RSSOoma Launches $400 Free Phone Service
By Nate Mook | Published July 19, 2007, 3:36 PM
As one VoIP provider is laid to rest, another is born. Ooma today launched its long-awaited Internet-based telephone offering for consumers. While the company is entering into a crowded market, Ooma is hoping to entice customers with a promising offer: free domestic calls for life.
Compared to Vonage and other providers, Ooma's offer may seem too good to be true - and there is a small catch. In order to join the service, you must cough up $399 USD for the Ooma hardware, which requires a broadband connection. The device plugs into a standard phone and includes answering machine functionality.
In order to keep the service free, Ooma has taken a unique approach by implementing peer-to-peer technology similar to that used by file sharing networks. Instead of relying on standard telephone exchanges to route calls like Vonage, Ooma utilizes the telephone lines of other users whenever possible.
And even if most Ooma users disconnect their landline phone (although Ooma believes many won't in the event they need to dial 911), the network will make use of the upstream network bandwidth of other Ooma customers. In turn, the company can keep its bandwidth bills low and the service free of charge.
While it sounds like a promising idea, Ooma -- which has raised $27 million so far and is headed up by CEO Andrew Frame -- still faces an uphill battle to establish itself. Without many users, the patent-pending P2P technology Ooma built becomes useless. Thus, the company is seeding the United States with Ooma devices through an invitation program (users can invite three friends) before they officially go on sale in September.
In addition, it's not clear whether consumers will be willing to pay $400 up front in order to potentially reap the long-term benefits of free domestic calling. Because Ooma is new, its future still remains uncertain, and those early adopters could find themselves with an expensive box of hardware if the company goes out of business.
SunRocket, a voice over IP provider that announced it was closing down Monday, offered a $199 per year prepaid phone service. Customers who recently signed up have found themselves out of luck and out of cash, although rival providers have offered SunRocket customers a discount on service.
TiVo faced a similar hesitation among consumers upon launch with its offer of a lifetime subscription. Many users chose to pay on a monthly basis because of skittishness over how long TiVo would be around, although long-time users may be regretting that decision 7 years later. Still, Ooma currently offers no monthly option, since its costs must be recouped in the hardware.
Ooma does have a revenue strategy behind its devices, however; the company will sell $39 "Scout" devices that link up to the main Ooma hub and enable customers to extend the service to phones in other parts of a house. Of course, many telephones these days now support multiple handsets and render the Scouts unnecessary.
In addition, Ooma will charge for international calls with prices starting at just a few cents. Customers enter their credit card information online and are billed automatically for the calls they make. Skype offers a similar service for customers who wish to use their PC to make calls, and the business was successful enough to entice eBay to buy it.
If the idea of free phone service for life (or at least the life of Ooma) alone isn't enough to bring on customers, Ooma has a backup plan: Ashton Kutcher. The actor has taken a position as creative director of the company and will create a viral video series in order to promote Ooma.
Or you could go with vonage and get their 500 minute plan. It would take 26 months before it would cost more than this service, and you don't have to pay for it all up front, which means you gain on your interest, not them.
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Maybe I'm not understanding you correctly, but paying $399 upfront for a lifetime service vs paying the same $399 for 26 months does not make up for the interest you'd earn on $399 (what is that? at 10% that's about 80 something bucks?)...sounds like pretty short term thinking to me - hope you don't invest with that mindset :-)
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Whose lifetime?
--->paying $399 upfront for a lifetime service
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$400 for something that's already free elsewhere?
Ashton Kutcher? I repeat: Ashton Kutcher?!! That's enough to turn me away.
Maybe they should study the Sirius model and consider a much lower hardware entry point.
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Where exactly is domestic calling 'free'?
Wherever you go, the minimum you're getting charged is $18-$25 a month for domestic calling, so no - it's not already elsewhere.
Lets see, 20 a month for 10+ years or 400 flat, no more charges....hmmmmmmmmmmm.
If this is:
1. a quality service
2. around for the very long run, or at least 3 years, lol
3. not riddled with 'catches' (for eg: Tivo lifetime subscriptions aren't transferrable and follow the box, if your box dies a day after the warranty so does your lifetime sub; though at one point they allowed users to jump to a new box, for another $300).
then obviously, after 20 months or so, the savings begin to pile in and it's a super, super deal.
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Actually your Tivo statement is untrue. The mobo in my series 1 died about 3 months outside of warranty, so I sent it to them and I just paid the repair fee of $75 for the hew hardware. Since the ID is tied to the MoBo they attached my lifetime service to my new ID. (now this may have changed in the past couple of years, but back then this was true)
If the box dies and you threw it away, yes you were screwed. However if you got it repaired (by Tivo), they would transfer the service to the new ID.
However I ditched Tivo a couple of years ago for MythTv. But it was a great box while I had it.
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