Aswath Weblog

I Thought I Understood Rebtel

I am sure you know how Rebtel works: For $1 a week, you get two numbers, one local to your calling area and another local to your designated buddy. When one of you want to call the other, that person will dial their local number allocated by Rebtel; in turn Rebtel will ring the other person's phone number. The called party can hangup within 30 seconds and dial their local access number allocated by Rebtel to be connected to the buddy and they can talk for free as long as they desire. One can easily infer the business model. Some time back Alec had pointed out that it costs about $1 per month to rent a telephone number. Since Rebtel's charge amounts to $4 a month for two phone numbers, there is a clear profit in just allocating the phone numbers. But the beuaty of the scheme is in recognizing that the two legs are incoming calls to Rebtel, unlike Jajah where it makes two outgoing calls. This way, Rebtel not only incurs any charges but can look forward to additional revenue in the form of settlement charges.

But Jeff had suggested after a trip that Rebtel is more than the obvious “mobile arbitrage pay”. He doesn't give any more clues – to be more accurate I didn't pick anything else, till this morning. Andy points to a story in B2.0 that claims that Rebtel is funded to the tune of $20 millon. Of course, they do not require this kind of money to execute the publically announced service. It is for those that are “going on under the hood that meets the eye”, as Jeff puts it. So the question is what could they be. Andy quotes his pal Sanjay jaawar of Bridgeport Networks. So this must be something to do with IMS.

Now for some nitpicks. I don't agree with Andy's characterization that Rebtel is like Mint Telecom. As far as I understand, Mint makes an outgoing call to the far end – it is not made up of two incoming calls. So they have to levy a per minute charge to their customers. Also Rebtel can further simplfy the user experience and extend the service. But I don't think that is what they are focusing on right now.