IP Democracy: Oh Boy, Just What We Need. Another VoIP Provider.

The big news for today is the launch of an ambitious VoIP provider called Ooma. Walt Mossberg reviews the $27 million-backed start-up’s service here and is generally positive. Mike Arrington has a relatively star-struck overview of the service here. Ashton Kutcher (yes, that Ashton Kutcher) is the “creative director” for the company and Arrington managed to land an interview with Kutcher and CEO Andrew Frame.

The normally no-nonsense Om has a somewhat breathless piece about Ooma here.

Ooma’s sales proposition in a nutshell: buy a $399 device that delivers voice calls on a P2P basis and get free phone calls in the U.S. An optional device allows consumers to make free phone calls throughout the house.

Hello? Have these usually shrewd people suddenly become babes-in-the-woods? Vonage is about to go belly up, weakened not only by litigation but also slowing subscriber growth, Skype’s usage is flattening out and SunRocket simply gave up the ghost last week. And those are the success stories in the third-party provider VoIP business.

Although all three touch upon these flame-outs, they’re basically denying reality because…Ashton Kutcher is pitching the service?…the technology is admittedly kind of cool?…some very prestigious money-men (Draper Fisher Jurvetson, the Founders’ Fund, Draper Richards, WI Harper and Worldview Technology Partners) are backing the start-up?

Why in the world would consumers pony up a hefty $399 for an Ooma box, when they can make free phone calls today using Skype and Skype ain’t doing as well as it should? Granted, Ooma may be easier to use — plug-and-play device, and all — but the DBS business and the cell phone industry learned long ago that forcing people to plunk down hundreds of dollars in upfront capital is a non-starter. It’s a big upfront barrier to adoption and one that Ooma will have to overcome if the service is to succeed.

But Ooma’s chances of achieving success are very, very small indeed. The fundamental problem, the one that is making even independent VoIP success stories look like utter failures, is that cable operators and phone companies offer triple-play packages of voice, video and data services, and the costs (at least right now) to consumers are relatively low in bundled packages.

It’s so easy for consumers to call their phone companies or cable operators and get an all-in-one voice, video and data package that starts at $99/year. Most don’t care that unlimted voice service may cost them $30/month — they still remember phone bills that topped $100 per month when long-distance voice service was an expensive thing. It’s just easier and, to many consumers, more reliable to tap their local cable and phone companies.

While a few geeks might go for Ooma, don’t expect a mass adoption of the service.

Posted by Cynthia Brumfield on July 19, 2007 9:59 AM to IP Democracy