July snapshot – HD Communication in North America – Consumer ITSPs

Upstart embraces HD

2 providers queried/spoken to:  ooma, Vonage
1 provider to offer HD voice service 3Q09:  ooma
1 provider not currently planning to offer: Vonage

For Internet Telephone Service Providers (ITSPs), the consumer mass market is not a place for the faint of heart. Margins are slim, millions of customers are necessary to generate a profit, customer service is a bitch and bad word-of-mouth is a killer.  Vonage has struggled to demonstrate profitiablity while ooma is challenging the consumer ITSP status quo with a radically different business model.

To offer HD voice service 3Q09

ooma

Status:  Third quarter 2009 with ooma’s Telo hardware
Type:  ITSP, peer-to-peer and device to PSTN service
Target market:  Mass-market consumer
Phones/codecs supported: Second generation Telo hardware supports G.722
Mass market outlets: Best Buy, RadioShack

Commentary: After a rough start with a confusing message and too much Ashton Kutcher, ooma brought in consumer electronics vet Rich Buchanan as CMO.  The company’s “free forever” phone service concept was clarified and the company has landed distribution deals with Best Buy and RadioShack.

Due out in the third quarter of 2009, ooma’s second generation Telo hardware natively supports G.722 and the user hardware – a version of Asterisk running on top of Linux – is capable of downloading and running other codecs as appropriate.  Telo hardware will likely default to G.722 in peer-to-peer mode (an IP to IP call) between devices, but it is not clear if support for SIP URI dialing will be available when the hardware first arrives on store shelves.

Ooma’s business model is a combination of “free” and value-added services.  Service for about an average of five years of PSTN local and long distance phone calls is “baked in” to the purchase price of the ooma hardware.  International calls and extra features above and beyond the basic set are value added (i.e. more money to be made) extras that the consumer picks up as he sees fit.  An advanced features bundle costs around $13 a month.

Ultimately, ooma hardware will show up in the SMB market and in white-label projects; the use of Digium Asterisk enables the use of various code loads customized for cable operators and vertical markets.

More information: ooma gets more cash, ooma goes RadioShack – Over the counter HD communications

No plans to offer HD voice service at this time

Vonage

Status:  No plans to offer HD voice service in the immediate future.
Type:  ITSP, classic/centralized ITSP
Target market:  Mass-market consumer
Mass market outlets: Best Buy

Commentary:  Vonage has enough processes to streamline and products in the pipeline as it is; the company is currently pushing international virtual numbers and is trying to get a mobile client to enable low-cost mobile VoIP calling (like the rest of the world already does).

However, the underlying Vonage infrastructure would be capable of supporting HD voice calls, but the company would have to select a HD handset vendor, brand a box, get it into the company’s mass market distribution pipelines and figure out a way to clearly differentiate from its existing VoIP service — challenges the company doesn’t need at this point in time.   Should ooma gain traction or a major telco or cable company roll out HD voice service, Vonage may have to meet those challenges

More information: Vonage confirms: No HD communications in the near future

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