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Startup Promises Free Calls in U.S.

 July 20, 2007

PALO ALTO, Calif. - A Silicon Valley startup wants to shake up the telecommunications industry with a $399 gizmo that provides free, unlimited domestic phone calls for homes with broadband Internet service.

Ooma Inc. also will offer a free second line, conference calling, voice-mail service and an online "lounge" where users may change their preferences or get voice mail in an e-mail format.

The company will start selling the devices with an invitation-only offer to select U.S. residents.

The company - backed by $27 million in venture capital - eventually hopes to crack the home-based and small-business niches.

Engineers are working on a system that forwards calls to cellular phones.

"It's nothing like anything a carrier can do currently," CEO Andrew Frame said. "Once you own the box, you don't have to pay ooma anything in the future."

Frame and other executives assume, of course, that their company won't meet the same fate as other startups going up against telecommunication veterans.

At ooma's headquarters in Palo Alto, executives say the 43-person company will have a steady revenue stream from hardware sales and international calls. Ooma's rates start at 1 cent per minute to Europe and 8 cents per minute to India.

Ooma, which has placed about 250,000 calls among 43 employees and 150 other "beta" testers, will compete against voice-over-Internet protocol services from companies such as eBay Inc.'s Skype division, which has 220 million registered users.

Patrick Monaghan, analyst for research firm Yankee Group, praised the programming-intensive approach to telecommunications, usually characterized by billion-dollar infrastructure investments and huge companies such as AT&T Inc.

News Source : http://www.rockymountainnews.com/