XCast ramps up home-grown wholesale IP services

Having recently secured its first round of venture capital funding and installed a new chief executive, IP services wholesaler XCast Labs is bulking up staff, network capacity and marketing efforts as it targets a variety of service provider partners – from cable companies and rural telcos to competitive carriers and more.

The 25-person startup, which transitioned from its roots as a reseller of traditional switched telephony to IP services in 2005, is touting a home-grown suite of IP voice and video services for business and residential customers, including IP PBX, SIP trunking, consumer VoIP and prepaid.

XCast claims it’s different from other VoIP providers because it developed its system internally, which gives it not only a lower cost structure but a superior product; the company claims the session border controller (SBC) it created in-house does call setups and teardowns faster than gear from major vendors. Its Dell server pizza-box SBC can serve more than 2000 calls per second for roughly $2500, XCast said.

Another in-house creation the company calls “direct RTP” cuts latency and bandwidth needs by allowing calls to go directly between participants over the Internet without going through XCast along the way.

“As far as we know, we’re the only VoIP service provider that doesn’t hold on to both ends of a call,” said Cliff Rees, XCast’s co-founder and – for the last nine months – CEO. “We can release it to the public cloud, which lowers our bandwidth demand by a few orders of magnitude.”

Starting next week, XCast’s PBX offering will be interoperable with Skype such that Skype calls to even non-Skype-using XCast customers will be treated like calls between two Skype users and therefore free to the end users.

Essentially, XCast created internally a Skype-to-SIP gateway similar to those sold by some equipment vendors. For a free call, a Skype user calling an XCast customer would call XCast’s Skype number, Matrix.us, upon which the call is converted to standard SIP, and the caller is asked to enter the number of the end user they want to reach. The first time this happens, XCast assigns that caller a unique internal number for future use. So when XCast’s own customers want to call that Skype user, they can dial his or her “XCast Skype ID” and talk for free.

XCast is looking to offer its services on a wholesale basis to cable companies, rural and competitive carriers and even marketing companies, such as Telescope, which handles viewer interactivity for TV shows like Deal or No Deal.

XCast’s biggest customers so far are Avenue Broadband, a two-year-old Midwestern cable operator born from some divested assets of Charter Communications, and Integrated Telemanagement Systems, a CLEC near Los Angeles specializing in IP PBXs.

For a cable operator like Avenue Broadband, XCast allows them to get into a market in which they have no background. For others, such as rural telcos and CLECs, Rees argued, XCast offers a less expensive alternative to creating an offering in-house and buying the necessary equipment.

Last November, XCast announced a $2.7-million series-A funding round from investors including tech investment bank Siemer Associates, angel investors and Rees himself.

XCast will spend that money growing its network capacity to keep up with rising traffic levels, doing more marketing (including attending for the first time this fall’s NCTC show for small cable operators) and hiring more engineers to do things like adding an iPhone app and applying XCast’s own internally developed video softphone for Macs.

XCast now has about 75,000 end users for its four products, nearly 40% of which are residential consumers. And while the recession has slowed XCast’s growth, Rees said, it is still growing, and has been profitable for the past five months.