The buzz of the day is about new VoIP company Ooma, which promises free phone calls forever
if users shell out $399 for its piece of hardware. The technology sounds interesting, as it handles some of the switching of calls in the boxes themselves, rather than in the network, but outside the hype, there's plenty to be skeptical about
. On the tech side, Ooma needs users with local phone service, since that's what it uses to terminate calls. Essentially what happens when an Ooma user makes a long-distance call to a non-Ooma user is that the call is routed to an Ooma box in the corresponding area code that's connected to a standard landline, which is then used for the call to the standard phone network. While this lets the company avoid setting up some network infrastructure, it seems counterintuitive to rely on people buying Ooma for long-distance calls, but keeping their local phone service -- particularly when many VoIP services offer unlimited local and long distance for little premium, if any, over the cost of traditional local service. Ooma's timing isn't great either. It's asking people to make a considerable upfront investment for lifetime service, just a few days after the collapse of SunRocket
, which had lots of users on $200 per year prepaid plans, and whose money (and phone numbers) are in limbo. Other companies have made similar lifetime calling offers
as Ooma's, but given the upheaval
in the VoIP space caused by falling call costs
, consumers will be hesitant to shell out large upfront fees for service, lest the provider disappear.