Stellar startups: Helping out our VoIP buddies

Love it or hate it, there was one thing you could always count on with "Ma Bell:" It would always be there.

voip biz 988 298 (photo credit: Courtesy )
voip biz 988 298
(photo credit: Courtesy )
Love it or hate it, there was one thing you could always count on with "Ma Bell:" It would always be there. But that's all in the past. In today's telecom world, you've got a wide variety of choices: POTS (plain old telephone service)? VoIP? Soft phone? Cell phones as your main communication device? Two tin cans strung together? So many choices! And choices do count - as former customers of Sunrocket ( will tell you. Back in the day, when you used the term "phone company," everyone knew who and what you meant: The phone system run by AT&T, which for decades owned most of the phone switching equipment in the United States, and thus controlled the local and regional phone companies around the country. Like with all monopolies, the system had its pluses and minuses. Service was extremely reliable: A phone repair person would be dispatched almost immediately to install or repair phone lines or even individual telephones in a customer's home. But repairs were few and far between - those phones were built to last! But then there were the prices - the extremely high prices for local and especially long distance service. The high price of phone communications, administered by a virtual monopoly, were what prompted a lawsuit against AT&T's monopolistic ways that resulted in the breakup of the company into regional "Baby Bells" to serve local customers - which opened up the market to competition for long distance calls. The result? Prices for long distance that were a fraction of what AT&T had charged. There was no denying it: Competition in the long distance market was a resounding success. But now the die was cast. "If some is good, more must be better," the old saying goes, and in 1996, Congress passed a law that was supposed to foster the same kind of competition in local markets. But while the results are not in just yet on the Telecommunications Act of 1996, there are plenty of people who give it flunking marks when it comes to fostering competition ( Among the complaints: "more media concentration, less diversity, and higher prices," according to the CIMA communications rights group. Usually when a law doesn't work properly, opponents and critics go back to Congress for adjustments to fix things - which can take years, in some cases. But all of a sudden, land-line phone service wasn't as important as it had been. With VOIP on the scene, companies could negotiate deals with local phone companies and charge their customers next to nothing for calls to "real" phones - while customers with broadband connections could talk for free to each other using IP "soft phones" like Skype, or via voice additions to programs like ICQ and MSN Messenger. Thanks to the new technology, anyone and everyone could run a phone company. You no longer had to put up an expensive physical plant of switching or line equipment: Digital calls were routed through digital equipment, i.e computer servers - and that kind of hardware comes cheap, meaning that service providers could provide cheap service. A little too cheap, apparently. Grow too quickly, try to sign up lots of customers for VoIP service at low prices, and you run into what almost every business that tries to operate on low profit and high volume runs into - problems. The same problems, by many accounts (, that did Sunrocket in. But VoIP providers don't have to struggle alone, says David Koppel, chief operating officer of Jerusalem start-up Kayote Networks: Instead of negotiating traffic with PSTN equipment owners to enable VoIP customers to make calls to "real" phones, billing customers and dealing with the everyday "surprises," like dead servers, VoIP service providers can hire Kayote to do a lot of the "back end" work, saving themselves money, time and frustration - and maybe even saving their business! Kayote's solutions revolve around building a "softswitch" for customers, which essentially does on a computer what a hardware switching station used to do: route the calls through various servers until it arrives at the proper "address," whether IP or phone number. Generally, the softswitch (also called a Media Gateway Controller in the IP telephony world) will have various features built into it, such as call forwarding, call waiting etc, and can also take care of services like billing to and from service providers. Kayote's solutions take care of all this - but they go the extra mile, or 10 miles, as the case may be, says Koppel. Besides the tech side of VoIP, which of course Kayote can handle, the company will generate profit reports and traffic reports and provide alerts when terminators exhibit problems thereby helping the user to run his business more effectively. Users can work with their own terminators or take advantage of Kayote's relationships with major terminators. Plus, there's the security end of things: As a software solution, VoIP can be prone to hacking, like when unethical telemarketers worm their way into a system and hijack it in order to make free or very cheap phone calls with automated dialers - a phenomenon that goes by the unsavory name of SPIT (Spam for Internet Telephony). Kayote's security suite ensures that a call or system cannot be hijacked at all of its vulnerable points, especially when service is being switched from one network to another. And, Kayote will even help customers deal with phone companies, says Koppel. Big phone companies don't like to deal with small VoIP fish, often because they themselves are not adept at VoIP technology. However, they welcome a company like Kayote, which acts as a liaison between the VoIP provider and the phone company, ensuring smooth operation for clients and end users, as well as making it easy for the phone company to take advantage a fast growing business. In the couple of years that it's been around, Kayote has carved out a real niche for itself in a very competitive market - so much so, Koppel says, that the company is on the verge of actually making a profit in its monthly cash flow (some big contracts are in the offing, he says), which would take it out of the realm of "start-up." With Kayote, he says, an entrepreneur can set up a "turnkey" VoIP business, if s/he were so inclined - and get things right. If only the Sunrocket people had known about Kayote.