After the troubled times of companies like Vonage and SunRocket, it’s a little surprising that a new VOIP startup could get $27 million in venture funding from some of the biggest venture capital firms in Silicon Valley. Yet that’s exactly what Ooma did, and today the 50-person startup launches beta testing for its flagship VoIP service.
Ooma’s guiding principal is that in order for people to finally embrace VoIP, it has to use the existing phones in the house (not PCs, mics and headphones), it has to offer cooler features than plain old phone service, and above all, calls have to be free.
Ooma hopes to make its money by selling a $400 Linux-based gateway device (shown below) that plugs into the customer’s broadband connection and existing land line connection (if there is one), and into the existing phone wiring in the house. When users pick up a phone to make a call they hear a special tone indicating that Ooma is on and that they’re in VoIP mode.
For calls to non-users VOIP services like Vonage typically must rely on the land line networks of other operators (like AT&T, for example), and that costs money–goodbye free calls. Ooma says it’s found away around that problem.
Ooma anticipates that many users will choose to keep one regular land line hooked up, and Ooma’s scheme takes full advantage of that fact.
Ooma uses those lines to connect all the Ooma boxes in a given market to form a sort of peer-to-peer grid. Each Ooma box in the grid can be used as a gateway to route calls placed by other Ooma users.
For instance, when an Ooma customer in San Francisco makes a call to Boston, the call travels via the Internet to another Ooma box in the neighborhood of the person he’s trying to call. That Ooma box then routes the call to its destination phone using the local operator’s land line network. This doesn’t affect the owner of that box in the least; he can still place and receive calls normally.
Ooma CEO Andrew Frame says the grid of Ooma boxes in households across the country will increase in capacity naturally: as more boxes are sold, more peers are added to the grid to support the additional call volume.
Because Ooma doesn’t have to pay other carriers to terminate calls, they’re able to offer the phone service for free, in the U.S. anyway. For international calls they’ll charge a per-minute rate, because they’ll rely on foreign carriers to complete the calls.
A fairly ingenious idea, if it works. Ooma is also betting consumers won’t balk at shelling out $400 for the main hub device and $39 each for the smaller extender devices, called “scouts,” that attach to the other phones in the house. Frame says Ooma will sell the hardware directly to the consumer at first, but will soon sell through consumer outlets like Best Buy.
PC World has signed up to help beta test the new service. We will post a more complete review after we’ve used it for awhile.