VoiP Providers Push New Pricing Models
17 December 2007
Residential voice telephony has become an unlikely hotbed for clever new products and new pricing models. For example, several VoIP providers are now promoting unlimited calling for one-time or low annual upfront payments, notably Ooma (www.ooma.com) and YMax’s MagicJack (www.magicjack.com).
With Ooma, once users have purchased a $399 hub device that connects to a cable or DSL modem, plus additional $39.95 units for each phone extension, they are promised unlimited local and U.S. long-distance calling for no additional charge. Ooma’s business model assumes there will be no public switched telephone network (PSTN) termination fees for Ooma calls. How so? A call originated by an Ooma user is routed via the Internet to the local calling area of the destination phone number; there, it finds another Ooma user’s hub device that completes the call via the latter user’s “backup†phone line. These lines exist because customers are advised to keep a local telco line as a backup and to retain 911 access. The terminating telco only sees a local phone call, and meanwhile there is no visible cost to the Ooma user, whose flat-rated “backup†phone line was borrowed.
Residential voice telephony has become an unlikely hotbed for clever new products and new pricing models. For example, several VoIP providers are now promoting unlimited calling for one-time or low annual upfront payments, notably Ooma (www.ooma.com) and YMax’s MagicJack (www.magicjack.com).
With Ooma, once users have purchased a $399 hub device that connects to a cable or DSL modem, plus additional $39.95 units for each phone extension, they are promised unlimited local and U.S. long-distance calling for no additional charge. Ooma’s business model assumes there will be no public switched telephone network (PSTN) termination fees for Ooma calls. How so? A call originated by an Ooma user is routed via the Internet to the local calling area of the destination phone number; there, it finds another Ooma user’s hub device that completes the call via the latter user’s “backup†phone line. These lines exist because customers are advised to keep a local telco line as a backup and to retain 911 access. The terminating telco only sees a local phone call, and meanwhile there is no visible cost to the Ooma user, whose flat-rated “backup†phone line was borrowed.
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