SunRocket demise casts doubt on business model Page 3

“I think standalones modeled after telcos… aren’t that interesting,” IDC’s Stofega said. “You really have to question that model. The enterprise play is more interesting.”

GlobalTouch Telecom is one such company. Los Angeles-based GlobalTouch Telecom sells turnkey VoIP systems to carriers, cable systems and other resellers. Joel Maloff, GlobalTouch senior vice president called consumer-only VoIP standalones “vestiges of the past.”

“Their models were built upon the tried and true approaches of traditional telephone companies,” he wrote in response to the SunRocket collapse. “Unfortunately, after considering the capital investments required to get started, the operating expenses needed to continue, the cost to acquire customers and the ever-present need to expand, the average revenue per user left them ‘underwater.’”

Henry Kaestner is CEO of a company that decided at the outset to avoid consumer VoIP. Bandwidth.com in Cary, N.C. focuses exclusively on business customers.

Kaestner said three key issues differentiated a company like Bandwidth.com from a typical standalone, residential VoIP provider.

“Customer acquisition cost--in business class, it’s higher than it is in consumer, but not much more so, and it’s recouped faster,” he said.

“The second issue is churn. We retain 99.4 percent of our business customers. SunRocket had a reported 5 or 6 percent churn. The third issue is, what are additional services? We offer ISP in addition to VoIP… not just a dial tone and long distance.”

Now in its eighth year, Bandwidth.com has generated $50 million in revenue and now has more than 10,000 VoIP “endpoints,” Kaestner said.

Nuvio of Overland Park, Kans., is also a business VoIP player, but the company immediately opened the door to disenfranchised SunRocket subscribers. Nuvio CEO Jason P. Talley said the company did so to mitigate any ill effect SunRocket’s unceremonious exit might have on VoIP providers in general.

“We’re picking up these residential customers to prevent people from getting the impression it’s the industry instead of a bad business decision,” he said.

Nuvio landed Shumaker after another VoIPer took his order, then told him it would take a week and an express shipment fee to get their router to him. He instead agreed to be Nuvio’s guinea pig for reprogramming the Linksys, which they did in about an hour.

Talley echoed Kaestner’s sentiments regarding consumer VoIP—customer acquisition is costly and churn is high. Nuvio normally stays once removed from the consumer market.

“We do sell some residential wholesale to other companies, although we don’t ever touch that customer,” he said. “To that extent, we think that is a viable market for us in the future… It’s an emerging market for us; and we’re going to be in that space, but [are we] going to do what SunRocket was doing? We’re not.”

Also Noted: SunRocket made the FierceVoIP 15 last year. See some subscriber comments here

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