Stellar Startups: Unmaking a monopoly

Spikko does not charge users for making phone calls through its system to other Spikko members' regular land lines anywhere in the world.

Spikko 88 224 (photo credit: Courtesy)
Spikko 88 224
(photo credit: Courtesy)
First, someone broke the phone monopoly. Then, someone else figured out a way to lower the cost of phone calls. And now, Israeli start-up Spikko ( has jumped the last hurdle - providing phone calls for free. That's free, as in the company does not charge users for making phone calls through its system to other Spikko members' regular land lines anywhere in the world, or even cellphones. If you're using Spikko to speak, you can talk to anyone, anywhere, using any communication method that utilizes the phone lines (voice conversations, SMS, fax, etc.) for no cost whatsoever. It's the revolution the world has been waiting for, according to Spikko chief marketing manager Rubi Kizner. "We are unique because we don't limit our free services to peer-to-peer conversations within our network, like many services do," he says. "We allow our users full access to the phone network, with any available service offered by 'regular' phone companies - except we don't charge any money." The "other companies" Kizner was referring to include Internet phone-giant Skype and its lesser siblings, such as Jajah, all of which offer free calls over the Internet (or USB phone) between members of the "club" using a computer-based phone to communicate. But when it comes to connecting to "real" phones, the free fun ends, and users must buy minutes. In the Spikko world, there are no minutes to buy, because they aren't selling any. "Whatever happens in the future, Spikko is prepared to make one guarantee: We will never ask customers for their credit card numbers," Kizner says, and will not collect money from them in any other way. "We see ourselves as providing a community service," he says. But there's method behind this seeming madness of giving away what every non-Luddite living in the 21st century understands is a service you are supposed to pay for. "In the end, technology will ensure free communications services for all," he says. Kizner has a point: e-mail, for those with short memories, wasn't always free; in its early days, you had to pay for it, and it was only with the inception of Microsoft's Hotmail that the culture of "gimme" spread to messaging. With Internet IP phone technology already making inroads on the cost-per-minute model of phone technology (thus the free calls between users of Skype or other services), Kizner says, Spikko is looking beyond the short term, and getting ready for the day when users will no longer be willing to pay for voice communications. To that end, Spikko has developed a number of unique (and patented) technologies that will ensure the company can make money, even if it is giving away phone services. Advertising, of course, comes to mind, Kizner says, and while presenting ads to users will be a part of the Spikko income model, it is by no means the most important - because it doesn't work, among other reasons. "Experience has shown that services based on ad income do not work in the long term, and certainly not on a large scale," he says - taking as an example the start-up problems faced by Blyk (, which offers free cellphone voice and messaging services ( Despite the fact that it is the brainchild of cellphone industry expert Pekka Ala-Pietilä (Nokia's former president), Blyk has gotten off the ground, but has faced criticism from users and pundits for various shortcomings in the service. "If the former president of Nokia is having trouble with an advertising finance model, it's a sign that there must be a better way," Kizner says, adding that the "better way" is tied to the technology that makes Spikko run. Right now, Spikko is in beta (closed); to get in, you have to be invited by other users. Users receive an Israeli phone number (but of course there are no long-distance charges for users dialing out to any other country code). Users connect using their computers or an IP phone, and they can call out free (incoming calls are charged for a local call by their local phone companies, unless they are Spikko users as well). Calls to members (Spikko numbers) are unlimited, but you need to have incoming calls from outside users to get outgoing call credits for use with outside phone company services (the kind of credits you have to pay for with other services). You can also earn credits from calls to new members you have invited into the service. The reason for the credit system, Kizner says, is to ensure manageable amounts of traffic on the network while Spikko builds up infrastructure, and to ensure that users who get invited are not going to try and take unfair advantage of the service. Spikko currently has about 100,000 users, a good amount. But in a few months that number could surge when the company comes out with its cellphone application, allowing users to make free calls on a Wifi or GPRS network. Spikko's CEO, Shai Gilboa, was founder of Israeli silicon optics startup Xloom, and is working with Kizner and two other college buddies on Spikko. Alon Carmel, founder of Jdate, is a major investor, as are several other forward-looking Israeli and international businesspeople. Free phone calls may seem like a radical idea, Kizner says, but it really isn't - and the millions he expects to join are primed for the idea. Skype and the other Internet phones have proved that it's feasible - and popular. "Who would pay for something you can get for free?" Kizner asks. Not me!