EQO Communications, a communications company based in Vancouver that made waves at Demo 2006 and raised a total of $13 million in two rounds of funding from GrowthWorks, BDC Capital and Ventures West is rumored to have cut nearly 65% of its work force — reducing the number of employees from 35 to 12. The news was reported by Techvibes, a Canadian startup related publication. I have called their marketing manager for a comment but had not heard back at press time.

When it launched, we were intrigued by EQO because it was one of the first clients out there that allowed you to make Skype calls from a regular phone. Making Skype mobile was an opportunity that slipped away from EQO mostly because competitor iSkoot was better funded and had a better execution strategy. In August 2006, EQO got into a bit of a tiff with Skype. The company then refocused on social networks but it seems even that strategy didn’t go anywhere. The company raised another $9 million in August 2007.

Funny thing about these rumored job cuts is that the company has been supporting more and more mobile phones and was supporting all high growth devices. The job cuts, if true, don’t bode well for the long term health of the company. VoIP as an industry has proved to be hard nut to crack for start-ups, especially those aiming for the consumer market. Jangl and TalkPlus were two startups that hit the deck earlier this year. We are going to see more of these”save money on LD” phone apps with no discernible business model and relatively little traction or loyalty to follow suit. 

* Approximately

Ooma, a Palo Alto, Calif,-based company that has created a VoIP phone hardware and services platform has raised another $16 million in third round of funding from it’s existing and new investors. Ooma had previously raised $27 million in two rounds of funding, bringing the total to $43 million. That’s a lot of money especially since the company hasn’t lived up to its initial promise.

Ooma, now about four years old had launched last July with much fanfare but lost its was as some key executives had left the company. In April 2008, Rich Buchanan, company’s new marketing honcho told us that the company would increase its retail presence. Since then the company has started selling at Best Buy. The company is going to use much of its new $16 million for expanding its retail presence.

While most of media attention at TechCrunch’s annual start-up showcase in San Francisco was on the latest and shiniest start-ups, I ended up spending most of my day walking the demo pit, quietly checking out what was on display.

And after that I checked on the health of the alumni of 2007. I was most interested in Pat Phelan’s company Cubic Telecom, which got a reluctant and very partial thumbs up from me a year ago. To jog your memory, Cubic has a service called MAXroam, which sells you a SIM card that saves you crazy amount of money when roaming overseas. Instead of paying the outrageous rates to incumbent carriers, MAXroam uses a VoIP-based architecture to offer calls at pretty cut rate prices. 

Phelan, is an odd man out at these Web 2.0 events. For starters, like me he was in his 20s a long time ago. He is telecom disrupter. And he is obsessed with real world metrics such as revenues and profits. Now that’s old school! Perhaps that is why I enjoy the company of this acerbic Irishman with a heart of gold. 

When I showed up at his booth, he was all flustered. Pat had just busted Michael Arrington’s iPhone. He was showing off a new iPhone SIM-unlocking hack that allowed you to use any service on the iPhone including data, not just the carrier who sold you the iPhone. Something went wrong and it took about 30 minutes to get the iPhone working again. And that was long enough to have Pat reaching for those nasty things I gave up in January. After giving him hell for sucking down on them coffin nails, I asked him how is business?

Pretty good, he said.  And it was about to get better. MAXRoam now has over 100,000 paying customers. The company is bringing in substantial revenues (and some profits.) It is enough for Phelan has no plans to raise more capital for his company. He has announced Version 2 of its service which includes data roaming and USA roaming. Overseas travelers could pay 40 cents a minute for roaming in USA, a huge saving when you compare to roaming charges of around $2.99 for every minute of talk time.

Will that be enough? I don’t think so. 

My argument last year was - selling discount minutes is a tough business and making money off it is even tougher. What you need is scale. Phelan thinks he will get their by selling MAXroam V2 as a white label solution for other consumer brands. For instance, Phelan is very close to announcing a deal with one of world’s largest travel agencies which will sell branded MAXRoam-powered service in places like India. He feels that by working with such well known consumer brands, he can accelerate the number of people making calls using MAXroam, which would allow the company to make more money. We will check in with Pat in a couple of months and see how he is doing. 

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When the times get tough the tough choose cheaper, open-source phone systems. Such seems to be the theme of Fonality CFO Dan Rosenthal’s chat with me about the company’s latest $12 million venture funding led by Draper Fisher Jurvetson Growth Fund with participation from existing investor Intel Capital. And you know, I don’t think he’s wrong. The company is “sometimes profitable,” according to Rosenthal, and has grown rapidly in the last few quarters. Supporting that growth is one of the reasons for the third round of funding.

The Ciscos and Avayas of the world won’t keel over because Fonality’s selling more phone systems and software (while beefing up its retail distribution network at stores such as Best Buy and through Dell), but Fonality has a really good chance to play big, because its open source roots mean its phone systems for smaller offices costs tens of thousands less than similar system over a multi-year time period. For a 70-person office its PBX costs about $23,100 up front compared to more than $30,600 in annual leasing fees for a comparable system from Cisco.

The economic downturn might actually help Fonality find more customers, especially since most entrepreneurs (who would be in the market for cheaper phone systems) tell me recessions are the best time to start a business.

I’ve been covering the VoIP space since 2004, and lately it seems like every other press release sent my way is from a company announcing the addition of an application programming interface (API) to its telephony platform. The promise of APIs is that they make it easy to integrate different services — even those provided by different vendors — into a single application. The press release from one carrier even went so far as to claim that its API would “boost innovation and development of new apps exponentially.”

But is simply providing an API to your telephony infrastructure enough to prompt the world to beat a path to your door? Don’t count on it.

To be sure, these APIs are necessary, particularly in the world of voice mashups. Voice mashups combine voice as well as data and applications across multiple systems to create a new, useful service.

One example of a voice mashup is Twitterfone, a free service that takes your voice, converts it to text and sends it to Twitter. MAXroam provides the overall infrastructure and inbound telephone numbers, Dial2Do does the speech-to-text part, and Zong provides some inbound SIP termination. APIs are needed all around — including on the voice side — to make this happen seamlessly.

Voice mashups can be useful in the business space. They can save a ton of money, and can help to enforce both business process quality and consistency. Imagine calling an airline and speaking to an interactive voice response (IVR) system. A certain percentage of calls could easily be handled by the IVR, which can ask all the correct questions to ensure customers have the right information.

There are, of course, times when speaking with a live human being is necessary. So imagine that all the data collected by the IVR about your call is then sent to a customer service representative so that by the time the two of you are connected, they already know exactly why you’re calling. The call could even be routed to a particular rep based on the reason you’re calling.

This is the power of a voice mashup — the ability to treat voice and data interchangeably. While large companies have been able to afford the cost of developing these custom voice mashups, tools and services are now becoming available that let you make your own.

Jaduka started out by providing a voice API to their telephony infrastructure, which is maintained by their parent company, NetworkIP. But Jaduka quickly discovered that while developers signed up for the API, few were actually using it to launch services. The company now offers customized voice-enabled applications to enterprise customers.

Jaduka’s customers currently use over 4 million minutes a month, a number that is trending upward. But that’s a drop in the bucket compared to the more than half a billion minutes a month their parent company serves.

Ifbyphone provides a number of voice-related small business services as well. They also offer a voice API, but it’s essentially driven by web forms, which makes it easy to integrate their telephony services into any web site without needing to be a programmer.

And while not everyone agrees that what Ifbyphone provides would qualify as a proper API, it does offer a range of useful services to small businesses, such as interactive voice response, intelligent call routing and voice broadcast. They are all designed to help small businesses interact directly with their customers in the most efficient manner possible.

Indeed, APIs enable some great solutions. But APIs aren’t solutions in and of themselves. Nor do they necessarily make money.

Consider Ribbit, a company whose business model is to make telephony available through APIs. The thinking is that they’ll make their money on revenue shares as developers create interesting applications.

If Jaduka’s experience is any indication, however, I don’t expect Ribbit will last too much longer without a complete change of strategy. Ribbit might have 4,000 developers, but how many of them are actually making applications on which Ribbit is able to share revenue? I don’t put a lot of stock in the rumor that BT has purchased Ribbit for $55 million.

Even where you’ve got more than just an API, such as the case with Jaduka and Ifbyphone, the prospects for making a pot of money just don’t seem that great. The combined revenue of Jaduka and parent company NetworkIP is thought to be north of $150 million a year. Assuming Jaduka’s share of minutes per month also translates into share of revenue, that suggests Jaduka is responsible for $1.2 million of the revenue. Ifbyphone would not disclose customer numbers or revenues.

I think the market has a lot of potential, but so far, that’s about it. Go ahead and make those telephony APIs available, but don’t expect the world to beat a path to your door, and don’t expect to make any money just by publishing APIs. Figure out who your customers are, find out what problems they have, and develop solutions to meet their needs. APIs can certainly be a part of the overall strategy, but relying on APIs alone to generate revenue is a pipe dream.

Ribbit, a Mountain View, Calif.-based company that is pushing a VoIP platform that marries web with voice is subject of acquisition rumors this evening. VentureBeat reported that the company was close to being acquired by British Telecom (BT), but later changed their story. When contacted by me, Don Thorson, Ribbit’s Vice President of Marketing dismissed the rumors but declined to comment any further.

It wouldn’t surprise me if BT (or some European telecom) acquired Ribbit (or any other platform) to expand across the borders and find a way to stay relevant. We had pointed out that a consortium of incumbent carriers were developing their competitor to Skype. Ribbit-type platform could be used to develop apps for the incumbent supra-net.

Ribbit has so far raised $13 million from Allegis Capital, KPG Ventures and Alsop Louie Ventures. The company has attracted about 4000 developers to its platform, though it is hard to tell if it is making any revenues from its platform. Over past few weeks, I had heard about Ribbit being in “play” and talking to likely buyers, but there is nothing concrete to add.

The big buzz of the evening is that Twitter, a San Francisco-based start-up that allows anyone to post short up to 140 character messages to its platform and thus broadcast them to one or many using different media such as web and mobile, is about to acquire Summize, a Potomac Falls, VA-based start-up that uses the Twitter API to search and find relevant messages on Twitter.

The rumors of the deal were first reported by a little known blog (not anymore of course) by Josh Chandler. Subsequent to the news, I made a few phone calls and did confirm that it is not just a rumor and a deal is certainly in the works. It is likely to be announced as soon as next week. I am still trying to dig-up the financial details and would report further when I get hold of them.

The deal would be a good move by Twitter, and would be putting some of its recently acquired $15 million in VC funding to decent use as it would help the company get hold of of a business model. Here is why. Most people think of Summize as a Twitter search utility and it is a might fine search service. It is so good that there are nearly half-a-dozen other start-ups that are using the Summize API. On first blush, it seems like Twitter could bolt on search on their platform and make it more useful. I think it would be thinking about Summize in a limited sort of a way.

“We monitor collective attitudes being expressed right now on the web,” is how Summize describes itself. In other words, it can quickly look at data coming from conversational sources - RSS feeds and Twitter tweets - and offer a quick opinion on what is being talked about. For instance, on this page you can find out what people really think of this deal between Summize & Twitter deal. All the data is coming from the twitter stream.

In a conversation earlier this year, CEO Jay Virdy, formerly of AOL told us that they had developed a way to geocode public timeline tweets (Short messages). This allows one to find out what people are saying about John McCain in Phoenix vs San Francisco?

In other words, Summize has come-up with a clever way of peering through Twitter’s vast data stream and finding out what’s hot, where and how. The results are essentially keywords - topic, person or location based - and thus can be used to show contextual advertising next to the pages that show these results. Summize, has thereby developed an ability to monetize conversations without being intrusive.

Summize could have easily done this on its own, and started to make money. It would surely need to compete for attention with Twitter, and figure out ways to keep generating more traffic. Instead, if Summize is bolted onto Twitter, it can help the tiny start-up get instant traction.

Just as AdSense serendipitously turned Google into a giant cash register, with Summize, Twitter can take first step towards a business model. Of course, Evan Williams & Company have to quickly figure out ways to fix their patchy-at-times service before everyone decides to switch loyalties to one of the many Twitter rivals currently being plotted by clever minds.

PS: Since Twitter doesn’t want to charge me for having too many followers, and it doesn’t cost me anything, go ahead and follow me on http://twitter.com/om. Not that you are going to read the tweets anyway

PS#2: My jet lag has finally hit so if you notice errors/mistakes, please excuse my tardiness. I will rectify when I wake up.

The business of providing voice services to users of social networks is a tough one - you need huge volume to basically make money off what is essentially a new age call-back/calling card business. That is why many companies that aimed at this market have either retrenched or gone out of business.

Jaxtr, a Menlo Park, Calif.-based company, on the other hand, is ready to double down and stay in the game. Helping it do so is $10 million in Series B funding from Lehman Brothers Venture Partners, announced this morning.

The funding announcement is contrary to the rumor I had heard about Jaxtr hiring Lehman Brothers to sell the company. Good thing, I didn’t post that one ;-) Jaxtr plan includes making money to selling minutes for outbound calls to non-network members and ad-supported calls. “Combo of viral growth, ad revenue and paid services is a promising model,” Konstantin Guericke wrote in an email this morning. Jaxtr says it has 10 million users, a number they have been using since early 2008, though I would prefer if they start telling us about active users per month.

The out-of-network calling is a new service from Jaxtr, and is ultra cheap. For instance calls to China cost a mere penny a minute, while calls to India are 6 cents a minute. That’s low price, and I am not sure how they are going to make a ton of money doing that. Advertising-supported business is not an easy one either - as we have noticed in the past. To sum it up, I channel Brian McConnell, a former phone guy, and an occasional columnist for us.

The liquidity and exit opportunities for small telecom companies are also not good. You either need massive amounts of capital, or you need to be bought by a phone company (the stereotypes about phone companies exist for a reason). There are exceptions, of course, but they are rare.

Good thing, Konstantin has the money to soldier on!

Rebtel, a London-based VoIP start-up seems to be taking a whitelabel approach to boost usage of its services. The company will announce a brand license deal with easyGroup, a company started by discount carrier easyJet founder and serial entrepreneur Sir Stelios Haji-Ioannou. As part of this deal, easyGroup will sell cheap international calls under the brandname, easyMobile.

easyGroup is well-kown in Europe for offering discount services-from airtravel to internet access to rentals, and cheap international calling fits in with easyGroup’s overall business mantra. easyMobile is going to target 5.5 million Britons who live overseas and a million non-british EU citizens. VoIP has become popular in Europe, mostly because carriers both fixed and wireless have high tariffs for long distance calls.

Over past few years there has been a huge influx of East Europeans in the UK workforce. Their international calling patterns offer an opportunity for a discounter, especially if it works with a mobile phone. Rebtel’s mobile VoIP service will work with any mobile phone. The two companies didn’t disclose the terms of the agreement. From what I understand, there will be some revenue exchanged. Rebtel has also done a similar deal with Polish portal, Onet.pl, making this their second white-label deal. I guess like Jajah, Rebtel is coming to grips with the reality that building a brand isn’t easy.

Rebtel is one of the companies that I ignored for a while, mostly because at the time of their launch in May 2006, I found the user experience challenging. The company that raised over $20 million for Benchmark Capital & Index Ventures, has since be working to make the service easier to use.

Our friend, Luca Filigheddu was singing their praises recently. That said, this is an increasingly crowded market - several players have Mobile VoIP solutions that essentially compete with Rebtel, not to mention Pat Phelan’s roaming discounter, MAXroam, a service I use and recommend.

All these new development… maybe it is time to catch up with co-founder, Hjalmar Winbladh.

While the emergence of VoIP, or voice-over-Internet protocol, technology has already helped push down the cost of making a phone call, now it’s starting to have a deflationary impact on the world of mobile, where call charges remain stubbornly high.

In the meantime, the ongoing adoption of 3G broadband and the inclusion of Wi-Fi in many high-end phones is drawing a growing amount of attention to mobile VoIP services. Indeed, research firm Disruptive Analysis predicts that the number of VoIP-over-3G users will top 250 million by the end of 2012 — from virtually zero in 2007.

We at GigaOM are constantly tinkering with these mobile services, so we’ve put together a list of seven mobile VoIP apps that we think you’ll find handy.

Skype Options

Service: Skype Mobile
Platform/Network: Java-based application that works on 50 popular phones from Nokia, Sony Ericsson, Motorola and Samsung. Can be used on numerous cellular data networks.
Cost: Free
Features: Chatting (including with a group), presence settings (offline, online, do not disturb), and Skype-to-Skype calls (including SkypeIn).
Our Opinion: If your phone is supported, Skype Mobile is a great way to add Skype chatting and calls to it. Though it would be nice if the Skype application weren’t written in Java, as these applications are often sluggish and unstable.

Service: 3 Skypephone
Platform/Network: Uses a specialized handset. Currently available in the UK, Italy, Austria, Hong Kong, Australia, Ireland, Denmark and Sweden.
Cost: The phone costs £49.99 (about $98) and can be used on a pre-paid basis. Calls cost nothing if they’re made from Skype.
Features: Free Skype-to-Skype mobile calls and the ability to conduct Skype IM conversations, all without touching your computer.
Our Opinion: The 3 Skypephone is best suited for those who need a few monthly mobile minutes and wish to talk/IM to their Skype friends along the way. The pre-paid feature makes it an attractive and inexpensive option for Skype chatters in the geographies it serves.

Service: iSkoot
Platform/Network: Mobile handsets such as BlackBerry, Nokia, Windows Mobile and Palm OS models. Also works on GSM networks.
Cost: Modest to expensive, based on usage. Because iSkoot is a hybrid VoIP/GSM service, it uses SMS and mobile minutes when making and receiving calls or Skype IM messages.
Features: SkypeIn and Skype-to-Skype calls, Skype IM messages.
Our Opinion: iSkoot is a good option for keeping in touch with your Skype contacts. However, I would look at other software applications that just use data to send Skype SMS and Skype voice traffic.

Mobile VoIP Players

Service: Truphone
Platform/Network: Nokia handsets
Cost: Incoming free calls while on the Truphone network, low per-minute rates while on a GSM network. Outgoing calls are billed at very low per minute rates.
Features: Truphone offers free calls, SMS and voice mail while logged into the Truphone network via Wi-Fi. Otherwise, Truphone forwards calls to your mobile handset and you pay a low per-minute charge.
Our Opinion: With its smart forwarding options, Truphone is particularly useful for international travelers. Whether you’re on Wi-Fi or just your normal GSM network, you can be reached via your Truphone number no matter where you are (charges apply in certain cases, see their site for details). For times when Wi-Fi is not available, Truphone just released Truphone Anywhere, which utilizes local gateways for outgoing calls at low per-minute charges. I have trialed the service by forwarding calls from my Truphone number to my cell phone and the call quality was fantastic; voices were indistinguishable from any other cell phone call. A Truphone-to-Truphone VoIP call yielded even higher voice quality.

Service: Fring
Platform/Network: Nokia/Symbian handsets, Widows Mobile, iPhone (pre-release beta)
Cost: Free
Features: Allows you to make VoIP calls on any SIP network, Skype or to other Fring users. Additionally, Fring is a multi-protocol IM client that will allow you to chat with your buddies on Skype, MSN, ICQ, Google Talk, Twitter, AIM and Yahoo.
Our Opinion: I have used Fring to make SIP and Skype voice calls, and over EDGE the call is choppy and hard to understand. However, Wi-Fi provides enough bandwidth to make Fring calls clear and understandable. I wouldn’t say the quality is fantastic, but it is very comparable to a normal cell phone call.

Service: Talkonaut
Platform/Network: Available for Java-based phones, Symbian and Windows Mobile
Cost: Free
Features: Talkonaut offers free VoIP and IM chatting. For instant messaging, the application supports Google Talk, ICQ, AIM, and Yahoo. Talkonaut can also use SIP for VoIP calling.
Our Opinion: Talkonaut is a Russian offering and is still very new. The application was quite unstable on my Nokia N82 handset. With iffy performance and a very rusty user interface, I would recommend looking at other applications for this functionality, namely Fring.

Service: Nimbuzz
Platform/Network: Java program, Symbian; an iPhone version is coming soon.
Cost: Free
Features: Allows you to engage in IM conversations and conduct VoIP calls, as well as to share media such as photos and video. Nimbuzz also allows for client-to-client calls and has widgets enabling calls to originate from Facebok and MySpace. Compatible with Skype, Google Talk, AOL Instant Messenger, Windows Live Messenger, Yahoo, MySpace, Facebook and Jabber IM networks.
Our Opinion: The Symbian application is very responsive and easy to use. A VoIP call originating from my Facebook page to Nimbuzz over a Wi-Fi connection sounded good — just as good as any call over a GSM network.

Service: Gizmo5 (formerly Gizmo Project)
Platform/Network: Nokia Symbian handsets, BlackBerry, Windows Mobile, Nokia Tablets
Cost: Free for VoIP calls, low per-minute charge to call landlines and to SMS to mobiles.
Features: Gizmo5 allows you to conduct voice calls to other Gizmo5 users and grants IM conversations with friends on Gizmo5, MSN, AIM, Yahoo and Jabber.
Our Opinion: Gizmo5 is a great competitor to Skype, just not as established or well-known. They have wisely developed their client software for many platforms including numerous mobile phones, and on both Mac and PC. VoIP call quality is stellar when calling between clients, as well as to landline/mobile phones.

Jangl, a Pleasanton, Calif-based start-up that launched with much fanfare and lot of promise ran out of time, and is headed towards an ignominious end. Venturebeat had first reported that Jangl was looking to sell itself earlier this week.

Jangl is not the only VoIP company to nosedive. We have heard from reliable sources that TalkPlus, San Mateo, Calif. Company is going nowhere fast. Michael Toepel, who was the CEO recently left, after the company failed to get new investment to keep going.

Jeff Black, founder is overseeing the operations but there is little hope for this company, which wants to sell its intellectual property. The company had raised about $5.5 million from Menlo Ventures back in 2006. I left Jeff a voice mail but so far no word from him. John Todd, CTO of the company is still with the company.

Back to Jangl! Cerda along with Jangl cofounder, Ben Dean and three other Jangl employees is joining Jajah, one company that seems to be defying the odds, mostly because it changed its overall strategy. “Jangl will sell its assets and there are people who are interested in this,” Cerda said. “The company was finding its grove in the marketplace, but our investors though it wasn’t enough for us to keep going, and decided not to fund us.” Jangl had raised about $9 million in VC funding from Storm Ventures, Labrador Ventures and Cardinal Ventures.

Jangl had started out by creating a bidirectional number that kept the privacy of the caller and call recipient intact. It later changed their tactics and tried to use social networking widgets to grow its customer base, in hope that it could make up the cost of free calling on advertising. The only place where it found success was amongst the online dating sites where it allowed people to make anonymous voice calls to each other.

Cerda explains the rise and fall of Jangl on his blog.

And in our opinion it needed another 18-24 months worth of runway to realize its fullest potential; but at the end of the day every venture capitalist has their own coefficient of venture. To that end, we took company forward into an M&A process. Unfortunately with much bigger things happening in the marketplace it turned out to be the worst time in a few years to be selling.

That last line should send a shudder down the spine of Web 2.0/Voice 2.0 entrepreneurs who are looking to sell and get out of Dodge.