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What’s interesting about Hike’s acquisition of VoIP startup Zip Phone

hike-sms(with inputs from Vivek Pai)

Hike, a messaging service backed by Airtel* promoter group Bharti and Japanese investor group Softbank, has acquired a VoIP (Internet Telephony) startup called Zip Phone. This is Hike’s first acquisition, and the second one for Bharti-Softbank, which had earlier acquired a mobile coupons company Hoppr; after Hoppr’s founders quit the company, it was expected to be merged into Hike.

Previously, Hike had raised $65 million from Tiger Global and BSB. The company now claims to have crossed 35 million registered users worldwide, and claims that over 50% active every month. Around 90% of its users are from India and are below the age of 25 years.

Why this is acquisition is interesting at this point in time

The Zip Phone acquisition comes at a time when Airtel has taken a strong stance against Net Neutrality, and sliced off VoIP calling into separate VOIP packs, offering flimsy reasoning to justify the move.  Airtel eventually backed off, following much ridicule, after forcing the TRAI’s hand on announcing a consultation on net neutrality. According to Hike, voice calling is one of the top requested features by its users, and this acquisition will allow the company to launch free voice calling to users much sooner.

This acquisition also means that the Bharti group now has two companies with VoIP capabilities: Airtel has Airtel Talk, while Hike can surely be expected to launch VoIP services. The two Bharti group companies appear to be working closely together. I’ve actually had an Airtel Customer Care executive explain to me how Hike works, when declining to act on a complaint against Hike Spam. Bharti Softbank also built Airtel’s music service Wynk.

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Hike Airtel

It will be interesting to see, if TRAI fails to uphold Net Neutrality, whether Airtel will offer calls from Hike and Airtel Talk for free, while charging separately for VoIP calls over other VoIP services. Remember that the position paper from the industry lobby COAI points towards the following options that telecom operators have for dealing with Internet services that they feel compete with them: blocking; making rival services less attractive by adjusting their own pricing, or making rival services more expensive; direct partnerships with some rival players; developing their own competing services.

Airtel has already tried making VoIP services more expensive. Perhaps Hike’s acquisition of Zip Phone can be seen as the Bharti group keeping another option open.

What ZipPhone Does

Founded by Anuj Jain in the US, Zip Phone was initially released as ‘Awaaz’ a ‘plugin’ for Android phones, that enabled direct phone-to-phone (P2P) calling over WiFi. Consequently the app rebranded itself as Zip Phone, and made it to the Y Combinator list for the Summer batch of 2014. The features listed for Awaaz, back in 2013:

  • Establishes a direct P2P connection between the two phones. Capable of punching a hole through NAT, or being used on the same internal network.
  • Uses the Opus codec for unmatched voice clarity.
  • Uses just 8 KB/s of bandwidth (upstream and downstream combined).
  • Uses a hybrid cryptographic system to exchange a 256-bit AES key using 2048-bit RSA. New public and private keys are generated every single time, thus theoretically making decryption impossible.
  • Uses GCM (Google Cloud Messaging) for push messages thus eliminating the need to run a service in the background.
  • Has the ability to use 3G / 4G as well. Please enable the option in the preferences if you want it.
  • All calls are logged in your regular call history.

Disclosure: Airtel is currently an advertiser with MediaNama

Also read:

– Net Neutrality: Did Airtel Broadband throttle video startup Ogle?
– A new vocabulary for Internet access in India, via #FutureAirtelCharges

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Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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