its model when I read this entry on Erik Lagerway's SIPthat blog.

What is amazing about VoIP is now that it is once again popular; everyone seems to be an expert on the topic. Few people were covering the market back in the good old days. Erik is obviously a veteran.

I did some searches on some of my writing in the past on free long distance based on Internet telephony and found a few articles worth noting. The first is an interview with Sarah Hofstetter of Net2Phone. Sarah is another veteran in VoIP and is one of those people that was in our industry prior to day one.

The next article of interest that I found was actually the prior month's Publisher's Outlook in Internet Telephony Magazine -- dating back to May 2000.

In this column I added a sidebar titled "Dial W-E-B For Long Distance."

Here is that sidebar:

As I write this column, I just signed up for dialpad.com, a free PC-to-phone service that allows you to call any U.S. number as long as you fill out an extensive online form. I have only had a chance to make a few phone calls with this service and they were of low quality, but what can I expect for the ability to make free nationwide calls? I suspect that, akin to my many other experiences with Internet telephony, quality is dependent on factors such as time of day, ISP choice, and the location that is called. Of course this model is exactly the same model that the free PC and free ISP service companies are touting -- an advertiser supported service, in this case long-distance.

Dialpad.com claims they have over four million customers already. While they may not all be current, active users of this service, it shows you how powerful viral marketing can be. A recent meeting with executives at Quicknet Technologies, makers of products that improve the quality and ease of use of Internet telephony, led to the conclusion that free PC-to-phone long-distance will soon be commonplace.

Who can argue with such logic, in light of the fact that deltathree.com recently threw their free PC-to-phone hat in the ring as well? deltathree.com's service allows you to call within the U.S. and Canada.

The Web-based advertising model has enticed companies to give their customers free financial information, access to many types of information, ISP services, PCs, and now free long-distance.

This advertising model, when coupled with the global reach of the Internet, is absolutely awesome. Many analysts predict a shakeout in the advertising-based services. They feel that there will simply not be enough advertising out there to support so many sites. I disagree. In fact, as the e-commerce revolution continues to grow and more and more "dotcoms" come to the market, there will be an ever-increasing need for them to differentiate themselves and set themselves apart from their competition. The best way for any company to differentiate itself is through advertising, and many of these "dotcoms" are looking for a captive Web-based audience to appeal to. As long as we see the emergence of a steady stream of new Internet start-ups, we can expect to see advertising supported models such as free PC-to-phone and even free advertising supported wireless services proliferate indefinitely.

A year later I realized I was very wrong about free VoIP. The concept of giving away free services for ads seemed to not be proliferating. Many companies offering free services such as Excite and Dialpad were struggling or just rapidly wiped away. A few bucked the trend such as Yahoo's portal and Microsoft's Hotmail. But there were few free services coming down the pike.

Then Skype came along giving us free p2p VoIP but paid connectivity to the PSTN. And now Yahoo!, Google and it seems everyone else is in the VoIP business. Furthermore the advertising supported model is very real as evidenced by what is happening with Google's stock price. So in the end there is a chance I will be correct.

You see in the crazed rush to differentiate someone is going to probably give VoIP to PSTN calling away once again.

But the point of this entry is not about who is right or wrong as much as it is about how a companies like DialPad and Net2Phone were real pioneers. Many of the concepts they invented are now being popularized by others. I am glad people like Erik are still covering the VoIP market and furthermore giving credit where it is due.