Sunrocket

SunRocket

Doug Mohney — Thu, 13 Nov 2008 09:56:50 -0500

Founded: 2004

Status: July 2007

Cause of Death: Multiple causes, beat down by cable VoIP, tried to grow too fast

What did it do: Low-cost Vonage clone

Founded by a pair of former MCI employees, the VoIP services company raised $80 million in venture capital and had 206,000 customers at its peak. SunRocket's hook was aggressive pricing, as low as $299 per year for unlimited calling to major cities in 41 countries and a domestic U.S. unlimited plan of $199 per year; an initial promo promised two years of service for $199, plus phones (no jelly jars or Ginzu knives, though).

SunRocket ran into severe growing pains early on. The company suffered from extended outages and poor customer service as it continued to grow.

And then it just ran out of cash. One source attributed SunRocket's money crunch to trying to raise a third round of investment funding at the same time as Vonage was trying to get its IPO out the door.

Even if SunRocket had managed to raise another round, it would have only been putting off the inevitable. Cable and POTS players were easily winning the argument of better and more reliable service trumping low-ball cost. And big brother Vonage is still trying to make its business model work.

The Fallen - Crashed and struggling VoIP companies

Doug Mohney — Thu, 13 Nov 2008 09:20:01 -0500

While I compiled the 2008 VoIP Fierce 15, I looked back at previous Fierce 15 lists. SunRocket was a member of the 2006 VoIP Fierce 15, and this got me thinking about the many companies that have crashed and burned over the past few years -- plus those that seem to chronically struggle.

Numerous companies rushed into the VoIP world with expectations of changing the world. Most showed great potential at first, winning vital acclaim in the media, throngs of admirers and predictions of greatness.

And yet, at some point in time, fortunes change. Acclaim turns to scorn, devotees turn to embittered critics and dreams become crushed by the real-world.

For some, it was a failure of execution. Others held onto their vision for too long, letting it grow stale and stagnate, becoming a me-too player, rather than an innovator.

Still others overreached, tried to be too much too soon, too fast, and burned out. Plus you have a couple with notably shady characters in their past and shaky business models that never made a dime.

Did we leave anyone out?

- Doug

MagicJack mystique

Doug Mohney — Sun, 08 Jun 2008 12:36:46 -0400

Unlimited long distance for $19.95 a year? It sounds more like a Ron Popeil commercial than a business plan.

The magicJack device costs $40 for the first year and includes a year of unlimited long distance calls anywhere in the United States. Plug one end of the over-sized thumb-drive device into a USB port, plug a phone into the other end of the device, dial away. The startup has sold more than 400,000 devices six months after launch and is now selling them at a clip of 7,000 per day, adding twice as many new accounts over the period as Vonage.

According to a variety of media pundits, the magicJack gizmo is easy to install and delivers consistently good sound quality on phone calls. Is it a threat to phone companies? You can't bundle TV and broadband with it. And consumer VoIP has been notoriously difficult to make profitable (See Vonage, SunRocket).

However, magicJack isn't perfect. There have been problems with delivering quality tones to menu-driven services and quality of service over cell phone broadband. Customer service--the Achilles heel of many businesses today--is only available through online chats. And you only can make and receive phone calls as long as your computer is on, so media pundits seem to be mixing and matching magicJack's functionality and convenience between Skype and Vonage.

Making money will be done through selling ads, displayed as a part of the software client that runs as magicJack is operational. The company also reserves the right to monitor the numbers dialed to in order to tailor ads, so users are going to give up some privacy in the process.

For more:
- U.S. News and World Reports gushes praise on magicJack

Related articles:
SPOTLIGHT: MagicJack voice-via-USB gains steam
Telecom's voice is changing

SPOTLIGHT: Dialaphone's Top 10 reasons VoIP isn't mainstream

Thu, 03 Apr 2008 07:59:53 -0400

Yes, Dialaphone's just another U.K. mobile phone retailer and thus has an agenda. Yes, Top 10 lists have been done ad nauseum. Yes, you already probably agree with everything you're about to read. But, while this bloglist--The Top 10 reasons VoIP isn't mainstream--probably won't be showing up on the David Letterman show anytime soon, you might want to print it out and tape it to the marketing department's door.

Here's an abbreviated version:

1. VoIP is marketed to businesses instead of residential customers. Residential customers like to save money, too.

2. There are dozens of VoIP providers, few are seen as stable. Can you say VoIP Inc? SunRocket? Vona ... never mind.

3. Mobile broadband and smartphones are relatively new. As mobile broadband use increases, VoIP will, too.

4. Cost are confusing. Plans have to make sense, be simple and straight forward.

5. Security concerns. VoIP = Hackers in paradise. Or so it appears.

6. Installation issues. It's all about the software, now. Let it out there!

7. Bad reputation regarding call quality. Can you hear me now?

8. Lack of attention from other industries. More collaboration means more cross pollination.

9. Lack of media coverage. So far, VoIP has been a word of mouth industry. That's got to change.

10. It's new.

And that says it all. Read the complete blog entry

Corrected: VoIP's worst of 2007

Mon, 07 Jan 2008 06:59:54 -0500

All was not sunny and bright in the land of VoIP in 2007, with serious problems facing Vonage, SunRocket, and Skype among other VoIP carriers. The lessons learned in the just-past year will serve VoIP carriers and customers well as they move into the future.

Much of the trouble involved relatively small VoIP carriers and their encounters with much larger firms. Vonage spent the year with the specter of legal doom hanging over its corporate head -- only at the end of the year did word come that Vonage and Nortel had settled the legal case in which they'd been involved. Skype's encounter was of a different sort, but left the company no less changed after Ebay purchased the European VoIP firm, then spent the year trying to figure out precisely how to profitably integrate the carrier into its larger business.

Neither of these encounters was as dramatic as that of SunRocket with its larger corporate competitors. In July, faced with unexpected competition and burdened with a business plan that seemed unequal to the task, SunRocket suddenly went out of business, leaving thousands of customers scrambling for a dial-tone. The lesson? For customers, at least, the lesson has to be keeping an alternative carrier available as part of a disaster recovery plan.

For more:
NewTelephony has the complete story here

Related articles:
Vonage settles with AT&T; expects positive cash flow in '08 Report
Vonage settles with Sprint Report

2007's top VoIP innovations

Thu, 20 Dec 2007 06:59:58 -0500

All in all, it was a pretty good year on the VoIP front. Along with rather depressing developments (can anyone say "SunRocket"?), there were many positive steps and great new products.

From Microsoft Office Communications Server 2007 and Ooma's free calling appliance to great IP desk phones fro m Polycom and others, 2007 saw enough moves in the right direction to set up 2008 as a watershed year for VoIP deployment.

Perhaps the most important innovations for business VoIP users were the VoIP call-center systems (which even used Skype for enterprise calling) and the myriad tools that promised to make the transition from POTS to VoIP easier for customers both large and small.

For more:
VoIP-News has the complete list in a feature article here.

Related article:
Analyze the definition of success Report

SunRocket port goes awry

Thu, 11 Oct 2007 06:59:58 -0400

Imagine getting a call from a total stranger who proceeds to read your phone bill to you. It happened recently to a Washington, D.C.-area resident and former SunRocket subscriber, according to Brian Krebs of The Washington Post. Left abandoned in July by SunRocket, Bill Adler signed up with ViaTalk of Clifton Park, N.Y., one of the many third-party VoIP providers that swooped in with rescue offers.

Adler used a temporary number while waiting a few weeks for the old one to be ported. He then heard from a Northern Virginia man who'd subsequently inherited Adler's temporary number and phone records. The man realized there were calls he hadn't made, and went through ViaTalk to reach Adler. ViaTalk chief Brendan Brader told Krebs the company was investigating the mix-up. Adler told Krebs he was "trying to divorce my anger over this whole thing from the reality that switching to another phone company is going to cause a lot more headaches."

There's been a lot of garment rending about VoIP this year based on SunRocket's ridiculously irresponsible exit and Vonage's legal floggings. Yet here's a guy who lost voice service completely, went to another VoIP provider that gooned up his records, and he's still a VoIP subscriber. If anything, the third-party pratfalls will just become marketing manna for cable companies.

For More:
- The Washington Post piece is here

Related Articles:
SunRocket orphans punk'd Report
SPOTLIGHT: ViaTalk chief joins subscriber forum Report

Japan's eMobile VoIPs with Jajah

Mon, 08 Oct 2007 06:59:54 -0400

Japan's eMobile has launched mobile VoIP service using IP voice software from Jajah. A report originated by Telecompaper said the service will run over eMobile's HSDPA network on proprietary handsets with pre-installed Jajah pre-installed.

Call rates on the "ONE Alpha" handset will run 2 cents a minute for domestic land line calls in Japan and around 13 cents a minute for domestic mobile calls. International land line rates are around 2 to 3 cents a minute. The service is scheduled to launch Oct. 18.

Forget about Vonage and SunRocket. This alignment is just one more indication that consumer VoIP is a WiFi play.

For More:
- TeleGeography picked up this summary from subscription-only Telecompaper
- eMobile has more here

Sipera secures $10 million

Thu, 04 Oct 2007 06:59:54 -0400

Sipera Systems, a VoIP security concern in Richardson, Texas, nailed down $10 million in Series C funding. The company's product line is designed to protect VoIP systems from voice spam and theft of minutes.

The round was led by Duchossois Technology Partners with the participation of existing investors Austin Ventures, Sequoia Capital and STAR Ventures. This influx brings Sipera's total funding up to $29.5 million.

Red Herring notes that Sipera's windfall comes amid bleak news for VoIP given Vonage's woes and SunRocket's flame-out. However, enterprise-level VoIP is hot as a pistol, with entities ranging from Shimano to the Social Security department adopting the platform. VoIP is not dead. It's the next landline model. The question is one of network ownership. Sipera sells locks to whomever owns the door.

For More:
- Sipera's official announcement is here
- Red Herring has further details here

Related Article:
Sipera finds phone vulnerabilities Report

8x8 to take 12,000 VoIP subs from exiting firm

Thu, 27 Sep 2007 06:59:54 -0400

Packet8 has confirmed that it's picking up 12,000 VoIP subscribers from an unnamed operation that intends to wind down in the coming months. Packet8, located in Santa Clara, Calif., said it struck an exclusive agreement to migrate the "soon-to-be-orphaned subscribers" to its 8x8 VoIP service.

Packet8 was one of the companies that scooped up SunRocket subscribers when the Vienna, Va., residential VoIP firm went belly-up in July. By early August, Packet8 picked up 19,000 subs and became the second largest residential VoIP standalone behind the legally embroiled Vonage.

Packet8 is wise to get out in front of this one. The SunRocket flame-out briefly cast a hairy eyeball at all standalone VoIP providers. Packet8 also has avoided patent disputes, having just filed its 69th VoIP patent.

For More:
- Packet8's announcement is here

Related Article:
8x8 signs up 19,000 ex-SunRocketers Report

VoIP quality on the upswing

Thu, 20 Sep 2007 06:59:56 -0400

Conventional wisdom holds PSTN trumps VoIP when it comes to over-all quality, but the gap is closing, according to a study from Keynote Competitive Research of San Mateo, Calif. The study compared the PSTN (public switched telephone network), PacketCable and VoIP hard phone services in the New York and San Francisco markets from June 1-30.

Voice services from AT&T's CallVantage and PSTN service; Comcast, Primus Lingo, Packet8, SunRocket (before it died), Time Warner Cable, EarthLink, Verizon's VoiceWing and PSTN; Vonage and Vonics Digital were evaluated for audio clarity, and reliability during peak and off-peak times.

Keynote placed 125,000 calls to make the assessment. While only two of the eight services tested provided 100 percent "availability" in the tests, VoIP nonetheless was deemed "highly competitive" with traditional PSTN. The most obvious factor not mentioned by Keynote would be price.

For More:
- Keynote's summary is here

Related Articles:
8x8 signs up 19,000 ex-SunRocketers Report
A quality call is more than voice Report

VoIP-outs stir regulation agitation

Mon, 10 Sep 2007 06:59:54 -0400

Maryland regulators are investigating Verizon over 450 subscriber complaints, the Baltimore Sun reports--but there's not much they can do. The state's Public Service Commission is rattling sabers, but federal and state laws leave the PSC mostly toothless because the service at issue is VoIP.

The FCC has declared VoIP an interstate commerce service that can't be regulated by the states, and Maryland Gov. Martin O'Malley signed a bill that reinforces the hands-off position of the feds. The situation leaves the PSC in the middle, fielding a growing number of complaints about VoIP providers for which it has no recourse.

"The agency refers Comcast customers getting less-than-Comcastic service to Attorney General Douglas F. Gansler," writes the Sun's Jay Hancock, who ended up calling Comcast about a subscribers inability to get decent customer service. She ended up with four months of free VoIP from Comcast. Given the SunRocket splat followed by the Skype outage of '07, VoIP regs may not be far behind.

For More:
- Jay Hancock's story in the Baltimore Sun is here

Related article:
Comcast outages in N.J.

Vonage sued by SunRocket specter

Mon, 27 Aug 2007 06:59:58 -0400

What remains of SunRocket is suing Vonage in a dispute over a customer list. Lawyers representing SunRocket filed suit last week in a Delaware court, alleging Vonage unlawfully obtained and used its customer list, reports indicate. Vonage claims it got the list fair and square through a third-party marketing firm in New York. Sherwood Partners, a Palo Alto, Calif., tech liquidator, is in charge of selling what's left of SunRocket.

SunRocket, based in Vienna, Va., was the No. 2 standalone VoIP provider when it suddenly ceased to function last month. The troubled company was negotiating a possible sale of its customer list with No. 1 provider Vonage before the deal and SunRocket itself went south.

Vonage, located in Holmdel, N.J., is already up to its eyeballs in litigation. It had spent $16 million by mid-year in patent disputes with Verizon and Sprint. Vonage was ordered to pay Verizon $58 million in a suit awaiting a final appeal decision. The Sprint suit is on deck for trial next month. Vonage cut its losses in the most recent quarter to $34 million, down from $74 million a year ago, but this is one company that can't seem to catch a break.

For More:
- The Washington Post story is here
- Cade Metz picked up the story for The Register here
- Russell Shaw at ZDNet saw this one coming here

Related Articles
Vonage faces Sprint suit Report
Vonage staunches the bleeding Report
SunRocket orphans punk'd Report
SunRocket demise casts doubt on business model Report

Telecommuter dream phone debuts

Mon, 27 Aug 2007 06:59:55 -0400

Plantronics, the Santa Cruz, Calif. headset maker, has introduced a phone that works with just about every comms platform available. The Calisto Pro landline charging base cradles a cordless handset and a Bluetooth headset, and allows for push-button switching between land, mobile and VoIP calls, TWICE magazine's Lisa Johnston reports.

The handset has a roaming range of 300 feet with a built-in speaker phone, noise-canceling mic and the ability to ingest 200 Microsoft Outlook contacts. The base station sports a USB port and the capability to transfer Skype and Yahoo!Voice calls directly to the headset. The $279 multi-platform phone is scheduled for release next month.

This sleek 3G phone arrives just as SunRocket's flame-out and Skype's outage cast a chill on the home office set. A phone that jumps easily between a landline and voice-over-IP is something the VoIP industry would do well to push.

For more:
- TWICE coverage is here
- The San Francisco Chronicle has details here

Peering is everything

Thu, 16 Aug 2007 06:59:59 -0400

This marks my fifth FierceVoIP newsletter, and a fiery baptism into a labyrinthine world of business models and technology worthy of a Harry Potter plot. I have a story index that already includes a spectacular failure (SunRocket); emerging disruptive technologies (ooma and the T-Mobile router); litigation (Vonage); unprecedented government VoIP projects (Social Security Administration); and a type of call traffic routing that sounds like something out of Star Trek.

The more I read about VoIP peering, the more it seems clear that switched networks will go the way of the Stromberg and Carlson crank phone. Peering allows VoIP providers to connect calls without accessing the traditional switched telephone network, which costs money. The physical infrastructure necessary for VoIP is available; it's the number system that still needs work. VoIP peering requires the capability to interpret phone numbers as IP addresses.

The technology exists, but two other conditions must also be met: A number directory has to be compiled, and for that to happen, consumer VoIP adoption has to stabilize. Plenty of people are still jumping in and out of VoIP service because they're not happy with quality, pricing or both. Churn for pure-play consumer VoIP providers is brutally high, and porting can become a nightmare. With that type of fluidity, a VoIP number directory would be pretty hard to maintain.

Cable operators have the best opportunity to nail down domestic VoIP peering. Their video/broadband/voice bundles are sticky, and their VoIP numbers are growing. The five largest U.S. cable operators have nearly 8 million VoIP subscribers--the perfect environment for a breakthrough peering architecture, don't you think? Let me know, at dmcadams@fiercemarkets.com. -D.

Guest Commentary: Rob Wolpov

Mon, 13 Aug 2007 10:44:56 -0400

Guest Commentary: Rob Wolpov

FierceVoIP welcomes this no-free-lunch perspective from Rob Wolpov, president of hosted PBX VoIP provider Junction Networks in New York. Junction charges a flat fee for a certain number of users rather than the typical per-seat pricing structure for unlimited minutes. FierceVoIP does not endorse the service of Junction Networks nor any other specific service provider. The opinions expressed here are the author's alone. FierceVoIP welcomes reader comments.

Is the premise of free Internet calling the reality of VoIP?

With the recent closure of SunRocket and a new breed of VoIP providers entering the market offering low cost internet calling, a closer look at the industry is in order.

Are we really getting a deal? Business customers and consumers alike need to look beyond the "great deal" being offered and consider what they are really getting. You may be getting ridiculously cheap calls but you are paying for it in other ways and eventually it will affect the quality of service.

For the most part, providers are riding a wave of hope that one day the traditional telephone network will be replaced by cheap Internet calling. Many providers are pushing the envelope, trying to drive down prices by avoiding the PSTN and focusing solely on the Internet. Many hold this vision of the future, but it may be a bit premature.

NO FREE RIDES

Calls to and from phone numbers cost money, there is no way around it. Providers offer the low-cost or free calls, and gladly bare the brunt in the hopes of up-selling you on more expensive services you will surely need, eventually canceling the free portion of the service and forcing you to pay. Even when calls avoid the PSTN and take place exclusively over the Internet, there is still a cost. Internet access, hardware, software and employees all cost money. Someone's got to pay eventually--the customer.

Unfortunately, reality will bite these services, which ultimately are likely to face reliability challenges as costs rise and revenue doesn't. Bottom line--cost cutting will eventually lead to poor service. Users will be hung out to dry. Take SunRocket for example; they overestimated the market and ended up closing their doors, leaving their customers stranded.

For a business customer, "FREE" should mean "too good to be true." Unlimited usage is well and good, but it certainly can't last forever. What businesses need is reliable service at a fair price; no hidden agenda and no up-selling. If you are making unlimited calls, you are making up for this somewhere else by paying more for add-on services or higher per-seat charges.

COST STRUCTURES

Seat charges are a way to limit small business customers from getting the same services as the big enterprise customers at more affordable prices. Some providers will require a minimum seat purchase in order to gain access to more advanced features like auto attendant. Why shouldn't the little guy be able to buy a smaller amount of service and still get their needs met?

Another consideration is looking at the provider to determine if they are going to stand the test of time. With the multitude of vendors to choose from, there is an opportunity to really shop around and find the best deal. Is the hardware they are offering compatible with other VoIP systems? Are you going to make a huge investment in hardware that's useless if you switch providers? Are they using SIP?

Don't be fooled by promises made for free calling, there is always a catch. Advancements in technology are certainly bringing the costs of calling down, but they will never be free. It's a business after all, and there are tons of companies out there making money selling phone service.

Rob Wolpov is president of Junction Networks, a New York-based company founded in 2004, providing next-generation SIP services to 3,000 small business customers. Wolpov was previously with IBM Business Consulting Services, and started his career as a software engineer. He holds his M.B.A from Columbia University and received a B.S . from the Wharton School of Business at the University of Pennsylvania .

SunRocket orphans punk'd

Mon, 13 Aug 2007 06:59:54 -0400

The fallout continues from the death of SunRocket, the Vienna, Va., consumer VoIP company that flamed out in mid-July and left 200,000 customers hunting for a new provider. The potential to poach customers led to a raft of outreach by indie VoIP companies that may or may not have been prepared to handle the influx.

Packet8 of Santa Clara, Calif., and TeleBlend of Oakland, Calif., officially stepped into the SunRocket void through liquidation deals. TeleBlend was formed for the purpose by USA Telephone of Kennebunk, Maine, and offered service at $12.95 a month for the time remaining on defunct one-year SunRocket contracts.

Last week, nearly everyone writing about voice service of any kind received an email from Marc Kruskol, a public relations professional in Van Nuys, Calif., who was seriously peeved with TeleBlend over a two-day network outage. TeleBlend blamed Global Crossing, then quickly took it back. Gary Kim of IP Business said the service disruptions were not network related, but rather a function of SunRocket creditors with no interest in playing ball with TeleBlend.

ViaTalk of Clifton Park, NY, is also having its share of SunRocket difficulties. Posters at the DSLReports ViaTalk forum have reported service call wait times of up to three hours as well as disruptions and various other complaints. Todd Clark, a student at Chemeketa Community College of Salem, Ore., said he signed up for ViaTalk July 18 and was told he'd have service in three to five days. After three weeks of waiting and complaining to ViaTalk, Clark said he disputed the charges on his credit card, effectively canceling the order.

FierceVoIP sent a query about Clark's experience to ViaTalk chief Brendan Brader at an address listed on the ViaTalk website. It bounced. In this Aug. 10 post on the DSLReports forum, Brader says the ViaTalk simply couldn't afford to hire enough people to handle the demand.

For more:
- Gary Kim comments at IP Business here
- TeleBlend's network status timeline is here
- the DSLReports ViaTalk forum is here

Related Articles:
SunRocket demise casts doubt on business model Report
8x8 signs up 19,000 ex-SunRocketers Report
SPOTLIGHT: ViaTalk chief joins subscriber forum Report

FEATURE: Guest Commentary: Junction Networks' Rob Wolpov

Mon, 13 Aug 2007 06:59:48 -0400

Is the premise of free Internet calling the reality of VoIP?

With the recent closure of SunRocket and a new breed of VoIP providers entering the market offering low cost Internet calling, a closer look at the industry is in order.

Are we really getting a deal? Business customers and consumers alike need to look beyond the "great deal" being offered and consider what they are really getting. You may be getting ridiculously cheap calls but you are paying for it in other ways and eventually it will affect the quality of service.

Click here to read the rest of this feature...

Packet8 profit not due to consumer VoIP

Mon, 06 Aug 2007 06:59:58 -0400

Packet8 residential VoIP service logged a gross churn rate of more than 9 percent during the same period parent company 8x8 cleared its first profit since launching VoIP. 8x8, based in Santa Clara, Calif., posted net income of $508,000 during its first fiscal quarter of 2008, while revenue on residential VoIP declined from the previous quarter by five percent to $7.6 million.

In an earnings call Aug. 2, Packet8 executives reported adding more than 1,000 former SunRocket customers a day since that company suddenly shut down July 16. However, the SunRocket influx started after 8x8's first quarter ended June 30, with Packet8 losing 17,300 residential customers. The number translates into a gross churn of more than 9 percent of the 181,000-subscriber base. A total of 8,300 new subscribers were added, yielding net churn of around 5 percent.

8x8 Chairman and CEO Bryan Martin said churn had slowed in July, and that 19,000 former SunRocketers had signed up for Packet8. Of those, 61 percent had signed up for Packet8's $199 one-year package, and will be locked in for the full amount after 30 days. At 9 percent churn (actual rate could be higher or lower), SunRocket refugees could add around $2 million to 8x8's bottom line over a 12-month period.

The first-quarter profit at 8x8 appears mostly to be related to a series of one-time items, including $573,000 in revenue arising from a change in the company's Universal Service contribution.

For more:
- 8x8's quarterly results announcement is here

Related Articles:
8x8 signs up 19,000 ex-SunRocketers Report

SPOTLIGHT: ViaTalk chief joins subscriber forum

Mon, 06 Aug 2007 06:59:53 -0400

Brendan Brader, the Ferrari-driving CEO of Clifton Park, NY, VoIP provider ViaTalk, logged onto a DSLReports forum discussion to answer questions about his company's service in the wake of SunRocket's closure. Hold and wait times on support calls and service tickets were a particular concern. Brader admitted call holds were reaching an hour-and-a-half during peak times, and service tickets took two days, but the company had "more than doubled" the staff. He said sales calls had increased between 150 to 3,000 percent of regular volume, depending on the day. For the most part, he pledged relatively swift action. Thread