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October 11, 2007

VoIP Nostalgia

Jahangir Raina has blogged a series about his pick of ten pioneering companies in Voice over IP. Actually Jahangir and his publication iLocus deserve a fair amount of credit themselves for pioneering. The first major use of VoIP was to reduce the cost of international calls between ordinary phones (see more about this in yesterday’s post). Jahangir particularly understood the importance of this to the developing world and helped bring entrepreneurs from the East and West together to make the deals that resulted in much cheaper call flow. He also explained (and is still explaining) VoIP and its significance to a large audience.

Number 1 on Jahangir’s list – as it should be – is the Israeli company VocalTec. He writes:

“There is no other company that can be associated with pioneering real-time voice over Internet. VocalTec was the first in introducing PC to PC VoIP client and hence is selected as one of the 10 organizations that established VoIP. There were other competing companies that were working on such projects who introduced similar solutions subsequently. These included Nuera, Net2phone, Cisco, Clarent, Vienna Systems etc.”

And also:

“Product named Internet Phone, developed by VocalTec, was a pioneering product from two aspects: (1) It had the ability to do VoIP call over the bandwidth-starved public Internet of 1995, and (2) The developers of Internet Phone had to overcome the limitations of the hardware of that time which comprised of 486 based PCs and modems of 28.8 kbps speed.”

I was in charge of Internet stuff at AT&T then and sent the product to Bell Labs for evaluation. The engineers there were so eager to explain that the quality was terrible and that it would never be better that I got very interested. Turns out all the problems they were citing were engineering problems (and problems with the slow speed of Internet connections in those days). Engineering problems get solved and the Internet got faster. I left AT&T for a career in VoIP.

Jahangir was kind enough to include ITXC, the company Mary and I founded, as #3 on his list:

“I have chosen ITXC among ‘The 10 That Established VoIP’ for the company’s pioneering contribution in the areas of International Long Distance (ILD) VoIP wholesale model, management of voice transportation over public Internet, commercial interoperability among varied VoIP platforms, and VoIP peering.

“Working with a vast group of VoIP POP owners (ITXC itself owned a large numbers POPs) induced competition among termination partners which in turn resulted in more competitive rates than what companies like AT&T had access to. This kind of wholesale model was totally new.”

A story that Jahangir may not know was that it was VocalTec CEO Elon Ganor and Business Development wizard Dan Berninger who did a huge amount to persuade me to actually leave AT&T and start ITXC and to figure out exactly what our VoIP business should be in those early days. VocalTec provided seed funding and did quite well when ITXC went public.

Dan Berninger (who is now CEO of FWD of which I’m a board member) reminded me recently of their motivation: “we needed a customer.” Once of the tough things about being a pioneer is you often need to invent your customers’ businesses as well as your own.

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