Growth Matters: Like Skype? Sipgate Wants Your Business

Is there room in the U.S. telecom market for another Voice-over-IP phone company? Recent European transplant Sipgate thinks so.

The company, which was founded in Germany and made a splash in Europe, moved it's headquarter to California last year and is now taking aim at American customers. Now based in San Francisco, Sipgate remains well-established in Europe where it has been successfully building its telecom business since 2004.

Today, it is arguably the most popular 'network-agnostic' phone service in a number of European countries. Sipgate got to its current position by pioneering a VoIP client for iPhones in 2008 and ended up challenging T-Mobile Germany in court over its lack of net neutrality and deceptive advertising.

Cheaper VoIP

So what exactly does Sipgate offer? In the U.S. consumers can get a plan called Sipgate One, which is, essentially, a replacement for your landline. But it operates over the Internet and costs much less than a typical landline service. Similar to Skype and other Web-based calling methods, Sipgate One is free for many calls within its network. But unlike many of its Internet peers, Sipgate gives each of its users a free Direct Inward Dialing phone number, so non-Sipgate customers can actually call its clients. The service also includes other features such as fax capability, free voice-mail, easy optional call recording, multi-party conferencing, and an online 'communication center' for storing contacts and other information.

Moreover, Sipgate works with most phone types, including SIP-based IP phones, analog landlines and mobile phones. The service also lets users manage all their phones -- they can have calls ring multiple phones simultaneously, or forward all calls to a specific phone. Sipgate also provides a "softphone software package" that works on PCs and mobile platforms.

Users who only take incoming calls using Internet phones pay nothing, and the rate to call out to the old public telephone network is cheaper with Sipgate's service than with most others: Calls to the U.S., Canada and most European countries cost 1.9 cents a minute. Outgoing faxes cost 49 cents each (plus phone minutes), and incoming faxes are free but they require a second phone number that costs $2.50 a month.

Tough Competition From Skype

While all this sounds great, Sipgate faces significant competition from services with more significant market share in the U.S. such as Skype. But Sipgate's CEO Thilo Salmon says he thinks his company's product is superior to Skype's. "We think we are different because unlike Skype, we offer a single incoming phone number that routes a call to the least expensive device depending on the regulations in each country," Salmon says.

In these difficult economic times, that might just be enough to help this company to gain market share.