VoIP Logic Sees a Rational Business Model

Williamstown's VoIP Logic LLC, a provider of hosted voice over Internet protocol (VoIP) services, has completed the rollout of its newest customer, OneStream Networks Inc. of New York.

The rollout represents the company's 125th deployment of hosted VoIP services since its inception in 2003, but also serves as an endorsement of the company's uncommon business model, according to officials.

The hosted service model itself is not new. By providing a "rented network interface," hosted services companies allow small service providers or enterprises to deploy and operate IP-based services without the cost or risk of buying their own equipment and building their own network facility.

VoIP Logic's model differs from most hosted and managed service providers in that it adds an element of systems integration into its offering. The company offers its own management platform for voice and other IP service offerings, but also puts together a network interface for customers, using gear from many different vendors, including Cisco Systems Inc., Sylantro Systems Corp., Covergence Inc. of Maynard, and IPeria Inc. in Beverly.

"We looked at a bunch of hosted PBXs and other hosted services to help us roll out VoIP, but they all wanted to do it under one package. We wanted to use some of our own technology along with that of some other (major) vendors," said Jonathan Gellar, CTO of WiTel Communications Ltd. in Toronto, which used VoIP Logic to roll out its VoIP service last year.

It is an unusual model, according to Gellar and analysts. The company reached profitability in 2003, and remained in the black until last year, when it took in $1.25 million in funding from Israeli VC firm 21Ventures LLC and increased internal investment in development. Officials say the company will again be profitable next year.

"Because we work on an ASP (application service provider) billing model, revenue is very predictable," said Micah Singer, founder and CEO of VoIP Logic.

The company is hitting its stride at the right time, according to analysts. The hosted VoIP industry has been growing steadily at about 30 percent, per year and passed the $2 billion mark in 2006, according to Stephane Teral, a principal analyst with Infonetics Research in California.

While Singer said the majority of his company's success lies with second- and third-tier service providers, he said he is seeing an increasing interest in hosted services from companies outside of the service provider space.

"It's what some people are calling 'voIP 2.0' -- the integration of VoIP into various product offerings," said Singer. "It could be big."

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