European telephone giant and 5th largest carrier worldwide, Telefonica said that it will shut down Janah, its VoIP unit on January 31st 2014. This is yet another sign of mounting trouble in the VoIP industry.
The shattering will end what was once considered a success story in the industry. Janah was once of the very few companies offering VoIP services that survived the onslaught of consolidation in 2010. Telefonica was sold by Skype for $207 million, at a time when even competitors like Jaxtr and Jangl were sold for pennies in asset sales or went out of business.
The closure means that Jajah Direct services and Jajah.com will no longer be offered and customers will not be able to make any calls. According to the company, Janah account holders will continue to use their accounts until31st January. However, the statement did not shed light on why Janah is closing.
It is possible that Janah was not making any meaningful profit and may even have been getting losses. The company had clearly lost the race to Skype that was acquired by Microsoft in 2011. Earlier this year, Microsoft indicated that Skype now had 33% of worldwide VoIP calls.
However, industry experts have pointed out that the voice traffic is dying; has become commoditized and overall prices, revenue and traffic are dropping. This means that Skype’s victory may be a hollow one for Microsoft, which has declined to indicate whether Skype is profitable or not.
All this has not been helped by the large number of popular VoIP providers including Viber, Vonage Google Voice and FaceTime from Apple.