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Current Issue: Jan.-Feb. 2008
View From the Top
Fringing in the changes
Mobile VoIP provider aims to revolutionize the mobile industry
by Ken Wieland
If Avi Shechter has his way, a new verb will emerge in the English language: to fring.
As CEO of Israeli-headquartered fringland, which offers the fring mobile VoIP service aimed at consumers, Shechter has already registered"fring a friend" and"fringsters" — people who use the fring service — as trademarks of the company. And if the number of fringsters hits critical mass, which is Shechter’s primary goal, then maybe — just maybe — fring could join Google in making the successful noun-to-verb transition. Shechter certainly isn’t thinking small.
"We’ll look back in a few years’ time and see how big a revolution there’s been in the mobile industry," he says."We’ll also see, hopefully, the pivotal role fring has played in making that revolution come about."
The fring service, which has been available since the beginning of 2007, enables"free" mobile voice calls between fringsters who have downloaded the software client onto compatible handsets. Shechter says more than 400 models of handsets are now fring-compatible. fring calls can also be made between the handset and PC.
To get the so-called free calls, fringsters must first sign up to a flat-rate data package from their mobile service providers. Mobile VoIP calling (which is a data application) then uses up the allocation of data. According to fringland, fringsters soak up around 8MB to 10MB per hour when talking, so it is important — if the fring service is to take off — that mobile operators’ flat-rate data packages are reasonably generous.
But fring is not only about peer-to-peer calls among fringsters. The client integrates with Skype and Google Talk, as well as"hundreds" of other SIP termination providers, which enables fringsters to call non-fringsters on regular mobile and landline numbers. The software, which has presence functionality, also lets fringsters have one integrated contact list for friends on different IM platforms, including MSN Messenger, Twitter, Yahoo and ICQ. The idea is to build a community by linking other different communities.
"We are providing our users with a better communications experience, regardless of the device and operator they use," Shechter asserts.
Non-stop development
Shechter was first attracted to the fring concept back in 2005 when he was working with Veritas Venture Partners, an Israeli investment fund specializing in technology-based start-ups. Alex Nerst and Boaz Zilberman, two Israeli entrepreneurs with technological expertise, were evangelizing the idea and Shechter was suitably impressed to leave Veritas and set up fringland with them.
"While Alex and Boaz had the VoIP technical background, I had the experience in Internet consumer applications," Shechter says."It quickly became apparent to us all that putting together VoIP, presence and chat on the mobile phone would be a compelling integrated experience for consumers. It’s exciting to see how the things we were dreaming about more than two and a half years ago are actually happening."
Shechter is at pains to stress that fring is unique, with functionality not easily replicated. This includes the ability of the VoIP software to work not only on 3G and WiFi but across low-bandwidth networks such as GPRS and EDGE, which enables it to grow in emerging markets where 3G is not yet available."fring has required a lot of high-level and out-of-the-box thinking," he says."It’s very tough to develop a good voice experience on different platforms connected to lots of different Internet networks and communities. It’s not a surprise that not many companies can do this."
And fring, adds Shechter, is still in beta phase."We’re always developing," he says."That’s the nature of the product. It’s an ongoing effort to improve the customer experience."
Part of that development includes the launch last November of fringME, a free-to-use widget that can be used on fringsters’ Web sites to enable the full range of fring features: VoIP, presence and IM. It can also allow visitors to the Web site to locate the fringster’s whereabouts using GoogleMaps (provided the fringME-using fringster has a GPS-equipped handset and has not switched off the"find me" presence feature on the widget).
Earlier in 2007, fring launched an auto-roaming service between 3G and WiFi networks for dual-mode handsets, giving connection priority to free WiFi networks whenever available. To take full advantage of this feature, however, fringsters must preconfigure connections to the WiFi hotspots they can access.
Where’s the business case?
The fringland business model is not a conventional one: It has no billing relationship with fringsters and no revenue streams to speak of. It is also difficult to see how well fringland is faring as Shechter does not disclose the number of fringsters nor the amount of capital the company needs for its day-to-day operations.
What Shechter does say is fringsters are present in 160 countries around the world, with no one country accounting for more than 10 percent of downloads. And because fring expansion is dependent on word of mouth, marketing costs are minimal. Neither does the company stump up interconnect fees with other operators — as do the likes of Skype and Truphone — as fring only plays in the end-to-end VoIP space.
But there are still costs fringland has to meet, not least R&D, the purchase of more server capacity to keep up with expansion, and the upkeep of some 50 staff. To meet those costs, fringland has had to rely on venture capital (although Shechter doesn’t say how much money has been raised so far).
fringland undertook its first round of VC funding in early 2006 with two Israeli funds: Veritas, Shechter’s previous employer, and Pitango Venture Capital. In August 2007, a second round of funding was led by North Bridge Venture Partners, a Boston-based fund specializing in seed funding for technology companies, which was supported by VenFin (an investor formerly holding a 15 percent stake in South African mobile Vodacom before selling it to Vodafone in 2006). The original Israeli investors also took part in the second round.
"We have very healthy backing from our investors and they fully understand what we’re doing," Shechter says."They can see where the market is heading and have the patience to see it through."
Investors’ patience will be key as Shechter says revenue generation is not likely until 2009 at the earliest. His immediate goal is rather to build up a fring community with"critical mass" (as for how many fringsters constitute critical mass, Shechter doesn’t say).
An extensive fring community, should it materialize, could bring about a lucrative exit for fringland’s investors, even if revenue streams are not fully developed by that time. It’s a strategy that has worked spectacularly well for other social networking sites, of course, such as YouTube, MySpace and FaceBook.
The sources of income Shechter has in mind include revenue-sharing deals on the extra traffic it brings to its SIP termination partners, as well as taking a slice of the subscription fee paid by fringsters to third-party application providers. Advertising is also a possibility, Shechter says, as is a prepaid service to allow fringsters to connect to a range of WiFi providers without the hassle of preconfiguration.
How disruptive fring and other mobile VoIP providers will be to incumbent mobile operators’ business models remains to be seen, but the established players are clearly in an increasingly uncomfortable position. After all, the overwhelming majority of their revenue still comes from circuit-switched voice.
Every technology change brings risk," Shechter remarks. Time, as ever, will tell who the winners and losers will be.
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