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5 May, 2006 - 11:14 By Staff Reporter

Babble’s bubble is floating Skypeward

A Herts company plans to go head-to-head with voice over IP (VoIP) giant, Skype, following an IPO on the small cap market, OFEX.A Herts company plans to go head-to-head with voice over IP (VoIP) giant, Skype, following an IPO on the small cap market, OFEX.

Babble.net now plans to use the £600k raised to “aggressively roll-out” its internet- based communication service and develop new products, with the aim of becoming the UK’s favourite VoIP provider over the next year.

Babble.net issued just over 60 million shares at a price of 19p, but this has subsequently risen to 23.5p giving the company a market cap of £14.1m, impressive given the company is only six months old.

Babble.net told Business Weekly that it planned to establish itself in the UK before moving up to the AIM market in about a year and expanding internationally.

Direct comparisons with runaway market leader, Skype are premature, but the Chorleywood-based company has enjoyed a rip-roaring start to operations. CEO Allan Howes and CTO Simon Lewis effected an MBO from Huntingdon based BON.net in October last year and are already gaining significant traction.

In addition to the over-subscribed fundraising, Babble.net has greatly grown its subscriber base and gained industry recognition for its technology.

In March, downloads of its software were double those of the two preceeding months, taking total downloads to about 96,000, while it was also recently awarded a Silver Award, second to Skype, in leading internet magazine WebUser. It was also voted ‘best value’ overall, ahead of BT, Yahoo and others.

Howes said: “We have been delighted by the investor interest in the recent fund raising which resulted in the round being significantly over-subscribed.

Howes added: “This interest coincided with the company being described by a leading UK internet magazine as providing ‘best value’ among VoIP service providers in the UK and ‘snapping at the heels of Skype.’

“We will look to use the proceeds of the recent fund raising to roll out our service more aggressively whilst continuing our product development activity.”

While it cannot yet compete with Skype in the numbers game – Skype was acquired by eBay in October last year for $2.5bn and has 75 million subscribers worldwide – Babble.net believes it has a technological advantage. The company currently employs eight and its turnover from October to the end of February was only £11,400, but it believes it has a good platform for growth.

Like Skype, the company’s Babble service allows users to talk for free to other users of the service and cheap calls to landlines and mobiles, where ever in the world they are.

Unlike Skype, which is based on proprietary standards, Babble uses the international session initiation protocol (SIP) protocol.

This means that, again unlike Skype, Babble subscribers can talk free to any other VoIP user on the SIP standard, which in practice equates to most of the internet calling services besides Skype.

This provides Babble with a critical mass it would not otherwise have expected to have achieved and importantly, Howes believes, makes it business-friendly.

The vast majority of existing SME and corporate implementations of VoIP use the SIP protocol, giving Babble an upper hand in that all-important market.

Babble.net has a track record of beating the ‘big boys’ to the punch. Babble was the first to bring SMS texting (to and from mobiles) into the VoIP world and introduced the first fully available dial-in service so that ordinary phone users can reach any user of the service. It also offered the first truly A-to-Z worldwide coverage for calling to fixed lines ahead of Skype and the other players.

It now plans to launch a host of new features aimed at the business market.

Babble.net will shortly be introducing a conference call facility with a capacity of 100 simultaneous users, making it a useful tool for company training.

It is also providing private numbering schemes, cost-centre based accounting, centralised billing, public numbering – including a fully customisable interactive voice response service so that customers can be routed appropriately without the need for expensive equipment.

Key to the further development of the company and further differentiation from Skype was a deal recently signed with Datacash and Lloyds TSB Cardnet for a new online payment system. Howes says that a simple to use system, which supports multi-channel payment options is integral to the company’s future plans.

“Babble is not just about voice. We intend to provide a range of content via our software with more on offer that just minutes, so online payment is central.

“We have banked with Lloyds TSB Corporate since inception and they have been instrumental in our early success. Senior relationship manager Dan Harrison recognised the potential of the company and has backed us all the way, not least by quickly expediting our use of the Lloyds TSB Cardnet technology.”

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