i2Telecom: The future is now

Source: Exec Digital USA

Date :8/13/2008 12:37:31 PM

With its innovative products, Georgia company is poised to move to the head of the field in VoIP technology.

Written by Kevin Doyle and Produced by Amber Sweeney

Call it what you will – instinct, the ability to spot trends or good old-fashioned business acumen. Whatever “it” may be, Paul Arena clearly has it in abundance and it’s paying off for six-year-old i2Telecom of Atlanta, GA.

As Arena explains it, he was of the mind “that VoIP (Voice over Internet Protocol) would be the next big technology.” So, two years after merging his previous start-up company Cereus Technology Partners, Inc in 2000, after reaching a market capitalization of more than US$350 million, Arena was part of the management team experienced in communications and Internet technology that founded i2Telecom.

And what of that feeling the VoIP technology would be the next big thing? “Today it’s about five-percent of a two and one-half trillion dollar telecommunications industry worldwide,” says Arena, the Chairman and CEO for i2Telecom.

Research explains that VoIP is technology that is optimized for the transmission of voice via the Internet or other packet-switched networks. The term VoIP is often used abstractly to refer to the actual transmission of voice as opposed to the protocol implementing it. Regardless, it is the next big thing and, though not well known by the general public, i2Telecom is a recognized industry leader.

As stated on the company website, i2Telecom was “committed to leveraging recent advances in microprocessor and DSP technology, plus the increasing availability of high-speed Internet access, into a way to enable small/medium busnesses and consumers alike to dramatically reduce their telephone costs.”

“We bought a small company in California (SuperCaller Community, Inc) that had developed a micro-gateway device. We started with 18 engineers, six of whom were PhDs and proceeded to build an intellectual property portfolio,” says Arena, who began his career on Wall Street with Drexel, Burnham, Lambert in the mid-1980s “raising money for cable companies and other technologies.”

Cutting-edge technology

The company’s micro-gateway technology is now available in most major countries and the company is poised to be one of the fastest-growing VoIP providers in the world. “We have spent about US$35 million developing our technology,” says Arena. “I think we’ve done a pretty good job staying ahead of the curve.

“This is packet-based technology. We use compression techniques and algorithms to compress packets and send them down the Internet as opposed to over phone lines. Because the call starts out on the Internet, using broadband, there is no cost for origination. The cost comes with termination, which is less of a cost,” Arena says.

In 2004, the company introduced VoiceStick – a softphone on a USB drive. The company website explains “This patented product affords the user the portability of VoIP by enabling the user to call any phone or VoiceStick customer from anywhere in the world.” The company recently sold the first patent for the technology for US$6.5 million while retaining the rights to use it worldwide.

Arena notes that he was recently in Kuwait and used the technology to make calls “that were as clear as a bell.” Because of the advanced routing technologies, customers pay for only the last leg of the connection. That results in costs of “two or three cents a minute” compared to exponentially higher rates charged by other major providers.

The company’s next major innovation, MyGlobalTalk, is scheduled for a September 10 launch date. The switch for that product was certified for several hundred thousand users in late July. Recently, the company posted this application on a blog website aimed at BlackBerry users for a beta test. “We signed up 1,000 customers in the first two days,” Arena says.

The beta version of MyGlobalTalk – built in a mere 90 days - is winning rave reviews and was accorded a Best of Show award at TMC’s Internet Telephony Conference and Expo East 2008. i2Telecom’s products also garnered Internet Telephony Magazine’s Product of the Year 2007 and United Communications Magazine’s 2007 Product of the Year recognition.

“When you sign up, you get your own DID (Direct Inward Dialing) number. From a cell phone, even a US$29 cell phone, you put that cell phone’s number into the caller ID for your account. You dial the number, access our switch and can then call anywhere in the world. If you have a Smart Phone, you download the application, then dial out as you normally would with no change in user behavior. It works great within the US and calling anywhere in the world,” Arena says.

The signal travels from the customer’s cell phone, to a cell tower, then to an i2Telecom switch. It is then handed off to a dozen different rate carriers. “Cell phone companies have done a very good job of confusing people on the plans and rates they pay for cellular phone calls,” Arena says. “Free unlimited calls is not really the case at all. Most cost at least 10 or 12 cents a minute.

The company website explains that MyGlobalTalk “places Internet technology in the hands of every cell phone user, independent of wireless carrier technology, handset manufacturer or the type of wireless carrier voice/data plan involved. MyGlobalTalk is fully functional without local access to the Internet or proximity to an Internet hotspot. Users also need not wait for the availability of a dual-mode phone, MyGlobalTalk is available at a fraction of the cost using the customer’s existing mobile handset.”

“We’re kind of spoiled in the U.S. Our rates are the lowest of anyone out there. Other countries typically pay three to 10 times more than we do. Still, people are looking for ways to save money,” Arena says.

Moving forward

Arena says i2Telecom has a dozen more patents pending “that are going to be worth a lot more.” The company has also retained a law firm to protect its patent portfolio from being copied or infringed upon.

“We’re trading NASDAQ on the OTC Bulletin Board market with an approximate US$30 million market cap at the time of this interview. We’ve signed a $9 million deal to roll out in several countries internationally. We envision major expansion in the future. This is a global play. It’s just a matter of execution and getting the technology out there because the technology works,” Arena says.

Arena says there is approximately a five percent adoption of the technology at this point in time. He anticipates that, within a decade’s time, “that will grow to 90 to 95 percent and replace the traditional ways of making phone calls.”

“More applications are centered on unified communications and will be introduced as they become available. More and more people are using their cell phone as a lifestyle tool. Unified messaging applications deal with all the other applications people can employ on their cell phones,” he says.

“Really, everything you can now do on your computer you will be able to do on your cell phones,” he predicts.

The human factor

The company currently has 22 employees and is growing. “One of the great values of our technology is that we can have a very high revenue to employee ratio,” Arena points out.

Its location in close proximity to Georgia Tech University provides the company with a ready-made talent pool. “We have a lot of Georgia Tech alumni. Atlanta, in general, is a great city for technology and telecom,” Arena says.

The company is located on an SAS 70 certified premise and has two data centers in downtown Atlanta, co-located with other providers. The network facility and main office is located in nearby Roswell.

Branding their name

With proven technology to market, Arena says the company’s next task is to increase its visibility. “We pride ourselves for being ahead of the curve for technology and being recognized as a leader for developing patentable, innovative technology,” Arena says. “We haven’t spent hundreds of millions in marketing like some of our competitors. We focused on building the technology. Now we’re just starting to get out there on the marketing side. Remember, it’s not always about being the biggest and the first who wins in the end.”

The inference is clear – you may not hear them now, but you will. Soon.