Tuesday, March 31, 2009

Ooma ends P2P (Distributed Termination)

Via: http://forums.ooma.com/viewtopic.php?f=6&t=710&p=3075&hilit=termination

Just a FYI -- ooma is not routing calls over other user's landlines (e.g. Distributed Termination). Any mention of this was removed from the user T&C's and the ooma website from the website a few months ago. The original intent of this "people-powered" network was to save costs with calling. Unfortunately it lent itself to be a poor user experience due to the fact we needed to block the outgoing caller-ID (e.g. a call going over another user's landline would show as "unknown" as the caller-ID instead of the caller's true name). Also, our business plan went through a couple revisions last year (starting with separating out enhanced features -- ooma Premier -- from the core service features and further recognizing calling economies of scale). As a result, we are able to continue to offer free phone service as a sustainable and scalable business.

They say they can still make the business work without it, claiming their termination costs are .5 of a penny or less ($0.005) and average usage is 350 minutes per month, which comes out to $21 per year. Although they also have to pay for a DID (phone number) and there are support and G&A costs too - and of course there's marketing too. And how much gross profit is there on the box when selling at retail $200 (Amazon)?

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