Ooma Puts Unlimited Phone Calls in a Box

Another day, another company promising unlimited telephone calls.

Ooma, a Palo Alto, Calif., Internet telephony startup, is offering a box that connects to your broadband Internet connection and your regular old phone, priced at $399. After that, you get unlimited domestic calls at no additional cost. Think of it as Skype but square, tangible, and more expensive, at least if used for less than 13 years.

It may sound too good to be true, particularly in light of the troubles faced by Vonage and the collapse of SunRocket. But Ooma has a management team that includes executives from Apple, Cisco, IBM, and Yahoo, as well as actor/entrepeneur Ashton Kutcher. Ooma could be the next TiVo.

Like TiVo, Ooma could find itself acclaimed for its revolutionary technology, but struggling financially. TiVo's problems stem from Hollywood looking unkindly on companies intent on overturning the old order and the same can be said about telecom companies. TiVo is only now starting to win friends in Tinseltown. TiVo just posted its first quarterly profit in Q1. If Ooma's only source of revenue is selling boxes, it may find hardware is a tough business.

The Ooma box is being made available to a select group of beta testers. It's supposed to be available to the general public in the fall. The service will include a free second line, online administration, conference calling, and voice mail.

The main reason that Ooma has a chance is that it allows people to make Internet calls using normal phones. Skype, for all its promise, still baffles the technophobes. But Ooma is sure to earn enemies before it earns much money. If the company doesn't end up partnering with the likes of AT&T or Comcast, it will have to watch its back as it pushes the envelope.