Ooma - Huh?

by Moshe Yudkowsky

Startup Ooma will start selling a $400 box in September; after you've purchased the box, you've got free phone calls forever, according to press coverage.

Frankly, I don't understand this hype. It sounds as if Ooma is selling "Skype in a box" — a hardware version of what Skype offers, a peer to peer network for telephony. True, it's a standalone box, allows POTS backup, and allows connection to your standard phones, all of which is worth something.

But I fail to understand the business model. How will the sale of one box allow them to provide infinite free PSTN connectivity? Sure, they'll charge for international calls, but something doesn't sound right; outbound PSTN calls cost money, and the ability to accept inbound PSTN calls costs even more. That can't be financed by a single sale of a single box.

So my best guess — since Ooma's web site doesn't say, and the mainstream press (non-technical, e.g., Mossberg et. al.) seem to be oblivious to VoIP-to-PSTN problem — is that Ooma is a hardware version of Skype. They'll sell PSTN numbers to receive inbound calls. They'll sell international LD minutes. And if they go under, that $400 box won't be able to connect to the PSTN any longer.

Edit, 2007-08-02: I've just learned/re-learned that Jeff Peck (see his comment below) is the Principal Architect at ooma. Since I happen to know from personal experience that Jeff is (a) very, very smart and (b) very, very competent, I suspect I will have to re-think my opinion of ooma...

6 Comments

joe
2007-07-19 09:30:27
check out the part of the stories explaining distributed termination for answer to your question...
Moshe Yudkowsky
2007-07-19 10:49:38
Oh, that idea; "distributed termination" has been around for quite a while and has never worked yet.


So, aside from the cost of the $400 box, I expect that I can only make calls to the PSTN if I in turn provide a connection to the PSTN for others to use. I'm not enthused by this notion, and I have to wonder in particular about the overall quality of service.

Jeff Peck
2007-08-01 17:30:05
$399 is a limited time promotion and incredible opportunity for customers to get free calling, the Instant Second Line feature and the Broadband Answering Machine all with no monthly fees.. This is a limited time offer to reward our early supporters and customers.


ooma's costs are reduced because the customers provide (and pay their LEC for) local PSTN access costs.


In the future, ooma will also offer the service in "Internet Mode" (with no landline required)


The beta trial customers are happy with the overall quality of service.

Mike
2007-08-02 16:19:21
So, is there a way to get Jeff Peck, who you say is very smart and very competent, to answer the technical questions that have been raised? It really doesn't matter how smart someone is if they don't have the specific knowledge of the specific subject, like how telephone lines work. It appears to me that no one at OOMA has the experience needed on this subject. I worked on designing and implementing the PSTN access part 30 years ago for a system that used the exact same concept (without IP).
Mike P
2007-08-09 15:02:22
Hot off the press. Just found this on home.businesswire.com:


August 9, OOMA announces Pre-sales. The announcement includes the following three statements:


1."This announcement contains forward-looking statements ... Actual results may differ significantly from management's expectations."


2."Purchasers during the promotional period will have this no monthly charge service for at least three years."


3."ooma reserves the right to change or modify its offering including limiting the unlimited U.S. domestic calling to an initial set of customers."


You can interpret these any way you want, but to me they mean:


1. OOMA is making wild claims and, if they don't work, don't blame us.
2. "Free service for life" is only guaranteed to be 3 years.
3. Later subscribers won't get free service.


Anybody willing to bet $400 on those terms?


Ed
2007-12-21 09:39:47
Does anyone know if there is an international charge or what it is?