VoIP Potential Seen As Limitless

February 11, 2005
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GRAND RAPIDS — A large Detroit automotive supplier recently came to Grand Rapids with a problem.

The firm had managed to install data communications with its facility in Mexico, but soon found that it could not install complementary voice circuits in either a timely or cost-effective manner.

The firm wanted to use Voice over Internet Protocol (VoIP) technology to integrate its phone system with its data system. The situation was not a matter of understanding the value of the technology, but of achieving it.

So the firm turned to VoEx.

“This is just an example of bringing the technology to a customer when they couldn’t do it cost effectively,” said John Belanger, vice president of sales.

Although VoEx Inc. soon captured much of that firm’s Michigan business as well, the Mexican scenario was one for which the 2-year-old Grand Rapids start-up was especially suited.

In 2003, the firm made national headlines and was featured in a Fox News Channel report for its venture into Iraq. The central offices of the Iraqi providers had been destroyed during the liberation of Iraq and international phone service was either not available or enormously expensive.

VoEx opened an Internet café and VoIP center in downtown Baghdad. Since then it has worked to expand its services there, including a mobile phone partnership with GlobalNet Corp.

“We understand the international market better than a lot of people,” said VoEx CEO Haydar Haba, who is from Baghdad

“The company was originally formed to use VoIP to enter into underserved markets internationally,” Belanger said.

“These are markets that really aren’t open to competition, and as a VoIP provider you can come in and set up operations and provide a cheaper way to get traffic from that company to the U.S.

As an executive vice president of eCircuit, Haba oversaw the development of circuitry and hardware that validated the VoIP technology for Sprint. When that company changed ownership, Haba decided to set out on his own.

Recognizing the technology’s potential for international communications, Haba helped launch Telco 214 in 1997 as CTO. The firm built a VoIP network into 35 countries and drastically reduced the cost of an international phone call in those markets. Over five years, the average per-minute price of an international long-distance phone call dropped from 30 cents to under 10 cents.

That venture was sold in 2000, and Haba followed his wife to Grand Rapids, where he and his partners spent a two-year, non-compete agreement period refining the technology and planning their next move.

“We were building and building the technology and I decided it was time to go the last mile,” he said. “We had already reduced the cost of transport while big carriers were dominating the market. We knew we didn’t want to go into the consumer market and knew we wanted to be dedicated to large business, enterprise and the carrier market.”

In June 2003, Haba, current Executive Vice President Michael Vorce, COO Sam Raman and CFO Daniel Quandt launched VoEx Voice Exchange with a Grand Rapids headquarters and offices in Chicago, Los Angeles, Seattle and London

Since then, VoIP has become mainstream, based largely on the consumer-driven efforts of companies like Vonage. Most of these firms have worked to bring the technology into homes and small businesses. Consumers, especially the computer literate, have come to understand the VoIP concept of carrying voice traffic over broadband Internet.

“We like Vonage for many reasons,” Belanger said. “If one of their customers is the CTO of a large company, they are going to eventually say, ‘Gee, why aren’t we using this at work?’”

While Vonage’s model is based on providing cheaper phone service, VoEx has a slightly different proposition.

“Many customers already have a trusted data connection in place,” said Jay Crookston, chief marketing and strategy officer. “They use it for mission critical applications like payroll and billing information. Typically, there is a lot of room on that data pipe left over.”

Similar to Vonage, VoEx proposes integration of voice and data networks, which typically lowers transportation costs by 30 percent.

“I don’t like to use this term, but it could be considered a telco bypass situation,” Belanger said. “But from a VoIP perspective, that’s where we’re going. It’s still voice exchange, but we aspire to be something more than that.”

Crookston displayed an Internet Protocol (IP) phone. The phone works and looks no different than traditional equipment. Behind its operations, however, are next-generation technologies that may or may not work with systems in place today.

The inherent difficulty there is in providing the same level of service and reliability to which enterprise clients have grown accustomed. An employee doesn’t care how it works, Crookston said, he just wants to get his job done.

Since its inception, VoEx has focused on integrating existing networks with its IP-based platform. That model has taken off in the last six months, Crookston said, and the firm is ramping up to expand past its CLEC and university base into large enterprise, data backbone and call center markets.

But the firm’s vision exceeds that competency.

“It’s going to be all about applications,” Haba said.

Integration through IP can lead to many communication applications.

A current example includes an application that has helped drive VoEx’s university penetration, including University of Michigan and GeorgetownUniversity. At many schools, staff is housed in thick-walled ground level or basement offices. As such, the staff doesn’t have cell phone coverage. Those offices do have a Wi-Fi network, so VoEx is able to integrate voice communication into Wi-Fi to allow for mobile phone use.

Stating its development intentions, VoEx has partnered with Internet2 as its expert in the VoIP arena. As the technologies developed through that research relationship expand into the commodity Internet, the applications will expand past voice and data integration into video, and then into non-communication systems.

Such an application possible today includes the integration of voice and computer systems for customer service call centers. As a customer calls up, his or her account history will appear on the account representative’s screen.

While the customer service applications are attractive, imagine if this were accomplished on that employee’s home computer. Call centers could both eliminate overhead costs and attract talented employees with untraditional schedules.

“There is a host of possibilities that could fundamentally change the way companies operate,” Crookston said.

“It’s not about how much VoIP we can sell you today,” Belanger said. “It’s about how we can make your business more efficient.”    

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