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Ooma Tries to "Un-Fossilize" Telephony With Free Calls

The $399 Ooma Hub routes U.S. phone calls over the Internet using a standard telephone, without monthly fees.

Ooma, a Palo Alto, Calif.-based communications startup, on Wednesday began selling a $399 device with the promise of free phone calls within the U.S.

The Ooma Hub routes phone calls -- made on any phone connected to the unit through a standard phone jack -- over the Internet using the owner's broadband connection. Ooma's box thereby eliminates the need for long distance and local phone service.

Ooma's goal is to "un-fossilize" telephony, said company CEO Andrew Frame, "To bring new life to it, bring new innovation to it."

"Ooma is the only company in the history of the telecom industry to offer you the opportunity to own your dial tone," the company says on its Web site. "This means you won't pay Ooma for unlimited calling in the U.S. Unlike traditional phone companies, like Sprint, MCI, and AT&T, there are no monthly fees or surcharges."

According to Frame, concerns about being able to dial 911 prompt about 50% of VoIP converts to keep a landline with local service. But Ooma customers can abandon their landline entirely (provided "naked" or "dryloop" DSL or another form of broadband is available) and still summon assistance using e911, the emergency services implementation for mobile phones.

The Ooma Hub functions as a broadband answering machine and includes three-way conferencing, enhanced call-waiting, Caller ID (assuming your phone can display it), and online voice mail access. It also offers low-rate international calls.

For an extra $40, Ooma customers can purchase an Ooma Scout unit, which adds another jack to connect a standard phone and a second line.

Over a three year period, according to the company's calculations, an Ooma Hub and Scout would come to about $440 while equivalent service with Vonage, AT&T, and Comcast would cost $2,100, $4,162, and $2,332 respectively.

Ooma says that "you won't owe monthly charges to Ooma for unlimited calling in the U.S. using the Ooma system for at least three years." After that, there might be fees. There's also the possibility of a $0.99 transaction service fee for 411 calls. And the company says that "in order for the Ooma system to work, we will add call forward busy when we provision your line, for which you will owe your landline phone company associated monthly charges." (Assuming you retain a landline.)

Ooma also has plans to generate revenue from new services. "We will be deploying features at a very rapid pace," said Frame. "The commonality is that they all generate revenues and consumers will be happy to pay."

As an example, Frame cited ringtones as an upcoming service. "But that's nothing compared to what we have up our sleeve," he said.

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