Business

Telecom giant Telefonica shutters VoIP provider Jajah — after Skype and others drive prices to bottom

Telefonica, the European telephone giant that is the fifth largest carrier in the world, said it will shut down its VoIP unit, Jajah, on January 31, 2014 — another sign of serious trouble in the VoIP industry.

The shuttering ends what was once considered a success story. Jajah was one of the few VoIP companies that survived a significant wave of consolidation in 2010: Skype managed to sell to Telefonica for $207 million, even as competitors like Jangl and Jaxtr went out of business or were sold for pennies in asset sales.

The closure means that Jajah.com and Jajah Direct services will no longer be offered, and users will not be able to make any more calls. Jajah account holders will be able to continue using their account normally until Jan 31, the company said.

It’s not clear why Telefonica is shutting down Jajah; the statement provides no details.

However, it’s likely Jajah was making no meaningful revenue and may even have been losing money. It clearly had lost the race to Skype, which has gotten massive scale. Skype was acquired by Microsoft in 2011, and Microsoft said earlier this year that Skype now accounted for 33 percent of the world’s voice calls. However, as experts pointed out, voice traffic is a dying industry; it has become commoditized, and overall traffic, revenues, and prices are dropping. Thus, even the Skype victory may be a hollow one for Microsoft, which has declined to say whether Skype is profitable or not.

All of this isn’t helped by the multitude of other popular providers of VoIP or VoIP-like services, including Vonage, Viber, FaceTime from Apple, and Google Voice. Indeed, even Telefonica has started offering other VoIP services, including its TU Go app.

Going forward, it may be difficult for VoIP-like services to be maintained as separate businesses outside of the strategic integrations of the kind Microsoft, Google, and Apple have put to use.


We're studying digital marketing compensation: how much companies pay CMOs, CDOs, VPs of marketing, and more, with ChiefDigitalOfficer. Help us out by filling out the survey, and we'll share the results with you.