Next-gen IP telephony start-ups team up

Start-up IP telephony providers Jajah and Jangl are teaming up to take on the competition, the companies said Thursday.

The companies are part of a new generation of voice-over IP providers that have crept up recently hoping to replicate the success story of Skype, which was bought by eBay two years ago for $2.6 billion. The market is already crowded with dozens of these small players. Typically at this stage of the game, start-ups are too busy duking it out against each to forge partnerships, but executives at Jajah and Jangl say it makes sense for them to partner even though some of their products may overlap.

"It is rare to see companies at this stage do something like this," said Michael Cerda, CEO of Jangl. "But it's such a confusing market out there and the press and VCs often lump all VoIP providers together. But our strategies and technologies are really very different. And when we sat down together, we realized they're actually complementary."

Jajah is focused on providing low-cost international calling. Already it has the ability to terminate calls or transfer calls from the Internet to the local telephone network in more than 122 countries around the world. Earlier this year it received funding from the German phone company Deutsche Telekom. And it has ambitions to grow into a major telecommunications platform provider in the future.

Jangl, on the other hand, is focused on providing secure phone calling for social-networking and dating Web sites. The service essentially provides alternative local phone numbers that can mask a person's actual phone number, so that they don't have to give out a personal telephone number to strangers.

But while their focuses may be different, Cerda and Frederik Hermann, director of global marketing for Jajah, say they see benefits in working together for both companies. For example, Jajah is about to launch an in-call advertising platform. The way it works is when a user is being connected to a call, he has the option of listening to a short 10-second advertisement. As a reward for listening to the commercial, the user earns credit, which can be used to defray the cost of making future calls over the Jajah network.

Jangl, which claims to be on some 40 million social-networking profiles on sites such as Match.com, says it brings an important target audience to advertisers because its service is already integrated into the media-rich social-networking world.

"Jajah brings the ads and we bring the customers," Cerda said.

Also as part of the deal, Jangl will be able to terminate calls onto the regular phone network from the Internet in all of Jajah's 122 countries. Today Jangl only offers termination service in 32 countries.

"Over the past two years, we've built a huge back-end system for terminating calls all over the world," Hermann said. "So we're able to allow Jangl to use that resource and we recover a small margin on that."

But Jajah and Jangl's main competitor Jaxtr says the companies are merely running scared. "I see it simply as the weak banding together," said Konstantin Guericke, CEO of Jaxtr.

One thing is for certain, partnerships are tough to manage no matter the size or stage of growth of the companies involved. But who knows? Maybe this partnership will be a prelude to a merger. Executives from Jajah and Jangl haven't ruled out the possibility, but they each say it's not on the table right now.

"Merging the two companies might make sense at some other juncture in the future," Cerda said. "But both companies are still so young. And they have something they want to be when they grow up. And we have something we want to be when we grow up."