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Woosh gets a dial tone

By Chris Keall

Thursday 1st December 2005

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Woosh has finally connected. The company's phone service was launched on September 14, two years after it started selling wireless internet access. But in the long wait for lift-off, a number of internet telephony rivals have been marshalling their forces, including Telecom, plus oddball but potentially potent foes like Skype. More on these shortly.

At first pass, Woosh's wireless phone service seems solid and a genuinely viable alternative to a Telecom landline. Firstly, it couldn't be easier to set up and use. Woosh gives you a special router - a piece of hardware that looks like a mini coffee machine and which has two standard phone jacks. You plug in your usual telephone, listen for a dial tone, then call as usual (or you could dispense with a phone altogether and make all calls via PC software and a PC headset).

If you use a cordless phone, you'd never know anything had changed - in terms of how you actually make a call, that is. Woosh pledges that call quality can be as good as the best-sounding cellphone call, but not the best-sounding landline call. The voice quality of calls I made at the launch event was pretty good over a regular phone; using the PC version (or 'Softphone') our receptionist thought I was speaking on a speakerphone.

The service is also cheaper than a standard $39.85 a month Telecom account. You pay $20 for a Woosh phone line (though you must also use Woosh as your internet service provider, which will cost you another $29.95-$69.95 a month). Services you have to pay $4.50 for with Telecom (voice-mail, caller ID, call blocking) are free with Woosh. Calls to cellphones, at $0.45 a minute, are also much cheaper than most Telecom plans.

Business calls are free, but with the service restricted to two phone lines it will be mostly confined to the residential market anyway. A setup cost of up to $200 will not help tip those unsure about whether to give up the security blanket of a Telecom landline.

You can keep the same telephone number and, for $10 extra a month, can acquire a second phone line and number. Try doing that with Telecom.

Now, the clouds.

Shortly before Woosh's voice launch, Telecom announced a $1.4 billion plan for a 'next generation' network, whose services will include IP (internet protocol) telephony. Limited trials are underway. No launch date is set, and it could be quite some time. But medium term it's no secret that Telecom - and all the Telecoms of this world - are transitioning from crusty old circuit-switched networks to IP technology, so Woosh's current point of difference will not last forever.

The silver lining for Woosh is that its stoush with Telecom is not just about technology and scale.

The skills of Woosh's legal affairs manager in negotiating an interconnect agreement with Telecom were just as crucial, if not more so, than those of any technical wonk working on Woosh's launch project. And in pitching its service as the first alternative to Telecom's local loop (its monopoly on local telephone exchanges), Woosh implicitly raises the spectre of a trip to the Telecommunications Commissioner if Telecom gets too predatory in its IP pricing once its own service is launched.

So the Telecom cloud can potentially be dispersed. But there are other threats.
CallPlus has an alternative, landline-based IP telephony service (which is cheaper but less attractive overall because of the need for a special type of telephone).

Early-adopter types who are abandoning telephones altogether in favour of an all-mobile setup may prefer Vodafone's recently launched 3G or Telecom's T3G network for all their voice and wireless data needs. Others will be attracted to the WiMax network currently being scoped out by BCL (WiMax is an alternative, backed by Intel, to the IP Wireless technology used by Woosh for voice and data).

But it's a little piece of software called Skype that poses a more serious threat. Skype lets you make free calls to other internet users who also have Skype software installed or, for a small monthly fee, make a call to any regular telephone number. Although wildly popular with geeky types, Skype used to be considered marginal. It was written by a couple of no-name European dreamers, and many see such peer-to-peer software as a virus and scamster-ridden.

That changed on September 12 when Skype was bought by eBay (market cap: US$55 billion). Talk about instant cred. And shortly after that, Skype got an official New Zealand distributor: mobile phone outfit BrightPoint - which among other things, imports HTC's i-mate line of smart phones, which now come bundled with Skype software. It'll be interesting to see what commercial product comes out of that.

Curiously, as I write this column during the last week of September, Woosh's ads are centered around a discount deal on its regular internet data plans. Mention of the new voice service has disappeared.

While CEO Bob Smith politely refuses - as ever - to answer any questions on how many voice customers Woosh needs to sign up, evidently an initial softly, softly approach is being taken to the new service.

And Smith is also coy on whether the voice launch has positioned his company for its long-rumoured public listing. If it's ever going to do it, now is the time.

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