CallWave's Internet Telephone Services Grow to 1,000,000 Subscribers in Four Months.

Business Editors

SANTA BARBARA, Calif.--(BUSINESS WIRE)

Feb. 23, 2000

1% of U.S. Homes Now Use CallWave's FREE Internet

Answering Machine(TM) to Hear Who's Calling While Online

CallWave today announced growth rates for its groundbreaking Internet Answering Machine, the first and only nationwide FREE solution to missing phone calls while online.

Since October last year, over a million homes across the U.S. have discovered CallWave and now are able to surf the Internet without missing any phone calls while they are online.

"PC Data Online" reports that CallWave's Web site was the 181st most visited site on the Internet for January 2000, with 2.5 million unique visitors. CallWave's Web site traffic ranks ahead of such popular consumer sites as E-Trade, Dell Computers, Buy.com, Quicken, and CompuServe.

"Our growth can be attributed to the ease of use of the Internet Answering Machine, and its appeal to the consumer's pocketbook," said David Hofstatter, president of CallWave. "We've captured a million customers by giving them a compelling alternative to their local phone company. We're delivering innovative Voice over IP (VoIP) alternatives to expensive second phone lines."

Highly Active Users

While other free Internet services achieve high subscription rates, their actual usage is frequently very low. CallWave's unique visitor count and actual call volume demonstrates that customers are depending on the service to keep them in touch when they're online. "We are handling well over ten million calls a month," said Hofstatter. "It's great to have our service adopted by one percent of U.S. homes in just four months. But the larger story here is the usage. Millions of people are calling our customers and are experiencing CallWave instead of getting a busy signal."

Huge Demand among Homes and Small Businesses

CallWave's Internet Answering Machine is actually used by more single phone line Internet users than any other comparative product or service. Dana Gardner, analyst at Aberdeen Group Inc. in Boston commented, "With 1,000,000 users, CallWave is emerging as the leader in the Virtual Phone Line Services category. There's huge demand among homes and small businesses with one telephone line who want Internet access, but not at the cost of missing phone calls."

Dana Thorat, an analyst from IDC, forecasts that 43.1% of online households will adopt Internet call management services by 2003. "This forecast suggests that we've just begun to tap the market," said Hofstatter.

CallWave Vaults Past Competition

Ease of use, compelling savings, national coverage and viral marketing have propelled CallWave quickly past competitors such as GTE, US West, Nortel, MSN, Prodigy and others. These companies offer similar services, but they are not available nationwide, and they require households to pay a monthly fee.

"CallWave is an application service provider (ASP) in a communications category that's really heating up," said Andy Schroepfer, vice president and senior research analyst at US Bancorp Piper Jaffray. "CallWave's innovation is impossible for the large phone companies to match, and with a million customers they are showing signs of leadership in a revolutionary phase toward Internet-based communications."

Unlike other players using Voice over IP (VoIP) to compete in long distance, CallWave is successfully applying VoIP technology to the local telephony markets. "Our Virtual Local Exchange Services will save U.S. consumers over $1 billion in second phone lines this year," said Robert Dolan, chief executive officer of CallWave.

About the Internet Answering Machine(TM)

CallWave's free Internet Answering Machine (IAM) enables Internet users to hear who's calling while they're online. IAM also eliminates annoying busy signals for callers trying to reach someone who is online. Instead of getting a busy signal, callers can leave a voice message that the online user hears instantly over the speakers on their PC. The Internet Answering Machine occupies a small window on the user's computer screen while they are online and displays incoming calls, plays messages, and saves them for replaying later.

The Internet Answering Machine is free and available throughout the U.S. and is compatible with all browsers and Internet Service providers, including AOL. The free IAM software can be downloaded in less than a minute at http://www.callwave.com and runs on Windows PCs.

About CallWave(TM)

CallWave is a new type of Internet-based telephone company with corporate offices in Santa Barbara. CallWave's mission is to give Internet users the convenience and functionality of extra phone lines in their home or small office, without having to install or pay for additional lines from the phone company. CallWave's Internet Answering Machine is a free alternative to a dedicated modem line, and the FaxWave fax-to-email service is a free alternative to a dedicated fax line. Both services are available to Internet users nationwide, and use open file formats, enabling voice and fax messages to be reviewed on and forwarded to almost any computer.

Media inquiries should be directed to Bruce Thompson at [e-mail] or by telephone to 805/690-4115.

CallWave, Internet Answering Machine and FaxWave are service marks of CallWave Inc. All other trademarks are the property of their respective owners. To subscribe or for more information, visit http://www.callwave.com.