Another consumer VoIP provider faces hard times

* SunRocket cuts a quarter of its workforce

The Washington Post reported last week that SunRocket, a consumer VoIP service provider, was cutting back its staff by about 30 employees — representing about a quarter of its workforce. SunRocket offers similar services to Vonage, using what we call a “bring your own broadband” (BYOB) connection. The company was founded by two former MCI executives in 2004 and is privately held.

The company has specialized in low-cost calling plans coupling VoIP calls with 12 custom features, including an “Annual Edition” plan for $199 per year with unlimited calling to the United States, Canada, and Puerto Rico; a “Limited Edition” plan for $9.95 per month with 200 minutes of calling; and a “Monthly Edition” for $24.95 per month. The company also offers international calling to China and many other locations for a penny-a-minute.

SunRocket reported 200,000 subscribers in April 2007 making it about one-tenth the size of Vonage. Compared to Vonage, the company’s coverage area is more limited. Also like Vonage, SunRocket faces increasingly steep competition from cable company VoIP offerings and traditional phone companies that offer wireline voice plans that are bundled with broadband and video services.

Our analysis: We’re a little disappointed to see SunRocket face hard times, but its difficulties aren’t unexpected as both consumers and enterprises alike begin to buy its services as a double-play or triple-play bundle. Yet we continue to hope that even though BYOB VoIP providers face diminishing market growth, the cable company and telco competition will keep wireline voice plans affordable.


Copyright © 2007 IDG Communications, Inc.

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