[Infowarrior] - Sunrocket halts VOIP operations

[Richard Forno]

http://www.nytimes.com/2007/07/17/business/17sunrocket.html?hp

Internet Phone Company Halts Operations

By MATT RICHTEL
Published: July 17, 2007

SunRocket, an Internet telephone company, has ceased operations and is
moving its customers to one or more other companies, according to a person
briefed on its status.

A recording on SunRocket¹s customer service line said the company ³is no
longer taking customer service or sales calls.² Executives of SunRocket,
which was founded in 2004 and is based in Vienna, Va., could not be reached
for comment.

Telecommunications industry analysts said the development highlights the
struggles of start-ups trying to offer telephone service over the Internet.

These start-ups face enormous competitive pressure from the biggest players
in the telecommunications industry, both cable and traditional telephone
companies. The cable companies in particular have made a strong push into
the telephone market by offering the service as part of a product bundle
with television and Internet access.

The start-ups, like SunRocket and Vonage, the best known of the group, tend
to offer a single product, and they do not have the same power as the larger
companies to control quality of service because they do not operate their
own telecommunications lines, said Richard Greenfield, a media analyst at
Pali Research in New York.

In April, SunRocket announced that it had reached 200,000 subscribers and
said the milestone was a testament to consumers¹ embrace of Internet
telephony, which allows telephone calls to be transmitted as data over the
Internet. One of SunRocket¹s main pitches to potential customers was its
offer of $199 for a year of unlimited calling to the United States, Canada
and Puerto Rico.

Vonage, which went public last year, was a pioneer in the commercialization
of the technology. But its fortunes have floundered too, along with its
stock, which has been on a steady slide over the last year, closing
Wednesday at $2.95.

Alan Bezoza, an analyst at Oppenheimer & Co., said Vonage had continued to
add subscribers, but the cost of attracting them had put the company deep
into the red. He said that in its first quarter this year, Vonage added
166,000 customers, but lost $73 million. The start-ups ³are going up against
the marketing muscle of very large companies, like cable and telecom
companies,² Mr. Bezoza said.

Mr. Bezoza said that he believed that stand-alone Internet telephone
companies could wind up as successful niche players in the market, but their
investors would have to be willing to endure a substantial period of losses
before they built enough of a customer base to be profitable.