Internet Phone Start-up Goes Belly-Up

westlake writes "The New York Times has a short piece on the failure of SunRocket, the second-largest internet phone service after Vonage, with 200,000 customers. Start-ups like SunRocket are under enormous pressure from the telcos and cable, which have marketing muscle and can bundle VoIP with Internet, TV, home security services, and so on. The start-up has only one product, and since they don't own the lines, they can't control the quality of service. Attracting subscribers can put a start-up deep into the red. Vonage added 166,000 subscribers in the first quarter of 2007, but lost $77 million."

I'll believe it...

...when Netcraft confirms it.

Till then, SunRocket VoIP is alive an well

Probably going to Vonage?

I'm guessing the SunRocket customers will be moved to Vonage.

I wouldn't worry about Vonage so much. They have 2.4 million subscribers already. Plus, it's not as if the cable company or telcos offering VOIP service have that much more control over the quality of their service either. They're still stuck with the same problems everyone else is in regard to Internet traffic.

For not having control over their traffic, I've been using Vonage for almost 3 years now over Comcast in Michigan and now Bright House Networks' Road Runner service in the Tampa Bay area and I have to say, the quality of service has never sucked so long as my Internet connection is working right.

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Most likely with the telcos activly trying to distroy VOIP I am not going to go to a company that distroyed my cheap telephone service with their more expensive.

Re:Probably going to Vonage?

back to having a cell phone as my primary line (which is also not from Verizon or AT&T).

Look at T-Mobile's HotSpot @ Home service. It's basically GSM over IP (voice, data, SMS, etc), with the added advantage that you can do seemless handoffs between IP and GSM, i.e: start a call at home, walk out the door and it switches to GSM. I'm loving it. $39.99 for 1,000 cellular minutes (with nights & weekends), + $9.99 for the HotSpot add-on. I basically have unlimited calls. Plus I can use wi-fi in any area where there isn't a good GSM signal.

T-Mobile doesn't have landline business in the United States so they don't have any reason to undercut their own offerings to keep a dying landline industry alive. And the best part is not giving your money to AT&T or Verizon.

Re:Probably going to Vonage?

Does it come with a get-out-of-jail [arstechnica.com] free card?

Does it automatically pick up any open hotspot, or do they have to be pre-configured?

Re:Probably going to Vonage?

Does it automatically pick up any open hotspot, or do they have to be pre-configured?

It won't automatically connect to an open one unless you add it to the list of saved networks. You can use any open hotspot with a DHCP server though.

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...and I have to say, the quality of service has never sucked so long as my Internet connection is working right.

Which just demonstrates why owning the lines (and therefore being able to provide a bit more QA) really cuts both ways: if you put in the extra money and resources to keep your lines and service in working condition, everyone else using those lines to de

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However, with net neutrality, they wouldn't be able to give priority to any VOIP packets, including their own. It's a double edged sword. On one hand, they want to deliver QOS, on the other hand, people don't want them deciding which packets get better Q

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Net neutrality says nothing about protocol driven QOS. Net neutrality states you can't alter service due to the source or destination of a given packet.

PS: We had a form of net neutrality and EMAIL packets where downgraded vs. HTTP.

Re:Probably going to Vonage?

Plus, it's not as if the cable company or telcos offering VOIP service have that much more control over the quality of their service either. They're still stuck with the same problems everyone else is in regard to Internet traffic.

They aren't stuck with any of the same problems if the traffic never leaves their own network. The cable outfit's VoIP packets may never leave the cable network itself, if they designed it so the VoIP->PSTN switch-over happens before their network edge. Ditto for the telcos. And quite a few of the telcos (Verizon and AT&T come to mind) are Tier 1 providers in their own right -- and could easily have end-to-end QoS for their own VoIP traffic.

Note: I'm not defending them or advocating for their service over Vonage or anybody else. Just pointing out the obvious. And for what it's worth, using T-Mo's @Home service (which isn't strictly VoIP, it's closer to GSM over IP), I haven't had any problems with my internet connection.

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I wouldn't worry about Vonage so much.

Can any company sustain losing $77 million per quarter indefinitely? I'm not trolling, but seriously asking becasue I was considering moving to Vonage before reading this.

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Can any company sustain losing $77 million per quarter indefinitely? I'm not trolling, but seriously asking becasue I was considering moving to Vonage before reading this.

Actually, according to TFA, it was $73 million, but what's $4 million between friends

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***I have to say, the quality of service has never sucked so long as my Internet connection is working right.***

That's the issue, now isn't it? My Verizon DSL connection slows to a crawl from time to time, and drops me completely several times a week.

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"I wouldn't worry about Vonage so much. They have 2.4 million subscribers already. Plus, it's not as if the cable company or telcos offering VOIP service have that much more control over the quality of their service either. They're still stuck with the sam

Re:Probably going to Vonage?

Key words: as long as the connection is working.

I had a three day - THREE DAY - outage at my house, which took out my internet, TV, you name it. Therefore, since I'm a SunRocket customer (:'(), that took out my phone, too. Even better: my house is in a nice little recessed valley, which doesn't get good cell reception. Therefore, to call tech support, I would have to walk up the road about a quarter mile, and get one bar worth of reception.

For a day and a half, this was the conversation:

"Hello, yes, we're completely out here..."
"OK! What exactly is out?"
"My internet is out"
"OK..."
"And my Cable is out"
"OK..."
*talk a little longer. She asks for a phone number; I give her my cell, and instructions to leave a message if they get my VM, since I'm out of reception range*
"Do you have a home phone number?"
"Yes, but it's out too, thanks to the internet being out"
"Do you have our Voice Over IP service?"
"No, I use SunRocket"
"Well, we don't do support for SunRocket, you will need to contact their tech support"
"No, lady, I know you don't support SunRocket, but my internet and cable are out!"
"You will need to contact SunRocket support"
"No, this has nothing to do with Su--"
"Thank you for calling Comcast! *CLICK*"

After many call-backs and attempts to get her and the next three techs fired, I FINALLY - after three days - got someone out to the house, who explained why everything died: We were the victims of the most amateur attempt at stealing cable ever. It was laughable; shredded cable where he tried to put the connector on, cut wire everywhere, he eventually had the cable un-sheathed, and tied in together in a knot.

But it took three days to get a tech, partly because it was a weekend, and partly because of SunRocket, and them absolutely refusing to help me because I DARED to have an internet service that Comcast didn't expressly approve.

If anything did in my VoIP provider, it was this bullshit. And that leaves me with very unattractive options: Go to Vonage (who have their own problems), go back to AT+T land line, or go with Comcast's VoIP (a company who I'd dump completely if I had that option).

Re:Probably going to Vonage?

Rule #1 when dealing with level 1 tech support. You know what the problem is--so tell them what they need to hear. "Do you have a home phone number?" Your answer--"No" Problem solved. And whatever you do never tell them you're using a linux computer as your firewall! I'm running ipcop, but if I call tech support I tell them I've got my cable modem plugged directly into my Windows XP computer--and it still doesn't work.

This begs the question.....

..... Can VOIP providers who aren't connected with a Telco make a go of it? So far it seems that the answer is no seeing that Sunrocket i dead and Vonage is not exactly healthy either.

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IMO, what makes this market tough is the saturation of competition + the low QoS of home broadband. I had lingo for a while until I eventually moved to the cell phone only setup. I was hoping that VoIP would drive the price of land lines down, but it does

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The dedicaed telephone network is still best, but I find VOIP quality better than cell any day. I suppose it all depends on what the broadband to your particular home is like.

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but I find VOIP quality better than cell any day.

I've never had an issue with cell call quality. Perhaps that's because I live in a suburban/rural area and they don't have to resort to tricks like slashing the codec down to squeeze more people onto limited spectrum. My cell sounds just as good as an

SunRocket

Things we learned

1. Don't let a 3-year-old name your company

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SunRocket
Obligatory Simpsons reference:

Skinner: Poland, tell us about your nation's achievements.

Milhouse: Well, uh, I heard they sent a rocket to the sun once... at night! And there was that submarine, with the screen doors...

Skinner: No, no,

Anyone remember Dialpad?

I'll never forget Leo Laporte laughing about the business model of Dialpad on "The Screen Savers" back in 1999. The idea of giving free phone service away, with no real way to recoup their money, was laughable even in those heady days of "internet 1.0". The model has improved only slightly in the "internet 2.0" era, I'm afraid.

Re:Anyone remember Dialpad?

Leo was one of the hardest working men on television back in those ZDTV days. The guy was live on TV every day with 3 different shows, would do appearances on several OTHER shows, and still managed to find time to keep up with virtually every development in tech and try out tons of software. I don't think he slept.

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Leo was one of the hardest working men on television back in those ZDTV days.

Now he's one of the hardest working men in podcasts / radio. Check out http://www.twit.tv/ [www.twit.tv] (i.e. This Week In Tech) - his podcast empire. Leo helps make my daily commute tolerab

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Adam Sessler is about the only person still left from those ZDTV/TechTV days still on G4. The basic G4 formula of today is this: "Pair a guy who knows SOMETHING about tech or gaming with a big-tit chick who wears low-cut blouses even in the dead of winter.

What can they do though?

What could a third party VOIP telco really do to make a more reliable service when they don't control the line. Here's my idea, have a protocol that automatically detects dropped packets, and lowers the bitrate until there's not so many dropped packets, or none at all. Personally, I'd rather hear someone at 8 kbps then hear them at 128 kbps with every other word dropped from the conversation. It might sound like a bad kids walkie-talkie you bought at Walmart, but it's better than dropping words. And if you explain to your users why they are getting bad audio quality, and recommend ISPs in their area that don't have problems with maintaining good connections, then you can help to give the big telcos a reason to give good service to their customers.

Also, make all the features free. Call waiting, call answer, call forwarding, call filtering, and whatever other features you can think up. Telcos charge a lot of money for these extras. By making them free (including them in the monthly rate), you're offering customers a big incentive switch from the other guys. And since most of these features cost very little once they are initially developed, it's a wonder why you would even want to charge for them.

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It's tough for numerous reasons.

-The quality of service is dependent on the cable provider being consistent.
-Even if the provider is good, there is no prioritizing for VOIP on the cable modem, which is a huge advantage for cable companies who want to do

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What could a third party VOIP telco really do to make a more reliable service when they don't control the line.

First of all, good for you for throwing some ideas out. What most people fail to understand is the VOIP protocol is **loaded** with features. T

Problems are usually CAUSED by telcos.

I have broadvoice and on a regular schedule Verizon happens to "lose" the routing information to my local Broadvoice phone number. It just magically disappears and suddenly people calling my phone get a "this number can not be dialed" message.

I end up calling broadvoice letting them know and they have to jump through hoops to get Verizon to quit acting like a 3 year old and put the routing info back in. This happens twice yearly. I also hear of it happening elsewhere as well with providers other than Broadvoice.

Telcos are scared to death of Voip. It sounds way better than cellphones so the current generation see it as great. They also see the $13.95 a month compared to the $49.95 a month from a telco and it's a no brainer. (Yes My VoIP line costs $13.95 a month. Yes Verizon charges $50.00 a month for a basic, every call costs you $0.03 + long distance charges phone line.)

So the telcos screw with the Voip providers, "accidentally".

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It sounds way better than cellphones so the current generation see it as great

That part I've never understood. My cellphone works just about everywhere. If you are a big talker and can shift some of your calling to nights & weekends (easy to do when all of your friends have cell phones too) then it often winds up costing yo

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And they can't do CDMA over IP?

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And they can't do CDMA over IP?

I'm sure they can, but there isn't a published standard for it as far as I'm aware, so they'd be building it from scratch. UMA/GMA [wikipedia.org] has been around for awhile.

AT&T could implement a UMA network pretty easily but I doubt they will, as it would under

Losing money

Attracting subscribers can put a start-up deep into the red. Vonage added 166,000 subscribers in the first quarter of 2007, but lost $77 million."

I'm not surprised - Vonage gave me $200 to sign up (CC Giftcard)for a year at $14.95/month; netting them $80 (

Turnover?

Vonage added 166,000 subscribers in the first quarter of 2007, but lost $77 million.

The turnover rate for Vonage is very high from what I've read. Is that added subscriber number on top of their pre-existing user base or is it just what they added in the first quarter? They could be hemorrhaging faster than they can bring in.

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Oh, don't worry... Vonage makes sure people can't quit their service by keeping you on hold for over a half-hour, claiming that their "computers are down" when you finally get to a person, and then hanging up on you.

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I can confirm Vonage's sleazy retention game. You forgot the very thick accent of the person that you eventually reach after an hour's worth of pushbutton and wait hell. Not to mention the poor bitrate of their offshored support location. I had to get t

Ah well

I suppose SunRocket should have followed the wise words of Homer Simpson.

"You tried your best, and you failed miserably. The lesson is: never try."

Same thing happened to many indie DSL

"...since they don't own the lines, they can't control the quality of service..."

If you didn't get your DSL through Ameritech, (the only game in town around here,) you were pretty much guaranteed that your DSL service would be down at least 2 weeks straigh

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This is also true in the discount cell phone market: Secondary cell carriers like a former employer of mine were completely at the mercy of the monopolistic local Baby Bell, Ameritech^H SBC^H AT&T.

no more voice mail

I am/was a Sunrocket subscriber. Everything was really great, one year and 9 months of everything just working for $200 a year. Right now the phone still works, I can call and be called by people. However, the voice mail is gone both the message box on the website and the ability to leave messages when calling me (it just rings forever). I'm guessing all my old messages are toast too. When calling customer service (800-786-0132) you get a message the last part in an almost robotic voice,

"Sunrocket! The no Gotcha phone company! ... We are no longer taking customer service or sales calls. Goodbye."

Well I am out 2.5 months service, I guess they learned how to "get" me.

Crap!

I have been a SunRocket customer for almost a year now and the service has been awesome. In addition to the much cheaper rates than Vonage, the voice quality IMHO was excellent in spite of "not controlling the lines" as well as the customer service. Bye Su

Procrastination pays off.

I've been a subscriber to Vonage for a few years now. Although I am happy with their service, I don't use the phone that much, so SunRocket's package that was something like $9.99/month for 200 minutes was very attractive to me and for the past couple of months I have been meaning to change my service to them. Every week I keep telling myself, "Ok, this week I will move from Vonage to SunRocket", but the procrastinator in me kept putting it off. Now I'm glad I didn't change.

Moral of the story: Procrastination pays off.

CallVantage is from Lucifer Himself

I have AT&T CallVantage, their VoIP offering, against my will. My employer installs and pays for it.

It is SHIT.

The voice quality is average at best. The reliability is horrendous. At any time and for any reason the entire service drops out - nothing no dialtone, nothing. Inbound calls route straight to voicemail about 50% of the time.

AT&T's tech 'support' is very simple - they tell you the only thing to do is to install he TA in front of the router behind the cable modem. But the Centillium MTA-1 is a locked down box and it's configured as a NAT device so it fucks up my Homelan every time someone looks for a DHCP refresh. So I have to put it behind the router instead and because of that tech 'support' won't 'support' it. It also consumes a great deal of bandwidth - about 128k. That's a LOT for quality that isn't crystal fucking clear. That's the same as two ISDN channels and for that much bandwidth I should be able to hear you sleeping on the other end.

Phone companies will kill VoIP just like they have killed everything else. They'll crush all comers and then do what they do best. Fuck up the service and rape the customers.

Marketing Failure?

So this is (was) the #2 VoIP company behind Vonage? So why is it that I've never even heard of them?! Granted, I've never actually gone shopping for VoIP service. But I am involved in the telecomm/datacom industry, so you'd think I would have at least heard the name.

Perhaps lack of visibility was part of their problem...?

Thoughts from a former SunRocket employee

(Note: I left after a year in October 2006, after things really started going downhill).

Basically, there's not one bigreason SunRocket went under, but rather a few smaller reasons that added up. The main one being that there was too much focus on bringing in management from the outside (mostly from AOL) instead of promoting from within. Also, employee retention was a big problem. When you start seeing early employees of the company quitting or getting fired, it's very demoralizing to those still there.

I ended up leaving after I was involuntarily transferred to another department (which was supposed to be temporary, but my requests to go back to my previous department were ignored), I had a director-level non-techie jerk that had been hired from outside SunRocket placed as my immediate supervisor, and they decided to blow hundreds of thousands of dollars on network monitoring software when we in the process of doing the same thing with Nagios [nagios.org] and/or OpenNMS [opennms.org] & saved big money.

To all of the former customers of SunRocket, as well as anyone considering hiring a former SunRocket employee: just about all of the non-management folks (especially the support personnel based in the US, & the technical groups) were the most competent group of people I have ever worked with, and the majority of them did care about providing the best VOIP service possible.

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That sorta ruins the point of VOIP. You know, being able to choose your phone provider.

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This really blows. I switched from Vonage two-plus years ago to SunRocket, and now I'm scrambling. Many of the subscribers have been moving to ViaTalk, which is offering to honor existing SunRocket contracts and has a similar price (but only one phone nu

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Why not go with a real VoIP provider? A SIP provider like les.net? I've been using that service for a long time now. Termination (ability to call PSTN) is separate from DID (PSTN calls you), so you do not even have to worry about monthly charges if you hav

Re:refund?

Easy, talk to your credit card company and dispute the charge (I paid $199 for 1 year of service, and the company went belly up after a month.) American express cards tend to be the best for this (6months since charge is where it starts to be a problem), but any CC should easily refund you the money w/n a couple months if you were just charged last month. Personally, in the vain hopes that sunrocket is in fact moving me to something else, I'm waiting to see what happens before I dispute the charge/mentall take the loss. The phone line works, and as I'm now living in England... Well, I'd like to keep an american phone line, and signing up for a new company isn't the easiest thing to do.