Internet Update
Dateline: 07/19/99
Thanks to reader Mike S. for suggesting adding Innofone (formerly APC Telecommunications) to my Yankee Index. I hadn't heard about it before and chances are, you haven't either. Innofone is an innovative company trying to utilize the Internet for long distance telephony. We're not talking about simple PC to PC teleconferencing here. Innofone has introduced the first PC to phone/phone to PC Internet telephony in Canada with gateways in Montreal and Toronto.
The range of services offered by Innofone is impressive. Phone to phone, phone to PC, PC to phone, fax to fax and more. For long distance between gateways, the customer's call would go to the local Innofone hub where it would be directed over the Internet to the other gateway hub, then back on to regular phone lines, bypassing long distance phonelines altogether. Their charges would be the lowest of what the three major long distance carriers (Sprint, AT&T and Bell) would charge as determined by their GLR™ or Guaranteed Lowest Rate software.
Although the company only has two gateways right now, they will supply long distance using regular long-distance carriers (always the lowest priced one) to build up a client base while establishing new hubs.
In a June 24th Press Release, Innofone announced an agreement with Netspeak Corporation of New York to complete network design and implementation. "Deployment of the new network including gateways in Toronto, Ottawa, Montreal, Vancouver and two major cities in the United States will begin in July," said President Larry Hunt.
The company's marketing efforts are interesting as well. Last week it announced a contract with Ottawa based Adcom to sell Innofone's services by direct marketing. Adcom has worked for other telephone companies before, including AT&T. In trials, Adcom increased the sign-up rate of new customers from 125 a week to 500 a week. The company is now setting a target of 1000 new sign-ups a week. Adcom President Gilles Cloutier says the company is "committed to move sign-ups to the 2500 level per week, by September of this year".
But that's just part of the marketing effort. The company is also using network marketing to sell its product. This is not the first time this has been tried. I believe Amway, among others, also sells long-distance phone service.
According to the company, the market "for Internet telephone long distance usage is predicted to grow from its current level of $741 million to $63 billion by 2002". That's a whopping increase by anyone's standards.
The company is very young with a target of 50,000 customers by June next year. Sales efforts are proving successful and it says it may reach that number by the end of this year. In any event, investors seem to be enthused. The stock has soared in the last two weeks going from $0.44 to Friday's close of $1.06, a 140.9% increase. The stock actually reached a high of $1.25 at closing Thursday and may now be settling.
This is a very speculative stock with a very young and growing company. But it may be worth a flyer.
Discount Net Calls Change Long-distance War - May 28, 1999 article from The Globe & Mail about Innofone's challenge to the established long-distance phone companies..
S&P Report on Innofone.com - Info on Innofone from Standard & Poor's.