Phone service revolution starts in Fort Collins

Gan, openLCR.com changing the way to dial long distance

You gotta have fun if you’re in high-tech, said Tim Gan. And right now, he’s having the time of his life.

Gan, named Bravo! Emerging Entrepreneur for 2000, is president and chief executive officer of openLCR.com – a 21-month-old company based in Fort Collins poised to change the way American consumers pay for long-distance telephone calls.

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It’s a confusing telecommunications world. There’s dialing options such as 10-10 numbers. But forget a sequence of digits and the rates go up. There’s a multitude of plans from which to choose. But which one is most affordable, when?

Wouldn’t it be nice if the phone or fax machine could figure out which long-distance provider has the best rate at the time the call is made?

In a nutshell, that’s the premise behind openLCR.com, the LCR standing for low-cost routing. “The concept is not new in the telecommunication world,” Gan said. It’s been available to businesses that have a PBX system with 50 or 100 phones attached. It’s also been a success in Japan, where the technology has been in place the past eight years and used by 20 million consumers in that country.

In fact, Gan’s partner, S. Fukuda, is credited with being the creator of “LCR in the phone” technology in the Japanese telecommunications industry.

But until now, that technology has been unavailable in the United Sates. Gan and Fukuda are changing that.

So how does openLCR.com work?

The consumer purchases a fax or phone with LCR technology built in, logs on to openLCR.coms Web site to activate the service (consumers are asked which phone plan they currently use, be it AT&T, MCI Friends and Family or whatever) and codes are downloaded to the consumer’s fax or phone. Every 30 to 45 days, the fax or phone automatically calls into openLCR.coms database for updates.

Thereafter, each time a long-distance call is made, the phone automatically searches for the least expensive long-distance provider at that time on that day. If none can be found, the call will be made at the regular plan’s rate. And the bill will come from the regular long-distance provider, regardless of how many companies openLCR.com technology connects with.

What’s the catch?

For the consumer, absolutely none. The LCR technology has not boosted the retail cost of the phone and fax equipment, there are no service fees and no hidden catches, Gan said.

The company makes its money as a telephone line reseller. “We make a commission off traffic,´ said Gan, adding that many telecom companies are happy to accommodate the number of potential users – 10,000 have subscribed so far – that openLCR.com can deliver if the price is right.

The company also derives revenues from banner ads running on its user-friendly Web site, which not only contains information about an openLCR.com account, but also information on the weather, the latest movies and the stock market. Users can buy a book or play a Web-based game.

Gan, noting that 25 million out of 130 million households in the United States will buy a new phone or fax each year, said the potential for the company within the next five years is staggering. “We expect phenomenal exponential growth.”

He said the company plans to provide additional services in the future.

To date, openLCR.com has formed partnerships with electronic manufacturing giants Sharp and Casio to include LCR technology in plain-paper fax machines and cordless phones. Eight-bit computer chips already are included in all phones and faxes, Gan said, so embedding the technology is not difficult. The first phones and faxes capable of using openLCR.com services are now hitting the shelves at electronics retailers nationwide, including those in Northern Colorado.

The response from both manufacturers and consumers has been positive, Gan said. Sharp is including LCR technology in four additional fax models, some designed for business use, and Casio is adding LCR capability to more cordless-phone models.

In addition, openLCR is “working vigorously with other manufacturers” to include the technology in their products as well.

The company’s goal is to have three-quarters of large electronics manufacturers embedding LCR technology into their products.

Gan said he chose to set up shop in Fort Collins because “for a service provider, Colorado is a very good place. If I wanted to make equipment, I would have been in Dallas. If I wanted to make routers, I would be on the West Coast.”

Ten employees based in Fort Collins focus primarily on the service end of the business, while the Japanese subsidiary, headed by Fukuda, oversees design.

Gan, an 18-year veteran in telecommunications specializing in business between Asian countries and the United States, has been involved in two previous telecom startups.

His third startup – openLCR.com – has had its share of challenges.

“The first one is hiring people. You can find people, the problem is finding good people,” he said.

Once good people are found, the next step, Gan said, is to convince them to make the jump to a dot-com startup, which has inherent risks simply because it is new and untested.

The second challenge, Gan said, is finding venture capital. The co-founders supplied the initial seed money themselves, then courted venture-capital firms, obtaining an amount Gan would only say was in the “multiple millions.”

The third challenge has been keeping on schedule. Gan said the company anticipated phones and faxes would be on stores shelves before May. “We have had a few hundred thousand fax and phones shipped to this country. We’re just waiting for them to hit the stores.”

Although openLCR.com is the first to offer the technology in the United States, Gan said he doesn’t expect to be the only one for long.

“In this business, you always expect competitors,” he said. “We will just have to run faster than anyone else. This is a high-tech business; it’s new today and old tomorrow. It’s not easy. Why we can do it so fast is we have done this in Japan.”

And for now, Tim Gan is having the time of his life.

“We’re very low key, very relaxed,” he said. “Being high tech, you don’t have to have pressure. Everyone’s tense already.”