Feature Article

Free eNews Subscription>>
August 07, 2013

Ooma: Latest Company to Add Unlimited International Calls

Ooma, a communications service and device provider, introduced a shockingly cheap international call plan last week. The Ooma World Plan offers unlimited calling to 61 countries for only $17.99 per month, joining an upstart crowd hunting telephony's last per-minute cash cow. Tier 1 and national carriers have to be taking note.

Carriers counted on international calling, like the various local, long-distance, and LATA billing schemes now gone in the dustbin of history, to generate profits on a per minute basis. The more minutes and exotic the location, the more money a carrier made.

Voice over IP (VoIP) started eroding profits on international calls more than a decade ago. Calling card companies and start-up service providers would hunt for the cheapest rates available to a particular area or country, lock the rate in, and then resell the minutes either on a retail or wholesale level to other service providers.  

Concurrent with voice minutes emerging as a big arbitrage scheme, service providers began widely introducing unlimited local and national calling plans for landlines and mobile phones. Flat-rate, unlimited calling became the New Normal when it came to consumer mobile with international calling remaining as the last bastion of per-minute billing.

At the same time, over-the-top companies -- Skype being the primary example and king -- delivered voice clients running on PC, smartphones and tablets to bypass switched telephony to conduct calls over an Internet connection.  Soft clients evolved into multifunctional tools capable of presence, IM, improved call quality, file sharing and video.

Vonage was the first company to unleash an unlimited international calling plan in 2009, offering unlimited calling to more than 60 countries for $24.99. But it wasn't until May of this year that T-Mobile and TruPhone both announced unlimited long distance plans of different flavors. T-Mobile started offering businesses international flat rate data plans without roaming charges while Truphone offered a shared mobile services plan, enabling businesses to share local minutes, SMS messages and data from a single bundle, regardless where calls are made.

Ooma's World Plan is likely to annoy both the traditional incumbent phone companies and OTT players around the globe that have been playing the voice minutes arbitrage game. I don't think it's going to displace any OTT client customers anytime soon, but price-sensitive consumers running through a significant number of minutes per month are always shopping for a better deal. The stumbling block for those customers will be the $150 to $210 entry cost for Ooma hardware . Existing Vonage customers may be more likely to switch to Ooma hardware given a combination of better calling features, HD voice quality, and longer-term savings of $7 per month.

The bigger long-term threat to phone companies is increased pressure from customers -- consumers and business -- to offer flat-rate, one-price international calling that just happens without soft clients or special codes or any other frictions. It won't happen overnight, but I suspect it will happen some day.




Edited by Rachel Ramsey


FOLLOW MobilityTechzone

Subscribe to MobilityTechzone eNews

MobilityTechzone eNews delivers the latest news impacting technology in the Wireless industry each week. Sign up to receive FREE breaking news today!
FREE eNewsletter