SunRocket demise casts doubt on business model

At first, Roger Shumaker didn’t give it much thought when his phone service went on the blink.

“I’d get a dial tone on Monday, but it would go to a busy signal. Then sometimes there was no dial tone, then it wouldn’t connect,” he said.

Shumaker’s broadband connection was fine, and the intermittent dial tone meant his Linksys router was OK. He just figured his voice-over-IP provider hit a technical glitch.

“With VoIP, you have an outage every now and then,” he said, “but it’s better than paying all that money to the local phone company.”

Shumaker didn’t yet realize he was one of the 200,000 subscribers left without landline phone service when Vienna, Va.-based SunRocket suddenly ceased operations July 16. There was no warning; no notification. The company was there one day and gone the next, but Shumaker didn’t know it until he went online to investigate.

“I went to SunRocket site, and there was nothing there,” he said. “Finally I went to Google to see if there was an outage.”

That’s how the year-long SunRocket customer discovered his phone service was gone for good.

Normally, a business the size of SunRocket would cause barely a ripple in the national media. Headquartered in a suburban office park outside of Washington, D.C., the three-year-old start-up employed about 160 people at its peak. Small and mid-sized businesses go under all the time, but SunRocket held a particular distinction. It was the nation’s second-largest independent VoIP provider after Vonage, a public company in Holmdel, N.J. with roughly 2.4 million subscriber lines.

NO GOTCHA NOT

SunRocket was launched in early 2004 by former MCI executives Paul Erickson and Joyce Dorris. It was the self-described “no gotcha” phone company, which is part of what attracted Shumaker in the first place.

“I had Vonage first,” he said. “Our relationship lasted for a couple of weeks. I registered for an extra phone number and found a $25 charge for it… and then a couple of other extra charges.”

Shumaker had heard good things about the quality of SunRocket service, and their offering was one of the best available--$199 upfront for a year of unlimited domestic calling plus a raft of features. Even with the aggressive pricing plan, SunRocket was up against serious competition, said William Stofega, VoIP analyst at IDC in Framingham, Mass.

Read more:
Next Page