8x8 signs up 19,000 ex-SunRocketers

8x8, the Santa Clara, Calif., VoIP provider that stepped into the SunRocket void, has signed up 19,000 subscribers from the defunct business.

“I have even received questions wondering if signing up former SunRocket customers to our standard one year Packet8 plan for $199… will cause 8x8 to start performing like a SunRocket,” said Bryan Martin, chairman and CEO of 8x8.

SunRocket, a Vienna, Va., VoIP provider, shut down suddenly last month, leaving 200,000 customers without a service provider for several days until they were directed to 8x8 and Teleblend of Oakland, Calif. In the wake of SunRocket’s fall, industry observers wondered if pure-play residental VoIP was a sustainable business. SunRocket was the segment’s second largest provider after Vonage.

Martin emphasized that 8x8’s residential VoIP service, Packet8, was different from SunRocket’s, even though both feature a one-year, $199 contract.

“We do charge our normal monthly fees and taxes--e911, Universal Service, regulatory recovery, state and local taxes where applicable--on top of the $199 a year fee. Over the course of a year, these fees add up to a substantial amount of money. SunRocket didn’t do this,” Martin said.

SunRocket also issued prorated refunds for anyone canceling service before the end of a year (except for those left stranded). Packet8 offers a 30-day money-back guarantee, but no refund after that, Martin said. Of the 19,000 former SunRocketers who signed up with Packet8, 61 percent took the one-year, $199 deal. 8x8 will account for those who stay over a 12-month period, said Dan Weirich, 8x8’s chief financial officer.

8x8 was only one of many companies that jumped at the chance to secure SunRocket “orphans,” as they came to be called. Independent VoIP providers are struggling hard against giant cable operators who can roll the service into a triple-play. Independents tend to spend a lot of money to acquire subscribers. Weirich said Packet8’s customer acquisition fee was $138 for 8x8’s first fiscal quarter of 2008, ending June 30. SunRocket refugees represented a large pool of potential subscribers at a much reduced acquisition fee that will be reflected in 8x8’s second fiscal quarter.

The company revealed its SunRocket numbers during its quarterly earnings call Aug. 2, when it also reported its first profit since November 2002. 8x8 posted net income of $508,000, or a penny a share for its first fiscal quarter of 2008, ending June 30. 8x8 lost $2.9 million in the previous quarter and $1.8 million in the same fiscal quarter a year ago.

“We did enjoy a number of one-time accounting benefits this quarter,” said Bryan Martin, chairman and CEO, “but we also achieved a milestone for the June quarter when we ended the [it] with a $284,000 increase in cash and investments.

Martin said 8x8 ended the quarter with $12.2 million in cash and investments with no debt on the balance sheet.