Firey battle emerges as VoIP provider sues Chariot

International Voice over IP (VoIP) companies, Transcom Australasia Pty Ltd and Transcom International Limited, have issued a claim for $3.2 million against Adelaide-based ISP, Chariot Ltd, citing breach of contract.

The claim was filed in the Supreme Court of Queensland this month. A further claim for pecuniary damages was made against two of Chariot's directors, Peter Buttery and Robert Horlin-Smith.

Transcom and Chariot had been involved in a joint venture to roll out a Transcom-Chariot VoIP service. Chariot paid $5 million upfront for its investment November 2004. It initially planned to roll its VoIP service out by the middle of last year. However, at a annual general meeting with shareholders last November, the company stated the rollout was delayed until December due to technical reasons.

In February, the ISP told ARN trials were in the final stages, with the service expected to be launched in March.

Spokespersons at Chariot and Transcom spokespeople were unavailable to comment.

In an ASX statement, Chariot said the claims by Transcom arose "from agreements between it and Chariot and the termination of a wholesale distribution agreement under which certain products and services were expected to be made available to the Australian telecommunications market".

"Chariot will vigorously defend these claims and is seeking advice as to any causes of action (including counter-claims) that may be available," it stated.

Managing director of Telsyte, Warren Chaisatien, said the pair were attempting to enter a difficult and highly commoditised market. The analyst firm's research showed in 2005 that there was only $80 million in total revenue made from both business and consumer VoIP combined. This had been shared by 80 players.

"The big guys, like engin and Freshtel, would occupy over half of the market and so the remaining slice is highly fragmented," he said.

"We see a lot of companies coming in and also a lot that go out of business; some because it is just not viable; and other activity is often due to mergers and acquisition."

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