Vonage to pioneer unlimited calling in Korea
By Kim Yoo-chul
If you've been putting off calling your sister or brother in Canada or your European cousins due to fears of the higher cost of calling from your smartphone, a promotion from Vonage may pique your interest.
The U.S.-based Voice-over-Internet Protocol (VoIP) provider is giving away one free international phone call, at a maximum of 15 minutes, to anyone who downloads its new iPhone mobile application Time to Call, which is also free.
Not surprisingly, the promotion will cost the provider, however it seems evident that Vonage doesn’t care because it believes the market for international calls in Korea is a highly lucrative one considering explosive local demand for smartphones.
``South Korea is important for Vonage. It has a large, sophisticated user base with high smartphone penetration and significant outbound international calling needs,’’ said Marc Lefar, a chief executive from Vonage, in a recent interview with The Korea Times.
Time to Call, a stand-alone mobile application for the iPhone has so far been released in 87 countries.
The chief executive explained the service allows customers to purchase a call and talk for up to 15 minutes to landlines and handsets in 100 countries for $0.99 or $1.99, billed instantly through iTunes.
He stressed it is the easiest way to make low-cost international calls on the go.
Vonage has also been developing mobile applications for smartphones, Android-equipped ones as well as the iPhone that will simplify the calling process and even allow customers to dial from their contact list without entering the access number.
Korea, a nation of 48.6 million, has taken to smartphones relatively late, but has quickly caught up.
Since November 2009, Korea’s smartphone market has taken off, inspired by the then-unexpected iPhone fever.
This has pushed Samsung to migrate into software-focused handsets, bringing the Galaxy S smartphone into a market rivalry with Apple.
The number of smartphone users is expected to surpass 20 million by the end of the year, according to estimates from the nation’s top telecom regulator, with top-tier handset makers such as Samsung and LG Electronics promoting their Galaxy and Optimus brands aggressively.
Another good sign for Vonage and its interest for growth in Korea may be that Korea is now a top spot for Apple, meaning local Apple vendors such as SK Telecom and KT will release the iPhone 5 and iPad 3 at the same time as vendors in Apple’s most-trusted regions of the United States, Japan, Australia and the United Kingdom.
Lefar, a former chief marketing officer (CMO) at AT&T Mobility, said Vonage hopes the service and other forthcoming products could be successful in Korea.
When asked about financial details such as revenue and profit targets, the executive declined to comment. However, he added Vonage will try to claim a larger stake in the world’s most-wired country.
Vonage, which is also the biggest U.S. provider of telephone service over the Internet, has recently said it will let users of its home plans make calls with a second device, such as mobile phones.
And the plan is apparently Vonage’s updated strategy for competition with Skype. The Luxembourg-based service is Vonage’s biggest rival.
Skype, which was acquired by Microsoft, allows people to make free calls over the Internet to other Skype users and even offers cheaper calls to landlines.
As of the end of July, the number of Skype users had grown to over 3.5 million in Korea, evidence of Koreans’ steady appetite for low-cost international calls.
``Some mobile carriers have been experimenting with mobile VoIP to provide their own VoIP client offers to compete directly with Skype. But Vonage has one of the largest VoIP networks in the world, terminates a growing share of traffic on VoIP network and has significant expertise in this market,’’ said the executive.
Lefar said he’s aware of the ongoing so-called ``free-riding’’ controversies between mobile carriers and mobile VoIP service providers here.
But he stressed Vonage doesn’t believe that it is a free-rider, as consumers who’ve paid for a fixed-broadband connection and other data streams should have the freedom to use the services that they wish.
``Mobile VoIP on 3G- and 4G-based networks is still nascent, and quality of service varies greatly from carrier to carrier and from country to country. We expect to begin expanding our 3G and 4G services to other areas of the world, including Southeast Asia, as we do more testing.’’
After targeting home-focused users for many years, Vonage is shifting its primary target to mobile devices.
``Consumers want to have the freedom to make calls at great rates from their other connected devices. Approximately 40 percent of all international calls worldwide originate from a mobile phone and that’s why we think this was a good chance to extend our service to customers even in Korea.’’
Vonage, which went public in 2006 at $17 a share in the New York Stock Exchange (NYSE), has seen an 80-percent rise in its stocks so far this year.