Social Machinery

According to Reuters, Telefonica just bought Jajah, the VOIP service provider, for 200 Millions dollars. Jajah currently has around 15 million subscribers that can make cheaper phone calls on their landline and mobile phones via its site. There are seven key points for understanding Telefonica´s strategic move. 

1. Jajah´s VOIP model is easy to integrate with any device or site without the need of a client. It also facilitates the call setup via a widget or even direct integration to services like Twitter. Basically users don’t need to know B-party’s phone number since you can initiate the call by just clicking on the user info or link.

2. Their platform can be integrated to any web 2.0 service. A good example is Yahoo Messenger VOIP integration with Jajah.

3. They already have 15 Millions users. Even do is not an astronomical customer base, it gives Telefonica an opportunity to buy “cheap” compared to other VOIP service providers.

4. Even do Jajah is a relatevely an small fish compared to half-billion users on Skype, they have built their own virtual network with special VOIP equipment worldwide connected trough Fiber and also connected to several PSTN networks. This enable Jajah to make phone calls to anywhere with ultra-low costs.

5. Jajah also provides real-time billing features that could easily complement Telefonica´s enterprise offering or allow integration to any big or small companies.

6. Telefonica enterprise segment could be benefited with low-cost international calling plans in order to increase retention or reduce churn in a fierce competitive market.

7. It could also be a first step to an deep integration between mobile internet services and voice as Telcos move into an all-IP world and voice becomes a commodity. This deep integrate could help Telefonica to develop more advanced services and create synergies between VAS and Voice.

8. Moreover it could be a way to prepare the company for their network evolution path towards LTE (Long term evolution) and its promise of VOIP. Jajah could be the link between all-ip and legacy networks.

Stilll is not clear how Telefonica wants to integrate Jajah within their portfolio. I believe the main challenge resides on the business model. Jajah is a free of charge service, while Telco’s voice revenues usually accounts for 50% to 70% of all business. Maybe this is a good sign of Telco’s need for strategic change in a crowded and complex competitive landscape.