Low-budget alternative to ooma

I've talked before on this site about ooma and how, despite the bad rep from the tech crowd, the company and product have survived and just keep on rolling.

At $200 for the basic service, ooma is a pretty sweet deal. Assuming you're replacing a landline at a baseline cost of $20 per month or more, you break even with a year.

However, if even that is more than you want to spend, and you don't expect to make many calls on your home line, here's a DIY hack that (may be) even cheaper using the PhoneGnome box (or an old unused Linksys/Sipura SPA-3000 if you have one). And this option is easier than Magic Jack if you don't want to leave your computer on all the time.

Officially, PhoneGnome is not a "replacement" service and the company hates being compared to Magic Jack and ooma. Oh well. Here's a DIY hack that works to effectively get rid of your landline and still use standard phones in the house and have a local number that rings at home.

You start with the $99 PhoneGnome device: http://www.phonegnome.com - to save the $99 use their free "upgrade" "Bring your own Device" option to convert a SPA-3000 device: http://www.phonegnome.com/byod.html - get one from Ebay for about $40 (typical price)

When you setup the device at my.phonegnome.com select the No Service Attached option. This is basically their "pure VoIP" option to configure the device as a stand-alone SIP adapter on the PhoneGnome service. Your device will be automatically provisioned with a "VoIP-only" number and this will be your "primary" number as far as PhoneGnome as concerned.

Now you add a phone number and outbound calling service. You can again "Bring your own" since PhoneGnomne fully supports SIP. However, the easy way is to use the "integrated" service options that are built into the my.phonegnome.com provisioning - the prices are competitive, but you can always shop around and configure a third-party service if you wish. I'll only cover using the integrated option here.

Add credits for outbound calling: Sign-in at my.phonegnome.com using your new number and password/PIN (you receive this in an email). Click Buy Credit in the left-hand sidebar under "Quick Links" or click Features / Low Cost Internet Calling. Calls to US numbers are 2.1 cents per minute. Calls to PhoneGnome and other SIP numbers (like Gizmo) are free.

Get a "Home Number": Again at my.phonegnome.com click Features / World Wide Personal Phone Numbers / Purchase and select a phone number. If you want to port your current number, you'll need to contact PhoneGnome - the best way is to click the Trouble Report link at the bottom of the page when signed-in at my.phonegnome.com. Most US numbers are $6.00 setup and $3.25 per month (less if you pay for 3-months or a year at a time in advance). If you don't care about a local number and are really on a budget, you can get a free Washington state number: the PhoneGnome blog describes how.

Done. That's it. With this setup you'll have a local number (or a free Washington state number) that will ring to a normal home telephone and you can make calls, both SIP / VoIP calls (free) and calls to normal telephones. Total investment is $100 (or zero if you already have an SPA-3000 device laying around) plus whatever calls you make.

Caveats: If you make a lot of calls (inside the US, to US numbers), ooma is probably a better deal in the long run. You don't have 911 service in this DIY hack - you will have to rely on your cell phone for 911.

But if you can live with these limitations, this hack gives you a home telephone service on a budget (I won't call it "replacement" service). And it has the advantage of free SIP calls, a free Softphone (something ooma doesn't offer at all), mobile phone integration (poor man's "fixed/mobile convergence") and some geek pluses like APIs and open SIP credentials.

Mobile Phones Surpass Landlines

Not exactly new, but I guess I missed it last month when the CDC reported that there are now more wireless-only households (20.2%) than landline-only households (14.5%).

The report also noted that Americans who are more likely to have wireless phones only: are adults living only with unrelated adult roommates (60.6%); rent their homes (39.2%); are between the ages of 25 and 29 years old (41.5%); live in poverty (30.9%); or near the poverty level (23.8%).

There are still far more households with both cell phones and landline phones (60%). Among these households with both landline and cellular telephones, almost 1 in 4 (24.4%) receive the majority of calls on their mobile phone. These "wireless-mostly" households, in turn, make up 14.5% of all households.

Voicepulse quietly TRIPLES their rates

Voicepulse had been offering outbound SIP termination for about a half-penny a minute to many (most) US regions. They had a "flex" rate where rates to each number varied, and some numbers were higher, but many were in this half-penny range.

Well, it looks like around June 8, Voicepulse went to flat-rate for the US but that new rate is 1.9 cents per minute. You could argue that this is FOUR times the old rate, but since it was a flex rate, I'll call it only three times the old rate. But THREE times! All in one day, without any warning.

I would expect anybody who had a large balance at Voicepulse to be really upset by this. There are many services offering better rates. The first punch to Asterisk users was when Voicepulse dropped support for IAX protocol. Now they've slapped us with this outrageous and totally out of the blue rate increase. I'm surprised I haven't seen more talk about this around the net.

How VoIP services define "unlimited"

I don't understand the legality of it, but they all do it. They all advertise their product as providing "unlimited" free calling - and then put limits on it.

We are used to minute bundles on our cell phones. We buy plans that include 500, or 1000, or whatever "free" minutes per month. However, in the VoIP space, they provide the same type of plan but they call them "unlimited" - I don't get it.

Here are a few examples:

• Vonage
  The terms and conditions summary defines "unlimited" as "normal use." Looking further, "normal use" is defined as less than 5,000 minutes per line per month.


• Comcast
  Comcast is less clear, but their terms of service say that they "reserve the right to limit or block any usage as deemed necessary to prevent harm to its network, fraud or abuse."


• Skype
  Skype places a limit of 10,000 minutes per month on its "unlimited" plan, with a maximum of 6 hours per day.


• ooma
  According to an Ooma FAQ: "Like all other 'unlimited services,' such as cell phone data plans and other VoIP services, we do have a limit of 3,000 minutes per month (for outbound calling) that we can enforce on a case-by-case basis in the event that a subscriber is clearly abusing the service."


• MagicJack
  MagicJack is the least clear on the matter. They say they do not have limits, but customers report being disconnected at around the 30 minute mark (some report 60 minutes). Other users have been disconnected after they exceeded a certain unspecified limit of free calls in one month. Recently, their terms of service were modified to define "unlimited" as not more than 20 times average usage. What's average usage? About 100 minutes a month. Apparently, MagicJack is having some difficulties trying to get a handle on what limits they want to enforce on their "unlimited" service.

People often say "It's not lying, it's marketing." Well, maybe - but it is lying, too. The definition of "unlimited" is:

1 : lacking any controls: unrestricted

2 : boundless, infinite

3 : not bounded by exceptions

Further, claiming a service is "unlimited" is a statement of fact, not of opinion, so can't be excused in the same manner as phrases like "bolder than bold."

The other defense you often hear goes like this "I will never hit these limits." I think that completely misses the point. How one uses an "unlimited" plan is completely different than a capped plan, especially a plan that has potential overage charges, as all of the above do. If you know you might get charged if you use more than X minutes per month, you're going to use the phone differently and you're going to want to know whether you're running anywhere near those limits. With the services above, what's even worse is that, in most cases, you can't even check your usage to see if you're near the limit. If you go over the "secret" limit, the company can charge for "overages", without notice and without your prior consent.

It's terribly unfortunate that marketers are allowed to use outright lies like this in their primary marketing message as long as they disclose the actual terms somewhere (buried deep in the fine print). I don't understand how they're allowed to get away with it.

These plans should be called what they are, such as "3,000 minutes per month" - NOT "unlimited" plans.

Ooma vs. Valleywag - Andrew Frame fired or not?

I've lost track of how many times the VoIP community has written off Ooma and I don't know what Valleywag has against the company or its founder, Andrew Frame, but man, they have hit Ooma hard since day one.

Now Valleywag declares Ooma dead - again

Their latest Ooma story, How Ashton Kutcher killed a startup guy's Hollywood dream, cites an unnamed "tipster" claiming that Frame has been fired by the board. A board member disputes this claim and there have been no official announcements.

People have lost bets over their predictions of the company's demise. Valleywag and these other VoIP pundits must be discouraged by how long Ooma has hung around (a little over a year since the initial public launch). But there are many signs that the business model is struggling. For the holiday season, they are now selling the "core Ooma system" for 199 bucks, down from the original target price of $599. At that price, it's less than the Sunrocket "annual $199 unlimited" plan, often cited as a contributing factor to that company's crash and burn in 2007.

There can't be much gross profit left over for Ooma at a $200 retail end-user price. Bestbuy et al will be taking 30% for sure, leaving $140. Of that, much will go to marketing fees (end caps, and other such), leaving maybe $100-$120 per "core system" in revenue to Ooma. So what are the real COGs of that system? It would be hard to believe they are less than $75 - there is a fair bit of hardware there and Ooma is not big enough to produce in large enough volumes to get their cost down to anything like Linksys levels. So let's say there is $50 in gross profit for Ooma on the $200 sale (I would bet that it is much less than that, if not negative). And we have not factored in any G&A, salaries, operations, support, telephony costs, or other overhead yet. Nor have we factored in other real world costs of selling at retail, like the cost of money, breakage, etc.

How far will that $50 go? It certainly won't pay for much marketing. Vonage spends $250 to acquire each customer. What about the actual cost of providing the service? Ooma is obligated to provide the customer "unlimited" domestic calling (limited to 3000 minutes per month) with no further revenue. What percentage of Ooma hubs are connected to landlines (i.e. can be used to deliver calls)? What is the overall percentage of minutes terminated via another Ooma hub vs. calls terminated at Ooma's expense? Even calls delivered via a hub are not "free" to Ooma - they still have to fund the infrastructure, support, billing, pay for the phone numbers they give customers, etc. If Ooma's original math said they needed to sell the hardware at $500 to make money, it must be hard to make the business work selling it for just $200.

Who knows. Maybe Ooma will prove all its detractors wrong again, although it is hard to see how. But they've done it so far, even with so many pundits lined up against them.

Ooma quietly adds a 3,000 minutes per month limit on their "unlimited" calling

I didn't see any announcements of this, but it was recently pointed out to me that the Ooma terms of use now includes a limit on "unlimited" calls of 3,000 minutes per month:

In addition you agree that any usage of more than 3,000 minutes per month will be deemed dispositive proof of Prohibited Use. In the event you engage in Prohibited Use, ooma reserves the right to terminate service without notice or, at ooma's sole discretion, to charge you at a rate specified on our Web site for calls that exceed the 3,000-minute per month limitation. This rate may be modified on our Web site from time to time.

That's probably more minutes than most people use. But if you're using less than 3,000 minutes per month, maybe you don't want an unlimited plan at all. You might be better off with a cheap pay as you go, per minute plan, depending on how long you think the Ooma box will last (service is for the life of the box, not the life of the purchaser). Most people will spend less than $20 per month, often far less, paying only for the calls they make. Think about how many calls you make on your cell phone instead your home phone - Ooma won't help you there. Or there are always annual plans like those from Skype and Magicjack to think about ($20-$40 per year - and also have similar monthly usage limits). Such plans equate to 8-10 years of Ooma service, and you don't have to pay so much up front. Will the Ooma hardware (and the company) last 8-10 years? Maybe, but it's something to think about, especially with these new 3000 minute per month limitations.

Is 100K skypephones really a "success"

UK mobile operator 3 is coming out with the second generation of it's Skypephone. Recently several news stories spoke about the "success" of the 1st gen skypephone, reporting "over 100,000" sold. Since when is 100K handsets a "success"? Perhaps 3 is a very small operator, but certainly Nokia or Apple would not consider that amount sold a "success".

Apple announced during the Macworld 2008 keynote that it sold 4 million iPhones during its first 200 days on sale.