ooma chief talks with FierceVoIP

 Consumer VoIP was ratcheted up a notch over the summer with the introduction of service in a self-contained device. The future-phone sporting the company name of ooma quickly grabbed headlines, partly because the ooma's creative director is television celebrity Ashton Kutcher, but also because of an appealing design. The ooma router, dubbed the "Hub," looks a lot more like an ultra modern intercom controller than the typical little gray box with blinking blue lights.

ooma's launch strategy is unique to VoIP as well, although TiVo did something very similar years ago: offer free service to early adopters for the price of the device.

The ooma phones were beta launched in June for $399, a price that guarantees three years of free service. The commercial launch is scheduled to take place this month.

Andrew Frame is the founder and CEO of ooma, based in Palo Alto, Calif. His credits include starting an ISP at age 15 before joining Cisco, and at 17, becoming the youngest person there to earn that company's top technical honor. Taking the same award a second time that year put him in the company of only seven other people. Frame started developing ooma in 2005. The company has raised $27 million from Draper Fisher Jurvetson, The Founder's Fund, Worldview Partners, Draper-Richards, WI Harper and other investors, and board members include the co-founders of TiVo and Ariba. ooma's formidable pedigree enters an equally formidable consumer VoIP marketplace, where standalones have yet to generate a profit from service. FierceVoIP wanted to know what ooma intended to do differently, and Frame agreed to answer a few questions from editor Deborah McAdams.

FierceVoIP: Tell us a little about yourself and how you came to develop ooma?
Andrew Frame: I have spent most of my career working with network infrastructure. I worked at Cisco fixing and deploying large-scale service provider networks for some time, and then joined core router startup Procket to work on a terabit core router. It was time to move into the application space, and the time was right to form ooma, whose mission is to un-fossilize telephone service and bring forth a new world of applications and services.
I then set out to build the strongest possible team to build and bring ooma to market. I can't say enough positive things about the people at ooma; it is their passion, dedication and creativity which makes it all possible.

FierceVoIP: How many White Rabbits (ooma's term for beta testers) have you had?
AF: We have had over 10,000 requests and are responding to the interest and demand for ooma as quickly as we can. As of mid-August, we have fulfilled slightly more than 1,000. We have a great appreciation for the support of our newly formed customer base. We are thrilled with the passion the customer base has demonstrated so quickly!

FierceVoIP: How many pre-sale orders does ooma have?
AF: We are not disclosing this information at this time.

FierceVoIP: You've said ooma is 911/e911 compliant, is that correct?
AF: Yes, and it is important to note that we support both real 911 and Internet-based e911, and we offer consumers the choice.
If you are OK with broadband quality e911, then we allow you to operate using purely broadband with no landline. If you are uncomfortable with broadband quality e911 and broadband reliability, then we allow for the integration of your basic landline into our service and it will use the 911 you are used to.
The market reality is that around half of residential VoIP users maintain a land line for 911 and reliability. Today, it is a separate phone number and separate account that doesn't integrate with their VoIP service.

FierceVoIP: The ooma Hub initially carries a one-time charge-$400 now; $600 as of 2008. Does the company intend to pay the 911/e911 service fees, or will subscribers be responsible for those fees.
AF: The product is currently priced at $399 for the Hub which includes domestic calling, the Instant Second Line, and the Broadband Answering Machine, all without monthly fees. In the future, there will be enhanced services that will have monthly fees. Placing an international call is very similar to Skype. Consumers establish a prepaid account from our online interface and as calls are placed the money is automatically deducted.

FierceVoIP: The ooma Hub fine print says users won't be charged for service for at least three years. Why three years, and what happens after that?
AF: We are required by the accounting rules to establish a reasonable service life. It is not uncommon to see such limitations in the fine print. In fact, if you look at the fine print for Tivo's "lifetime service" it also mentions three years being the definition of "lifetime." What really happens over time may be quite different with many people upgrading their device or service level well before the three years are up, while others may have the original device much longer than three years.

FierceVoIP: What is the company's projected cost of termination fees in those three years?
AF: We do not disclose these details, but as you can imagine, we have quite an advantage given our P2P architecture. In addition, traditional termination fees have been declining significantly and are expected to continue to decline over time.

FierceVoIP: Does ooma use a VoIP peering architecture, and if so, what percentage of traffic is then pure IP?
AF: We support industry standards, and hope to be peering with others soon. We are strong believers in an all-IP future. Critical mass of VoIP users will be reached cumulatively by the industry as a whole. You bet we'll be part of this.

FierceVoIP: How is ooma different from PhoneGnome, aside from the physical aspect?
AF: I'll start with a quick feature comparison.
Ooma:

- Custom Digital Voice Appliance, plug-and-play, control of all software, platform architecture
- Unlimited free domestic calling
- Broadband Answering Machine allows for live call screening, the ability to send live calls to voicemail, check from web, etc.
- Instant Second Line automatically enables a second line on a phone number using existing equipment
- Box will receive automatic upgrades and bug-fixes.
PhoneGnome:
- Resold Cisco ATA device, not true plug-and-play, no control of the software
- Free calling between PhoneGnome devices, pay for all other calls
- Pay for Voicemail
- No second line

In addition to the data-sheet feature comparison, there are important intangibles as well. When designing ooma, the requirement was that it had to be simple enough for our moms to install and use, yet powerful enough for them to fall in love with. We wanted to create a new category of consumer product that would give average consumers access to the power and promise of VoIP. It is not only plug-and-play, but the features are intuitive and are accessed automatically without having to read an instruction manual.

We are a company with a laser focus on the user experience. Maintaining a complete and holistic control of the experience requires a more committed approach to development. We do not operate a softswitch, we don't use off-the-shelf ATAs, and we don't even use an off-the-shelf OSS. We had many unique requirements, so we had to build a lot of this stuff on our own.

FierceVoIP: Olga Kharif in Business Week gave the ooma device an unfavorable review, mostly for audio quality, but also for a customer service hang-up. What's your take on her assessment?
AF: Nearly every review so far has been great; notably, we received praise from The Wall Street Journal and The New York Times. In addition to the support we've received from reviewers in the media, we've enjoyed seeing all of the positive feedback from our user base.
We have a strong competitive advantage when it comes to voice quality--we have developed the system ourselves with quality as an imperative. We use better codecs and better QoS queuing algorithms on the hardware. It all boils down to better quality.
For example, we have one user whose father is hard of hearing and claims his father will only allow him to call him from his ooma. I believe that Olga's experience was atypical in terms of both the voice quality as well as the customer service experience. It was an accident that the phone was disconnected, we called her back immediately.

FierceVoIP: Much of the audio quality of any VoIP device depends on the network. You have no control over that. Would you recommend that people do multiple speed tests before buying ooma?
AF: Agreed, although we don't control the broadband networks, we are doing everything possible to maximize the quality over the third-party networks. We have the best possible VoIP experience in the industry. You can try it for yourself. We have a 30-day money back guarantee.

FierceVoIP: Will you be partnering with any carriers, i.e., cable operators or ILECs?
AF: That is the plan. We are friendly with the incumbent industry. Our platform is essentially an application that integrates both broadband networks and the PSTN, which they've done a great job building. Our focus is to build outstanding products and provide constant innovation on the service side.
The question, which we are answering, is, "In tomorrow's consumer telecom environment, which applications and services are generating revenue?"
We have a compelling roadmap of cool and unique features that are all high-value for consumers, but generate recurring revenue.

FierceVoIP: Is there an ooma mobile device in the works?
AF: We are not ready to make any announcements in that area yet.

FierceVoIP: What is the origin of the swirly ooma logo?
AF: It is an overhead shot of a huddle. That huddle exemplifies the community joining forces to bring forth a fresh new choice for consumer telephone service.