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Summary:

Sun Rocket, in a bid to gather some much needed momentum, (and spend the $25 million it raised recently) is introducing a new $10 a month limited VoIP service, that gets you 200 minutes outbound and unlimited inbound minutes. (It has to do something – nearly […]

Sun Rocket, in a bid to gather some much needed momentum, (and spend the $25 million it raised recently) is introducing a new $10 a month limited VoIP service, that gets you 200 minutes outbound and unlimited inbound minutes. (It has to do something – nearly $34 million in total VC dollars and 50,000 customers!) Of course you could spend another $5 and get extra 300 minutes from Vonage which offers a similar package but with 500 minutes for $15 a month. (Sun Rocket’s additional minutes and extra line prices are lower than Vonage, however!) Sun rocket also offers an unlimited $199 a year plan, which is much more attractive than its new offering but is a bit pricey as a lump sum payment. How long do you think others are going to take to respond?

This offer shows the quiet desperation in the business. VoIP-based phone services are growing, only for those who are providing near free services like Skype or others who sell it as digital phone, aka the cable companies. There is very little room for independents in this business, unfortunately. Regardless of all that, this is part of a continuing trend of constant commoditization of the voice, and a silent price war between the independent service providers. This also shows the lack of imagination on part of service providers who are using price as their only tool. Going back to today’s news, Sun Rocket’s new offer is attractive for those with a limited need for a quasi landline but I wonder how much stress it is going to put on their infrastructure. The company’s network and infrastructure has buckled many a few times in the past, irritating the customers.

  1. A deeper analysis suggests something interesting about pricing. If the usage exceeds 700 minutes, one is better off with unlimited service with Sunrocket; 750 for Vonage. If monthly usage is below 365 mins, one is better off with Sunrocket. For me it looks like the whole play is for the low end users. That means the revenue attraction is somewhere else – probably in termination charges for incoming calls? Or possibly some other regulatory benefits? I am not sure and I do not have any additional information.

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  2. The way I see it, the barrier to entry into the VOIP market is so low now, everyone can sell VOIP services. Either go in as a reseller piggybacking on someone else’s network, or buy a voip box for a few grand and run your own network. Where is the money in this? Do they really make much $ when people going over their alloted minutes get billed $0.02 a minute?

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  3. i do agree with Brian, ihave just discovered a new voip provider Glootix.com
    it proposes an unlimited calls plan in Europe at 19,90 E per month,
    an US one at 7,90 E….how can they get money?

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  4. [...] Today SunRocket is began offering its residential VoIP service for $9.95 a month. It’s a great point for entry into the market (I guess they havn’t heard of Skype yet), but it’s getting a lot of heat from the blogsphere. Om Malik has this to say and Andy Abramsonhad this to say. [...]

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  5. Sunrocket has been growing at a very fast clip. They are now the second-fastest growing “standalone” VOIP provider with about 10,000 customers added each month. Adding the $9.95 plan is the natural expansion of SRs successful business model. Sunrocket has achieved almost 100% compliance with the FCC ruling in regards to E911 while almost all other VOIPs are scrambling to get there or have not made any efforts. Those other companies are effectively banned from adding any more customers in areas they have not achieved full E911 in.

    Om Malik shows an astounding lack of knowledge of the VOIP market. Sunrocket started national business in December of 2004. In one year of being in business they have achieved almost 55,000 customers up to this point. Packet 8’s customer base is a little over 80,000, ATT CallVantage is at 57,000 at this point. Considering how much longer these two have been in business marketing their products nationwide Sunrocket’s growth has to be considered a success for their business model. Sure, there is Vonage, but with the $9.95 product as well as expanding to many more locations around the country by recently adding Level 3 to their list of CLEC partners, Sunrocket is obviously accellerating growth to the point where they will pass Packet 8 as the Number 2 stand-alone VOIP, setting sights to close in on Vonage’s numbers eventually.

    Skype and IM-based telephony are different products altogether, requiring computers to be on at all times. Many people want a service that is akin to their current landline setup, with a phone or multiple phones active with dialtone without any thought whether the computer is on and clean of viruses and spyware. The standalone VOIPs compete for growth for their particular type of product mostly with cable-based VOIP, but prices are usually much higher, even with triple- or quadruple-play incentives.

    Sunrocket’s move to a $9.95 limited minute plan is an excellent business decision, IMO. Nothing about it smacks of “quiet desparation,” quite the opposite. Mr. Malik could not be more wrong with his comments on this one.

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  6. I do not need to be a VOIP industry expert nor a PHD in computer science or business administration to tell you SunRocket has internal problems. After my experiences with them today, this is obvious. Let me elaborate. I called with a simple request to add 2 additional phone numbers to my service. I was told they had a major database failure and was unable to accomodate my request for at least a week. (that’s a whole week and in Information Technology terms, that’s just plain unacceptable service.) This immediately points out the lack of infrastructure management, backups, redundancy, and the existance of single points of failure within their critical systems. Next, I emailed builditbetter@sunrocket.com, the address they provide their customers to report concerns. Both were returned as “undeliverable” by their mail server. So I figured, let me just call and talk to a manager. Not a simple task. The representative told me no manager was available to take my call. I had to ask (5) times if a manager could call me back. The representative STILL did not take my call back number. This illustrates a total failure in the chain of command and leave these customer with no option but to be satisfied with any answer they are given. Even if they give the service away for free, I doubt it is of any value if they cant keep their critical systems online. Buyer beware and be informed before you purchase.

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  7. [...] Sun Rocket, a johnny come lately VoIP Service Provider has started a stealth marketing blog called Everyday Hogwash, which essentially is a contest that rewards people for bitching about businesses. (Hat tip, Thread Watch.) Some think it is a bad idea, and gives bloggers a bad name. Without getting into the semantics of it all, it clearly is a terrible move for Sun Rocket. I mean, it is a wide open invitation for dissatisfied Sun Rocket customers, and there are many, to go and post on the site. (Whether their complaints go online, is a whole different story!) [...]

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  8. Sun Rocket’s future may be bleak. They stand at near 100K subs today despite being in the business for 1.5 years now. They are NOT growing the fastest as claimed. Other companies are adding on 10K/week net! While they claim to be adding on 10K per month.

    Sun Rocket isn’t even in the top 10 as VoIP providers and is uickly getting burried. While they only have a fraction – perhaps 1/10th of the funding Vonage has had they are basically collecting scraps while Vonage fights in a losing battle to the Cable Companies who can pick up a sub though tripple play or HSD upsell to VoIP for $35 acuisition fees. If Sun Rocket is like Vonage they are probably picking up subs at the same $200 – 225 cost.

    I think the future of Sun Rocket will soon be learned with the troubled Vonage IPO. This IPO could spell trouble by letting 15-17% of the Vonage customers in on the IPO. If it tanks…so does the sentiment of some of its best customers and negative viral marketing.

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  9. I also heard that Sun Rocket recently hired Lisa Hook from AOL. We all saw what happened at AOL and what she did for AOL Broadband. It sunk like the titanic.

    The consumer and wall street was so confused with what AOL for broadband was that they had to rebrand it as True Broadband…like it was fake when Lisa was running it? Perhaps sp.

    Sun Rocket – 1 for exec hires.

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  10. Kevin Sneed Tuesday, June 6, 2006

    Boy, do I feel duped..stupid and ripped off again. I don’t feel like repeating everything I’ve read..since it’s exactly what I would have wrote about sun rocket..The homeless on the street selling papers or asking for a hand out have better customer service than sun rocket. The silly fools running this business are just taking the money and laughing all the way to the bank. Virgina based and cannot have anyone local answer customer calls except in canada and the philippines..stupid, dumb and insulting is this service and it’s a mistake to jump before looking with any of these providers. At least refunds seem to be legitimate with sun rocket. Talk about getting your hopes up…only to be let down..it’s a cruel world.

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