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While most of the media attention at TechCrunch’s annual startup showcase in San Francisco was focused on the latest and shiniest startups, I ended up spending most of my day walking the demo pit, quietly checking out what was on display.

And after that I checked on the health of the alumni of 2007. I was most interested in Pat Phelan’s company Cubic Telecom, which got a reluctant and very partial thumbs up from me a year ago. To jog your memory, Cubic has a service called MAXroam, which sells you a SIM card that saves you crazy amounts of money when roaming overseas. Instead of paying the outrageous rates to incumbent carriers, MAXroam uses a VoIP-based architecture to offer calls at pretty cut rate prices. 

Phelan is an odd man out at these Web 2.0 events. For starters, like me, he was in his 20s a long time ago. He is a telecom disrupter. And he is obsessed with real-world metrics such as revenues and profits. Now that’s old school! Perhaps that’s why I enjoy the company of this acerbic Irishman with a heart of gold. 

When I showed up at his booth, he was all flustered. Pat had just busted Michael Arrington’s iPhone. He was showing off a new iPhone SIM-unlocking hack that allows you to use any service on the iPhone including data, not just the carrier who sold you the iPhone. Something went wrong and it took about 30 minutes to get the iPhone working again. And that was long enough to have Pat reaching for those nasty things I gave up in January. After giving him hell for sucking down on the coffin nails, I asked him, how is business?

Pretty good, he said.  And it was about to get better. MAXRoam now has over 100,000 paying customers. The company is bringing in substantial revenues (and some profits.) It is enough that Phelan has no plans to raise more capital for his company. He has announced Version 2 of its service, which includes data roaming and U.S. roaming. Overseas travelers could pay 40 cents a minute for roaming in the U.S., a huge savings when compared to roaming charges of around $2.99 for every minute of talk time.

Will that be enough? I don’t think so. 

My argument last year was: Selling discount minutes is a tough business and making money off it is even tougher. What you need is scale. Phelan thinks he will get thereir by selling MAXroam V2 as a white-label solution for other consumer brands. For instance, Phelan is very close to announcing a deal with one of world’s largest travel agencies, which will sell branded MAXRoam-powered service in places like India. He feels that by working with such well-known consumer brands he can accelerate the number of people making calls using MAXroam, which would allow the company to make more money. We will check in with Pat in a couple of months and see how he’s doing. 

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The big buzz of the evening is that Twitter, a San Francisco-based startup that allows anyone to post short (up to 140 characters) messages to its platform and thus broadcast them to one or many using different media such as web and mobile, is about to acquire Summize, a Potomac Falls, Va.-based startup that uses the Twitter API to search and find relevant messages on Twitter.

The rumors of the deal were first reported by a little-known blog (not anymore, of course) by Josh Chandler. Subsequent to the news, I made a few phone calls and did confirm that it is not just a rumor and a deal is certainly in the works. It is likely to be announced as soon as next week. I’m still trying to dig up the financial details and will report further when I get hold of them.

The deal would be a good move by Twitter, and would be putting some of its recently acquired $15 million in VC funding to decent use as it would help the company get hold of of a business model. Here is why. Most people think of Summize as a Twitter search utility, and it is a mighty fine search service. It is so good that there are nearly half a dozen other startups using the Summize API. At first blush, it seems like Twitter could bolt on search on their platform and make it more useful. I think it would be thinking about Summize in a limited sort of a way.

“We monitor collective attitudes being expressed right now on the web,” is how Summize describes itself. In other words, it can quickly look at data coming from conversational sources — RSS feeds and Twitter tweets — and offer a quick opinion as to what is being talked about. For example on this page you can find out what people really think of this deal between Summize & Twitter deal. All the data is coming from the Twitter stream.

In a conversation earlier this year, CEO Jay Virdy, formerly of AOL, told us that they had developed a way to geocode public timeline tweets (short messages). This allows one to find out what people are saying about John McCain in Phoenix vs. San Francisco.

In other words, Summize has come up with a clever way of peering through Twitter’s vast data stream and finding out what’s hot, where and how. The results are essentially keywords — topic-, person- or location-based — and thus can be used to show contextual advertising next to the pages that show these results. Summize has thereby developed an ability to monetize conversations without being intrusive.

Summize could have easily done this on its own and started to make money. It would surely need to compete with Twitter for attention and figure out ways to keep generating more traffic. Instead, if Summize is bolted onto Twitter, that can help the tiny startup get instant traction.

Just as AdSense serendipitously turned Google into a giant cash register, with Summize, Twitter can take the first step towards a business model. Of course, Evan Williams & Co. have to quickly figure out a way to fix their patchy-at-times service before everyone decides to switch loyalties to one of the many Twitter rivals currently being plotted by clever minds.

P.S.: Since Twitter doesn’t want to charge me for having too many followers, and it doesn’t cost me anything, go ahead and follow me on http://twitter.com/om. Not that you are going to read the tweets anyway :-)

P.S.#2: My jet lag has finally hit so if you notice errors/mistakes, please excuse my tardiness. I will rectify when I wake up.

Rebtel, a London-based VoIP startup, seems to be taking a white-label approach to boost usage of its services. The company will announce a brand license deal with easyGroup, a company started by discount carrier easyJet founder and serial entrepreneur Sir Stelios Haji-Ioannou. As part of this deal, easyGroup will sell cheap international calls under the brand name easyMobile.

easyGroup is well-known in Europe for offering discount services — from air travel to Internet access to rentals, and cheap international calling fits in with easyGroup’s overall business mantra. easyMobile is going to target 5.5 million Brits who live overseas and a million non-British EU citizens. VoIP has become popular in Europe, mostly because carriers, both fixed and wireless, have high tariffs for long-distance calls.

Over the ast few years, there has been a huge influx of Eastern Europeans in the UK workforce. Their international calling patterns offer an opportunity for a discounter, especially if it works with a mobile phone. Rebtel’s mobile VoIP service will work with any mobile phone. The two companies didn’t disclose the terms of the agreement. From what I understand, there will be some revenue exchanged. Rebtel has also done a similar deal with Polish portal Onet.pl, making this their second white-label deal. I guess like Jajah, Rebtel is coming to grips with the reality that building a brand isn’t easy.

Rebtel is one of the companies that I ignored for a while, mostly because at the time of their launch in May 2006, I found the user experience challenging. The company that raised over $20 million for Benchmark Capital and Index Ventures has since be working to make the service easier to use.

Our friend Luca Filigheddu was singing their praises recently. That said, this is an increasingly crowded market — several players have mobile VoIP solutions that essentially compete with Rebtel, not to mention Pat Phelan’s roaming discounter, MAXroam, a service I use and recommend.

All these new developments…maybe it’s time to catch up with co-founder Hjalmar Winbladh.

One of the most important calls I make during the week is the one to my mother, followed by another one to my baby brother. These are international long distance calls, and for the first 15 years of my American life, those calls went over AT&T’s wired or wireless networks, forging a very special bond with Ma Bell.

This past year, however, that bond has been broken. AT&T has been replaced by Truphone, a UK-based mobile VoIP company that offers better quality voice calls at lower rates and doesn’t require me to own a landline. A WiFi-enabled Nokia phone is all it takes. (These days, I am totally in love with my Nokia E61.)

Truphone has become indispensable to my work and personal life, and perhaps that is why I’m glad to learn it just raised a whopping $32.7 million in Series B funding from “new investors,” although the company wouldn’t name names. Previous investors who have pumped in over $24.5 million in Series A funding — Burda Digital Ventures, Eden Ventures, Independent News & Media and Wellington Partners — came back with more cash as well.

Truphone recently acquired Sim4Travel, a company that made cheap cellular roaming possible. Alec Saunders points out that, with that particular acquisition, Truphone can extend its footprint beyond expensive Nokia WiFi-enabled phones. This has been Truphone’s Achilles heel and had limited the company’s growth prospects.

This is the crucial point. Even though Truphone has made great progress, the mobile VoIP game is still about cheap minutes and low-cost SMS. And that business is all about volume. I just hope Truphone can build that volume — this is one service I really want around forever; if it’s not, I will get an earful from mom.

VoIP startup Jaxtr said today that it has attracted 5 million registered members, up from 500,000 users 140 day ago, making the company “the fastest-growing Internet communications service in history — ahead of Skype, Hotmail and ICQ,” according to its press release.

But where is the money?

You might think that scaling to meet the needs of these millions of users represents Jaxtr’s biggest challenge. Indeed, Jaxtr expresses concern in its announcement over its ability to meet user demand. To that end, it recently hired Taneli Otala, former CTO of MySQL, as VP of engineering.

But Jaxtr has bigger problems than scaling and tuning their systems for millions of users. To make Jaxtr a real business, they need to convert sign-ups into satisfied users, and from there, transform those users into customers who pay.

Even then, there are no guarantees Jaxtr will succeed. If the promise is cheap calling, it’s just the same old VoIP thing.

How Jaxtr works

Jaxtr offers free international calls via a web-based widget. To use it, you sign up for an account then publish your Jaxtr widget on your blog, web site, or social networking profile page. You can also email callers a link to your Jaxtr page, which shows the widget. Callers click on the widget, enter their phone numbers, then Jaxtr rings the caller phone and your phone to connect you with one another.

If the caller is located in one of 50 supported countries, they will be given a local phone number they can use to call you next time — without paying long-distance charges. Otherwise, they will be provided with a U.S. number.

Each Jaxtr user gets 100 “jax” a month. Jax represent a Jaxtr-specific currency that is exchanged for minutes at different rates in different countries. Currently, once you run out of jax you have to wait until the next month to get more. In the future, you’ll be able to buy jax — and that, along with web and mobile advertising, is where Jaxtr plans to get its revenue.

The big challenge for Jaxtr: Turning try it into buy it

It’s no surprise that Jaxtr is seeing so many sign-ups: the promise of free international calls, mobile-to-mobile, is compelling. And compared to Skype, Jaxtr doesn’t require any special client software. A caller simply uses the widget once, then subsequently dials the number the widget gave them for future calls. But turning registered members into ongoing users — and paying customers — won’t be quite as easy.

First, the Jaxtr service is somewhat complicated, as a quick glance at the frequently-asked questions list proves. Plus, though it does provide for mobile-to-mobile calls, the first time a caller uses it, he or she must use that web widget.

Second and more importantly, there are doubts as to whether the Jaxtr money-making math adds up. The company must be spending some serious cash on those local numbers it gives out, as well as on connecting phone calls. Will they be able to come up with a pricing scheme for jax that makes the business economically feasible?

Five million users is impressive, but how hard can it be to find 5 million people that want mobile-to-mobile international calls for free?

Voice over the Internet, so far, has been a game of cheap minutes, shoddy quality, and unreliable connections. It’s also been a money-losing proposition. The promise of voice being free has remained just that - a promise. Palo Alto-based startup Ooma promises to resolve those frustrations in September 2007 while offering free voice calls for life.

In doing so, it’s relying on a very old tech strategy: Just as PCs shifted some functionality from mainframes into your house, Ooma’s boxes will handle locally some of the telecom switching that normally happens on phone networks. Go ahead, roll your eyes. I did too when I first met Andrew Frame, the founder of Ooma, over a year ago.

Frame, a former Cisco employee, came across as a paranoid startup founder hyping his company. “This will cause some major shifts in the voice business, it will make voice free,” he said.

But it’s clear Ooma is part of a large trend, one of chips and software commoditizing services. iTunes did it to music, Sling Media did it to television, and Ooma is on the right track to do it to voice calls.

That promise has attracted a number of investors: Draper Fisher Jurvetson, the Founders’ Fund, Draper Richards, WI Harper and Worldview Technology Partners are backers of the three-year-old company. From them, Ooma garnered $27 million in two rounds of venture funding. It’s not strictly true to say Ooma is offering free voice – after all, you do pay a monthly tariff for your broadband connection. Similarly there are other costs, including value-added services, the company plans to roll out later. The company will also charge a modest fee for international calls.

Ooma’s achievement was to build a slick box, which runs a couple of general purpose processors and embedded Linux, costing about $399. It will eventually be sold at consumer electronics stores with a promise: free voice service within the US.

The simplicity of the box masks complex technology. You plug it into your broadband connection and you are all set to go. You pick a number of your choice on the website. If you have an old fashioned landline, you can plug it into the box as well. A port allows you to connect to the kind of home phone network that most homes already have.

An optional device, called Scout, allows you to extend your Ooma network across your home via vanilla phone jacks. All your current handsets can plug into any phone jack. The phone rings, just as it always does. Using a hack that most DSL folk are familiar with, Ooma offers a second line that relies on sending information at higher frequencies, ones that are available outside of those used by the voice channel. You can use it to make or pick up a call on another handset without disrupting the first call. And like old-fashioned voice mail systems, you can listen to a voice message before picking up the phone.

So how does Ooma manage “free” voice calls? Say you call Manhattan. Ooma routes the call to an Ooma box to the 212 area code, with the local carrier accepting it as a regular outbound call. It works even if the destination number lacks an Ooma box.

It’s free to you, though it does cost the Ooma box in far-flung area codes, but most of the local call plans are flat rate and come with unlimited calling. Ooma piggybacks on existing phone services, bringing all the things you expect from a traditional phone service, like dialing 911. (Walt Mossberg gives his thumbs up to this service.)

In telecom lingo, this is called distributed termination. The more boxes on the Ooma network, the more termination points - and , more voice calls the system can carry to the public switched phone networks. This sounds eerily similar to Jeff Pulver’s Free World Dial-Up in concept. Execution is a different story, and we always can count on Jeff to think of the next big voice thing. Ooma has really done is basically take a media gateway and put it into its box.

Think of it another way: What the PC did to the mainframe, Ooma is doing it to the telecom switch. It’s a brilliant technological achievement, tempered by some serious regulatory and go-to-market challenges. These challenges are not simple.

I cannot overstate the wrath Ooma will feel from incumbents. Since Ooma threatens the carriers’ core business, they’ll do their best to crush it, arguing Ooma bypasses the local access regulatory structure. Don’t forget the mortal combat between Vonage and Verizon. If so, Ooma’s $27 million in venture funding will be nowhere near enough.

And Ooma will need to convince customers to buy the device. The $399 price tag for the box puts it out of range of people who need cheap voice: budget-conscious callers. Voice, local voice to be specific, is pretty cheap in the US, and that might cause adoption resistance.

It is a dilemma Frame and his team will need to figure out.

If you have any ideas, leave your comments below, or email Ooma using this address - gigaom@ooma.com. The first 50 people to email will receive a free Ooma box.

Update: During the beta test, you will need an incumbent phone line, according to Ravneet who signed up. The company did not reveal this during our conversation. Secondly, this incumbent requirement will go away in September 2007, when the product launches. I have posted some clarifications in comments, and will answer more of your questions. This post was written late at night, so I might have skipped a few things.

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Open Communication Systems, the company behind conferencing & group communications service, Radio Handi has been acquired by Virtual PBX, a ten year old provider of hosted PBX service for businesses.

While Radio Handi does clever things like easily broadcast audio on the net, it is conference call part of the business that has been the driving this bootstrapped start-up based in San Francisco. The company had raised a total of $225,000, with a big chunk of it coming from founder Brian McConnell.

When we asked him why sellout now, before getting the company to the next level, he said that telecom is a capital intensive business, and the track record for telecom start-ups hasn’t been that stellar.

“When we surveyed the previous ten year history for telecom startups, we saw that relatively few small to mid-size companies were successful VC investments,” he says. “Many of them are/were successful companies, but very few generated the kind of returns that make a VC backed deal attractive to founders. Deals like Skype are very rare in the business.”

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