My Personal Finance Journey

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Free Domestic Calling For Life

Contributed by mm | August 9, 2007 6:00 AM PST

A new startup is making a bold claim: it will offer local and long-distance calls anywhere in the US for free, for life. The company, carrying a fancy name "ooma", is currently testing its service and will start signing up new customers in September. For an introductory rate of $399 to cover the equipment, you can dial everywhere in the States without worrying about your wallet.

Don't confuse ooma with a VOIP service provider like Vonage. While still requiring a broadband internet connection, ooma's device actually uses a new technological design. According to TechCrunch:

Instead of using normal exchanges to terminate calls like Vonage does, Ooma routes calls through the phone lines of other users if it can. That saves them the termination fee on the call and eliminates their largest marginal cost. That does mean that if you have a normal phone line (its not required to use Ooma) it will be used by other Ooma users, but it isn’t something you’d ever notice because your inbound and outbound calls are routed around it. And in the event you call 911, any phone call using your line is immediately broken and you are put right through. If there are no Ooma user within twelve miles of where your call is being terminated, Ooma uses the normal phone system. From the caller’s perspective, its all invisible.

So do you want to take a try?

I will be really cautious. Of course, the math works out ok. Comparing ooma's $399 one-time charge to Vonage's all-inclusive monthly rate of $24.99, it takes less than 16 months to get ahead. However, shall you bet your phone service on this unproven technology?

One does not have to look very far for victimized consumers who wanted to save by paying upfront. SunRocket, a VOIP startup that heavily promoted $199/year service, shut the door back in July, without even notifying its 200,000-strong customers. Washington Post reported scary stories like this:

One of them was Kirsten Apple, who depended on her phone line to run her photography business. She's also nine months pregnant and does not get cellphone reception in her Falls Church home.


"I'm supposed to go into labor any day, and I have no way of making a phone call from home," said Apple, who had been a SunRocket customer for nearly two years and resorted to stepping outside her house to make calls on her cellphone. "I was such a big advocate of SunRocket, but this is more than disappointing. They could have given us warning before shutting down service."

Back to ooma, it is probably fair to say it will more likely to fail than to succeed. I won't be an early adopter of it (and I'm a satisfied Vonage customer in the first place). Will you?

This Post Has Received 6 Comments. Share Your Opinions Too.


John Commented on August 9, 2007

grandcentral + gizmo + linksys WIP330 is the answer


Nabloid.com Commented on August 9, 2007

How does ooma plan on monetizing their free service besides the one-time charge? If they are solely relying on the one-time charge then its almost like a pyramid... when people stop joining the company starts to go bankrupt!

Unless they have some way of monetizing it that hasn't been mentioned here.


MM Commented on August 9, 2007

Nabloid.com: according to some other reviews, ooma will develop value-add services for fee, like ring-tones, etc.


Tom Commented on August 14, 2007

I really believe in the next few years, you won't have to pay for any long distance service. I mean we already have programs like Skype and other various VOIP programs where you pay next to nothing.

It's a wonderful idea!


FIRE Finance Commented on August 15, 2007

Ooma is a great idea but I do agree that I shall be careful before adopting it. Skype and Vonage is working great for us. Thanks for the info.
Cheers,
FIRE Finance


VoIP Commented on February 5, 2008

Hello,


Finally I found a blog that shares my interests. Thanks and keep up the good work.


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