Internet Call Waiting:
The Rewards Without The Risks

The fledgeling ICW industry has made a sharp course correction. Rather than require ISPs to invest in infrastructure, providers are now offering the service on an ASP basis.

by Gerry Blackwell
[April 17, 2000]

Way back at the end of the last millennium, we introduced the notion of Internet call waiting (ICW) as an attractive value-added service ISPs might offer subscribers.

This is the service that lets subscribers field phone calls even when they're using their only phone line to connect to your POP.

When a phone call comes in, the ICW system pops up a window on the subscriber's screen showing the number and name of the calling party and offering a selection of call-handling options.

Options vary by service provider but could include hanging up and taking the call, taking the call using VoIP, sending it to voice mail or ignoring it.

The way we told it, offering ICW was a great idea, but it involved installing servers and VoIP gateways and basically taking the first steps into the IP telephone business.

Well, as Rosanne Rosanna-Danna used to say on Saturday Night Live, "Never mind!"

No, we didn't get confused. And we still think ICW is a good idea. It's just that our timing was a little off.

Strategic rethinking
The company we featured, Beaverton Ore.-based eFusion Inc. was at the time selling ICW as a turnkey server-based solution, which appeared to be the logical way to go—the only way.

But within weeks, eFusion radically changed its strategy and, along with other companies, such as newcomer BuzMe.com of Palo Alto Calif., introduced application service provider (ASP) ICW offerings.

The BuzMe and eFusion ASP offerings provide the same churn-reducing, subscriber-attracting, revenue-generating benefits as the relatively capital-intensive server-based solutions, the vendors say, but reduce ISPs' risk virtually to zero.

We recently talked to two ISPs that have taken the plunge.

Suite fusion
Orlando-based MPInet Inc., a 64,000-subscriber ISP in central Florida, recently took the first steps to rolling out eFusion's SuiteAdeline ICW and voice mail service.

Subscribers will pay $6.95 for the service, plus $3.95 to their local phone company for the call forwarding service that makes ICW possible.

For that they get a voice mail box plus ICW service that gives them three call-handling options: drop the Internet connection and take the call, take it as a VoIP call, or forward it to voice mail or another phone line.

MPInet gets $3 to $3.50 per month per subscriber. Not bad.

"It's good revenue," says MPInet president Rich Lee. "And since it's revenue for which we don't have to supply our own infrastructure, there's little risk involved. So it's good from that perspective. But it's also good whenever you can bundle more services together. It helps reduce churn."

Modest numbers
MPInet is aiming to have SuiteAdeline available by mid-May. It told subscribers about the service in a March newsletter. The initial response was not overwhelming: about two per cent of recipients inquired about it.

"But we think seven per cent will take it over the first six to eight months," says Lee. "We also think it'll attract new subscribers. It's good for customer retention, but we think we can also steal subscribers from other ISPs."

The only costs to MPInet will be marketing and training—although most of the marketing will piggyback on existing efforts, and eFusion provides co-op advertising funds. Training sales and support staff may be the biggest commitment, Lee says.

MPInet considered installing its own ICW infrastructure, but decided against it in the end.

"We know there's one thing we do better than anything else and that's data," Lee says. "Whenever you get into other areas that are not your main strength, we felt, there's more chance of failure. Also, we'd gone to a lot of expense introducing DSL."

Consumer buzz
The BuzMe.com ISP proposition is even simpler—though not as rich. ISPs market the service to their subscribers. For every one they sign up, they get a flat $1. That's it.

BuzMe is about to introduce co-branding and private label offerings that involve ongoing revenue sharing, but the company wouldn't provide any more details at this time.

BuzMe offers two versions of its subscriber service—free and a $4.95-per-month extended package. It doesn't matter which the subscriber signs up for, the ISP gets the same $1.

BuzMe's business model is different and certainly more daring than eFusion's. It only expects a 10 to 15 per cent free-to-fee conversion rate among subscribers, says vice president of marketing Rob Tobias.

BuzMe will make the rest of its revenues from banner advertising, selling opt-in e-mail lists and possibly from ads on the ICW pop-up window.

Free and simple
With the free service, BuzMe subscribers get a voice mail box that will hold a maximum of ten messages and simple Internet call waiting that lets them choose to send the caller to voice mail or reject the call.

The $4.95 extended services package adds more voice mail capacity and two additional call-handling options - take the call or send the caller a message.

If subscribers choose to take the call, BuzMe drops the Internet connection and rings their phone. In future, the company will offer the option of taking the call using VoIP without dropping the connection. The extended package currently includes 40 minutes a month of talk time.

Extended package subscribers can also choose to send the caller a canned or custom message. They type a message in a text box or select one from a list and BuzMe's text-to-speech system reads it to the waiting caller.

NapaNet Internet Services Inc., a 6,000-subscriber ISP in Napa CA, is BuzMe's beta ISP affiliate. It has been offering the service to 3,000 of its customers for several months. So far it has signed up about 100—or three per cent.

"But we think we can get that up to five per cent with more aggressive marketing," says NapaNet president Steve Kokotas.

Even so, the revenue—only about $300 altogether if it signed up five per cent of its entire customer base—would barely cover the "negligible" marketing costs of e-mailing subscribers and sending newsletters.

Plus there is a hidden cost, Kokotas points out. Flat-rate subscribers may be encouraged to stay online longer if they have ICW. "But that is definitely offset by the value of having additional services to offer and keeping them on as subscribers," he says.

Revenue or loyalty?
Indeed, anyone who chooses the simple affiliate offering from BuzMe, must view ICW as mainly a way to differentiate itself and retain customers, rather than as a source of revenue.

"It's important to add new services all the time, and for subscribers to see that we're progressive," is how Kokotas puts it. "Even if they don't all sign up for the services."

That said, NapaNet is getting ready to launch a community portal site and now hopes to use one of the new revenue-sharing programs BuzMe is introducing. That will require a greater marketing effort - but theoretically return more revenue.

ASP-based ICW is certainly an easy, low-risk play for ISPs. But it's value in the end may depend on something as simple as how long it takes competitors to catch up.

Related stories:
Developer Seeks ISP Partners for New Software
Internet Call-Waiting - Part 1
Internet Call Waiting - Part 2

—End