In the CEO
Spotlight section in Internet Telephonyï¿½ magazine, we recognize the
outstanding work performed by exemplary companies. Each month we bring you
the opinions of the heads of companies leading the Internet telephony
industry now and helping to shape the future of the industry. This month, we
spoke with Tom Evslin, Chairman and Chief Executive Officer of ITXC Corp.
IT: What is your vision for ITXC and how is the company positioned
in the next-generation telecom market?
TE: ITXC is currently the market segment
leader in international VoIP traffic. In the final quarter of 2003, we
carried over 1.2 billion minutes of traffic. Most of this traffic was
between ordinary PSTN phones. The callers had no idea that the ï¿½middleï¿½ of
their calls were actually carried on the Internet.
Up until the end of 2003, VoIP growth was invisible at the retail level.
But, in fact, by that time more than 10 percent of international calls were
already being carried on VoIP networks because of the growth in the use of
VoIP by wholesalers and new entrants in deregulating markets. This VoIP
traffic funded the buildout of ITXC.net, our Internet-based VoIP network of
connections between the Internet and the PSTN. We have direct connections to
more than 175 countries and can reach any phone in the world, PSTN or IP.
Our revenue for 2003 was over $338 million.
VoIP is now becoming visible at the retail level as well. In 2003, more
ports of IP PBX capacity were purchased than of traditional TDM PBX.
Services offered by Vonage, Net2Phone, Delta3, Skype, and Softbank among
others have drawn attention to premises VoIP in the residential market. All
major carriers now are either getting ready to offer premises VoIP services
or using VoIP within their own networks or both.
So we believe the telecom market of the future is a VoIP market. ITXC is
perfectly positioned to serve this VoIP market because we have the largest
international VoIP network and because weï¿½ve developed proprietary and
patented technology which solves the problems, which can slow the deployment
We also believe that the telecom market of the future will be largely a
horizontal market. Instead of the old vertical monopolies of last
generationï¿½s telephony, we are seeing a dynamic separate retail layer of
marketing companies that donï¿½t own network or own only local access
networks. These retailers and the increasingly independent retail arms of
the old vertical carriers need to buy products like call completion,
signaling, and IP interconnection. ITXC is and always has been a pure
wholesaler concentrating on meeting the need of our customers who sell to
the retail and business market rather than competing with them.
Simply put, our expertise in VoIP, our VoIP technology, and our huge
existing network have been the engines of our growth. After our merger with
Teleglobe we will have not only much greater voice scale but also IP transit
and connectivity and signaling services to sell as well. We will deliver
these services to the retailers who reach businesses and consumers.
IT: Describe some of the key decisions that you have made as CEO to
steer your company through the recent challenging financial straits.
TE: Although telecom has been rough
sailing for everyone, ITXC did not have the ballast of enormous debt, which
sunk so many of our competitors. We built our network on the Internet so we
didnï¿½t need to borrow billions of dollars for physical construction or
purchase of circuits. Being debt-free, we are able to ride out the storms
and grow as we work towards positive cash flow.
We bet the company on the success of VoIP and specifically on our ability
to deliver high quality while getting the economic advantage of using the
Internet. We had to develop much of the technology ourselves to make this
happen but that patented technology has now become an important asset.
We stayed wholesale both so we could grow our network at the maximum rate
and to avoid competing with our customers who sell to the retail market.
And, we decided to sign a definitive agreement to merge with Teleglobe.
This agreement is subject to regulatory approval as well as approval by ITXC
stockholders. Once it is approved, and we are confident it will be, we will
get the advantage of three times as much traffic, a wealth of bilateral
relationships Teleglobe has with traditional carriers around the world, a
huge IP network that cost billions to build but was purchased out of
bankruptcy at a low price, stronger cash flow, and more services such as
signaling for the wireless market and IP transit and connectivity to sell to
our wholesale customers.
IT: To what do you attribute the recent IP telephony market upswing?
TE: VoIP has actually been growing
rapidly but invisibly over the last six years. It has now not only reached
critical mass within the networks of carriers but is rapidly being deployed
much more visibly on business and residential premises where it is much more
visible. The market overreacted to hype several years ago and reality caught
up. Then the market was too discouraged but reality is now exceeding the
marketï¿½s diminished expectations and there is new excitement.
IT: What makes ITXCï¿½s services unique and how can a client benefit
from using them?
TE: ITXC had developed proprietary
technology, which allows us to deliver carrier grade quality (including
premium quality where a customer needs it) even though we get the economic
advantage of using the Internet for transport. Other technology weï¿½ve
developed allows us to change routing hourly network-wide, something that
would be impossible on a traditional network with intermediate switches, in
order to get the ï¿½rightï¿½ blend of price and quality consistently. This means
that our carrier customers get the best value in international call
completion by using ITXC.
Our ITXC VoIPLink Service, which has recently become generally available,
makes VoIP internetworking practical. This is increasingly important to
carriers who either have premises VoIP customers or their own internal VoIP
networks. When these carriers can connect their VoIP networks directly to
ITXC.net, they save enormous amounts of capital and operating costs compared
to a legacy PSTN connection. ITXC VoIPLink Service solves sticky problems of
interoperability and also provide a carrier-class demarc between our
customersï¿½ network and ours.
Carriers also benefit by terminating local traffic for ITXC. We can
deploy faster than anyone in the industry ï¿½ especially with a VoIPLink
interconnect ï¿½ and deliver massive amounts of traffic and revenue to most
destinations sooner than anyone else.
IT: What do you make of the increased
buzz surrounding IP telephony regulation? What are some of your thoughts
surrounding this increasingly important issue facing our industry?
TE: The increased pressure for
regulation is a direct consequence of the increased success of VoIP. It
makes no sense to apply outdated regulations developed to restrain
monopolies to the very competitive world of VoIP. There are no VoIP
monopolies nor any sign that there will be. In fact, since VoIP carriers
donï¿½t need to own networks, VoIP has proven to be the technology of choice
to compete with former monopolies. It would be ironic if the regulations
originally passed to control monopolies were now used to protect them.
Applying obsolete regulations to VoIP will not kill the industry; the
benefits to our customers are too great. But overregulation will slow the
benefits available to consumers and businesses and will hurt the economy of
any country which adopts them. This is the converse of what happened as one
country after another enhanced its competitive position by deregulating and
VoIP service and infrastructure providers need to voluntarily meet
legitimate needs of law enforcement, 911, and a disabled and rural access.
Providers also need to be active in organizations like the Voice on the Net
Coalition to make sure their voices are heard where regulation threatens.
IT: Describe your view of the future of the IP Telephony industry?
TE: Voice over IP is the future of
telephony. That means there wonï¿½t be a separate industry for long. By 2010,
at the latest, all voice will be on the Internet and voice and other data
services will be well-integrated with enormous public benefit.
Return To The April 2004
Table Of Contents ]