Kiss your phone bill good-bye


NEW YORK (Fortune) -- The concept of connecting your home computer to your music library to your mobile phone is no longer as exotic as it was a few years ago. These days just about everyone with high-speed Internet, or broadband, service has some sort of home network set up.

If the idea is no longer novel, the execution is. Most home networks are fairly rudimentary and require separate systems for connecting, say, your television to your PC and songs to your TV. What's more, the services that connect your devices don't always work well.

Enter Ooma. In 2004 the Palo Alto, Calif.-based startup set out to build a box, really a computer itself, based on the Linux open-source operating system. The box would sit between a broadband connection - your DSL or cable modem - and the rest of your home network. So instead of needing multiple boxes, you'd need just one. Having one central system that could talk to every device in your home could potentially save you a lot of hassle, not to mention money.

Ooma's technical team built the uber-box of its dreams. Called the Ooma Hub, it's sold - for now - as an alternative to your home phone service.

The Ooma service uses so-called Voice over Internet Protocol (or VOIP) technology to deliver calls to your existing phone using a broadband connection. Consumers need only to buy a $249 Ooma Hub (it was a hefty $399 when the service launched last year); all domestic calls are free. (Ooma charges a few pennies a minute for international calls to landlines and 20 to 30 cents a minute for overseas calls to mobile phones. Calls from Ooma box to Ooma box are free.)

Buy the hardware and never pay a phone bill again. That's the value proposition Ooma is currently selling - and one that more consumers are buying. The Ooma Hub is now sold through Best Buy (BBY, Fortune 500), Fry's Electronics and other physical stores in addition to online sales through sites like Amazon.com (AMZN, Fortune 500) and Costco.com (COST, Fortune 500).

Make no mistake: Ooma has a long way to go before it upends the phone business. Tens of thousands of Ooma Hubs have been sold so far, which isn't all that much (it wouldn't hurt to drop the price further). But the early adopter crowd has raved, including Tech Crunch's notoriously cranky Michael Arrington, about the Ooma Hub's easy setup and sound quality compared to other VOIP services like Vonage (VG), which charges a $25 monthly fee for unlimited calls in the United States.

In our brief test, where we pulled an Ooma box apart and then hooked it up at the Ooma CEO's house, the Ooma gear worked flawlessly.

A grand plan
Replacing your phone service is, of course, just the start for Ooma. In some ways, calling is the Trojan horse to get the box in your house and then figure out other services to sell, like enhanced network security or kid-safe Web surfing.

Another potential revenue stream is bandwidth metering. As high-speed Internet use has soared in recent years, phone and cable companies have started charging heavy bandwidth users higher fees. The Ooma Hub could help video-download happy families monitor their usage to keep their broadband bills in check.

The problem is, consumers aren't yet demanding bandwidth metering or other services Ooma hopes to offer. That's expected to change as home networks become more advanced and awareness of their potential grows.

So while the future that Ooma is mapping out is not yet on the horizon for most people, their monthly phone bill is.

"Not writing a check to the phone company for phone service is a concept people get immediately," said Rich Buchanan, Ooma's CEO. "And let's face it. No one wants to give up their broadband. That's why we're starting there."

Ooma can't get rid of your phone or cable bill completely: you still need a Web connection. But the company is set on becoming the central hub for your home network - and providing a range of services faster and at a deep discount to what phone or cable companies can offer.

Ooma is already charging $99 a year for some enhanced voice features like instant second lines and call forwarding to your mobile phone. Because these services are software-based, Ooma can install them automatically with the click of a computer mouse and bundle them for a lower price than traditional phone companies.

Ooma's core technical team came from Cisco (CSCO, Fortune 500), so they know a bit about moving data of all kinds around a network. Ooma's CEO, Rich Buchanan, and the marketing team came recently from Sling Media, maker of the popular TV-streaming Slingbox, so they know a lot about Ooma's biggest challenge right now: selling seemingly exotic electronic gear to consumers. Ooma has reportedly raised $42 million from Draper Fisher Jurvetson and other venture capitalists.

For now, selling phone calls keeps the company focused and the message to consumers clear. But when people start clamoring for other broadband-enabled services, Ooma plans to be ready.

I already told the phone company to fuck off, switched to Comcast recently. I'll see how long I can put up w/ those assholes but so far I'm basically getting phone service for free b/c my cable & broadband are w/ them as well Still super expensive though

CalhounSq said:

Comcast is really good. My mom works for them, even though she's ready to quit

Somebody called her the other day yelling they wanted to get rid of their service because there were too many reruns, and blamed Comcast for it

bboy87 said:

lol.....in this economy I would not quite a job at Mcdonalds

[Edited 12/10/08 14:10pm]

EmeraldSkies said:

I forgot the Mj. The problem is I can't get the internet without having a local phone line. I need 2 get around this nonsense.

EmeraldSkies said:

i saw this at radioshack, does it work well?

EmeraldSkies said:

Does the Magicjack work in conjunction with the USB Aircard?

kimrachell said:

I'm not sure,I have only seen the commercials for it,but it does look like it would be worth a try.



There website has a live help agent to answer all questions. I really would'nt know this myself.

http://www.magicjack.com/...ercare.asp Just scroll down.

bboy87 said:

yep, soon everything will be pay-per view on demand

i pay for DTV and I haven't even turned it on in two weeks.

i dont use my land line, just to connect to the internet.

i want dtv at my flat, but why should i have to pay the same company a bill for each place?

I shouldnt have to get charged rent for the dish or the receiver. It should be a privilege that i allow them to place their solicitation in my residence. they can charge me for what i watch when i watch it.
same with the internet.
why should i have to pay for a phone plan just to pay for an internet service.
especially when they own both services.

EmeraldSkies said:[quote]

kimrachell said:

its just wifi, right?

horatio said:

No,all you need is high speed internet. Any kind Cable,DSL,WIFI...

EmeraldSkies said:

it doesnt eliminate the need for me to pay for the land line in order to get my dsl signal.

horatio said:

You could always Get naked with AT&T.

http://blogs.mercurynews....-landline/