The first 10 minutes are free: PokeTalk uses voice-over-IP to connect regular phones.

Residents of the southern part of Israel in range of missiles from Gaza can now make phone calls up to 30 minutes to their friends and relatives entirely for free, thanks to a new Israeli startup called PokeTalk. The service, which is already operational in 60 countries around the world, is good for any calls between two phone numbers in the 08 area code.

PokeTalk has been flying high since its launch three months ago. The company, founded by two 25-year-olds in Tel Aviv – Shai Genish and Boaz Bahar – has signed up 70,000 users nearly entirely on word of mouth and viral marketing alone.

The service is the only one on the market that uses voice-over-IP to connect regular phones, not just two computers ala Skype, at no cost to the caller.

As with any good idea, though, there’s a catch: calls are limited to 10 minutes. The promotion on Israel’s frontlines triples that amount.

Ten minutes on the phone is usually enough

Ten minutes (or even 30) may seem like a deal breaker but, says Genish, the average call placed is only two minutes and 40 seconds. And 70 percent of calls from a mobile phone are a mere 80 seconds. “Other than for business calls, 10 minutes is usually more than enough,” Genish tells ISRAEL21c.

PokeTalk is essentially an automated version of the call back systems that were once popular in Israel as a way of saving money. But rather than calling a certain phone number, with PokeTalk you enter your number and the number you want to call on the PokeTalk site. A few seconds later, your phone rings. You pick up and PokeTalk places the call.

ISRAEL21c took a test drive and the quality is quite good – better than most voice-over-IP systems like Vonage, Gizmo5 or even Skype.

So how can PokeTalk offer even 10 minutes of talk time for free? On-site advertising. Since you’re required to initiate your call from the web, PokeTalk can show you advertisements on screen. That’s a whole lot less annoying than some other free phone systems that put 10-second audio ads before a call is connected.

It’s also much less invasive than a firm like Pudding Media, which actually monitors your phone calls to serve up targeted ads from its website, delivered by e-mail, or inserted as audio ads. (That company is based in Silicon Valley but was founded by a team of Israeli software managers.)

In addition to advertising, PokeTalk plans to make money by providing a premium service where users can talk for more than 10 minutes, along with other goodies such as voicemail and call transfers from one country to another.

PokeTalk’s main phone-to-phone competitor is another Israeli company Jajah, which also places calls between two regular phones. But other than the first call, it’s not free.

Free calls originate from 13 countries

PokeTalk is far from profitable – only 50 percent of calls are covered by ad revenue – but the small eight-person company has raised $1.25 million from Maayan Ventures and private investors. Genish says he hopes to be in the black by the end of 2009.

PokeTalk calls can originate from 13 countries – including Israel, the US, Canada and Germany, though notably not the UK – and can be connected to 60 nations, from Kazakhstan to New Zealand. Mobile phones are supported in nine countries.

Of PokeTalk’s 70,000 users, 40,000 are in Israel (including 15,000 from Tel Aviv University alone where the company did more active marketing). A viral “refer a friend” program has been successful at recruiting new users too (if your friend signs up, you receive an extra 10 minutes on your next call).

On an average day, up to 7,000 users login and make close to 18,000 calls.

The company has been featured on Israel’s Channel 10 news and in The Marker and Globes business supplements. Genish estimates that a series of interviews that appeared in the VoIP Guides online publication led to some 10,000 new users.

The company’s current promotion in the south of Israel probably won’t generate a significant number of new customers, but it’s a noble gesture that helps local residents in tough times.