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Will your VoIP provider go out of business?


Consumers and small businesses sign up for VoIP services in hopes of saving money and taking advantage of advanced features such as e-mail delivery of voice mail messages that they can't get with their landlines. Some keep their PSTN service for fax compatibility, security systems, or emergency calling backups, but many have cut the telco cord altogether and are using VoIP as their primary telephone service, often supplemented by cell phones.

But now some VoIP users are getting nervous, wondering if they'll wake up one morning to find themselves without phone service. When we opened VoIP accounts, few of us considered that our providers might go out of business with no warning. But that's exactly what happened earlier this month to about 200,000 SunRocket's customers.

The shutdown may not have come as a surprise to those who keep up with the industry. Apparently the three-year-old company has had financial problems for a while and was sinking fast. Prior to the shutdown, they laid off most of their employees. But most VoIP customers don't keep up with what's going on in the industry, and it certainly came as a surprise to them when one day they just didn't have a dial tone.

Even worse, those who prepaid for a year's service are apparently out of luck when it comes to getting a refund of their money, although they may be able to get discounts on service if they sign up with certain other providers. Many customers signed up for the prepaid plan for $199 per year, because the monthly cost came to only $16.58, significantly lower than most unlimited calling monthly VoIP plans.

Sunrocket's web site now carries a "critical announcement" stating that services may be discontinued at any time and all services will be discontinued no later than August 5, 2007. The announcement also states that two "preferred providers" have agreed to give special pricing to SunRocket customers to help them migrate their service - but fails to mention which providers those are.

Competitors to the rescue

As soon as the news was out, competing VoIP providers rushed in, offering to take up the slack and sign up SunRocket's old customers. The most popular VoIP companies have all announced special offers or initiated efforts to attract former SunRocket users:

  • Teleblend: One of the "preferred providers," Teleblend is offering a discounted rate of $12.95 per month for SunRocket customers with prepaid annual contracts.
  • Packet8: The other "preferred provider" is offering SunRocket customers no startup cost and one month of free service. They specifically state that they cannot honor any prepaid amounts paid to SunRocket and that SunRocket equipment doesn't work with Packet8 service.
  • Lingo: Though not a designated "preferred provider," Lingo (Primus) is offering free equipment, shipping and activation along with one month of free service to SunRocket subscribers. To get the special deal, you have to send a copy of your current SunRocket invoice.
  • Vonage: Vonage is offering two free months of service along with a free phone adapter, waiver of the activation fee and free shipping for SunRocket customers.
  • ViaTalk: ViaTalk has a contract buyout offer that gives a service credit for up to three months of free service for prepaid contracts from any other carrier, including SunRocket - if you sign up for their own $199/year plan.
  • VoIPYourLife: VoIPYourLife is offering free hardware, free virtual numbers and expedited porting of your existing phone number.
  • Earthlink trueVoice: Earthlink is offering a discounted price of $19.95 per month for unlimited calling for six months to former SunRocket customers, increasing to the regular price of $24.95 per month thereafter.
  • Nuvio: Nuvio is allowing SunRocket customers to sign up for the monthly plan and roll over to the yearly plan if satisfied with the service, with no cancellation fees.
  • BroadVoice: BroadVoice advertises a special steamlined process to facilitate the migration from SunRocket.

How to lose friends and alienate people

Many of SunRocket's former customers are angry not so much that the company failed, but at the way they were treated during that failure. Customers weren't notified in advance that their service would be shut off, so they weren't able to make new arrangements in time to avoid a disruption in phone service. The customer service center was shut down and those who called it got a recording that said "we are no longer taking customer service or sales calls."

Losing your phone service is a major annoyance for anyone. For those who are dependent on it for their businesses or due to medical or health situations that may necessitate communication, it could cost money or even a life.

Choosing a replacement

If your VoIP provider goes bankrupt, you're likely to think very carefully before choosing a replacement, and you may wonder whether to choose another VoIP company at all, or go back to PSTN.

The SunRocket shutdown is making VoIP users (and potential users) think again about whether the technology is stable and reliable enough for their needs. Other carriers are obviously aware of this, as many of them are now emphasizing that issue on their web sites. For instance, BroadVoice stresses that it has been offering stability since 2003. Lingo notes that it is backed by Primus, one of the largest telecom companies with over $1 billion in annual revenues. Vonage boasts "over 2.4 million customers strong and growing."

But just how much do those claims mean? SunRocket was the second independent VoIP provider, after Vonage. Vonage itself is still mired in a patent lawsuit brought by Verizon, who claims they own the patent for the way Vonage connects VoIP calls to the PSTN system. Vonage has admitted that if Verizon wins and they're prohibited from using the technology, they could go out of business. Would other VoIP providers follow?  Will Verizon end up with a VoIP monopoly? Nobody seems to be sure right now, but even if you weren't a SunRocket customer, their demise just might affect your decisions on VoIP service in the future.

Deb Shinder is a technology consultant, trainer, and writer who has authored a number of books on computer operating systems, networking, and security. She currently specializes in security issues and Microsoft products, and she has received Microsoft's Most Valuable Professional (MVP) status in Windows Server Security.

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About

Debra Littlejohn Shinder, MCSE, MVP is a technology consultant, trainer, and writer who has authored a number of books on computer operating systems, networking, and security. Deb is a tech editor, developmental editor, and contributor to over 20 add...

14 comments
firefighter1201
firefighter1201

I don't understand how a Voip company with hundreds of loyal customers can shut down their doors, bad admin, low profits,? I've been using [url=http://switch2voip.us/]Switch2voip[/url] for the past 7 years and i constantly communicate with their staff, i think communication is a quick solution in the meantime, if in any case they are going to shut down at least i will know if.

voip for business
voip for business

VoIP system's benefits and features are far greater than the traditional phone system. This require minimum software and hardware making it more affordable. Ringcentral has provided me with my VoIP needs.Helps me in unifying and optimizing the use of my communication devices.

deane_justin
deane_justin

I use Primus backed Lingo VoIP. It works prettily well. Lingo is financially solid and offers unlimited calling plans to over 230 countries. I can recommend Lingo confidently to all SunRocket victims who are interested in getting special promos.

riccardo.cecinati
riccardo.cecinati

Hello, I'm posting from Italy, and here too we had troubles with a couple of providers. The issue in my opinion is not only the possibility of placing calls (it's fairly easy to switch from one VSP to another, and my company allows user to have several VSP online) but in receiving calls. i.e. the provider your number is bound to. If that provider shuts down, you may as well lose your number. Disaster. That's why I think law should protect users against that kind of risk, since the number, and not the phone service itself, is to become the real worth for phone customers.

tim
tim

I did get notified, albeit just two weeks ago. An e-mail informed on who the two other providers were, and I was able to switch immediately to Packet8, which I ported my phone number to. It is working fine, and I got the same $199 a year deal. Sunrocket sent numerous e-mails and even called once. I was impressed with their concern, seeing they were obviously going out-of-business. I only lost four months of service, since I paid last December for another year. The only thing that I don't have that I did have, was a second phone number that had a distinctive ring.

levi
levi

After many days of research....I found a great company called VIATALK. They offer a plan $199 a year for unlimited calling, just like sunrocket and they will give you in addition to the plan they offer you, up to 6 months free service , only if you were a sunrocket customer. for example , if you sign up for their service for $199 a year and had been a customer of sunrocket and you had 4 months left on your sunrocket plan.. they will give you 4 months free here is the link.. copy and paste this link in your browser http://affiliatecenter.viatalk.com/idevaffiliate.php?id=5099

tishatobin
tishatobin

As previously reported, SunRocket is in the process of closing its operations and therefore will no longer be able to provide customers with the phone service. The services are being discontinued and will be permanently shut down no later than August 5, 2007. My Sunrocket phone number is dead as well. While I was searching for effortless transition for existing SunRocket VoIP users I came across Lingo and signed up for Lingo. Lingo is backed by Primus ? one of the largest global telecom companies with over 2.4 million customers. Hence, there is no need to get anxious, wondering if you?ll wake up one morning to discover yourselves without phone service. Lingo is offering a special promotion located at http://www.lingo.com/sunrocket that gives users a choice between two plans. The Chatter Box promotion has proved to be of more interest to new customers. More countries are included in a user?s unlimited calling plan than any other provider. For thousands of SunRocket subscribers who found their phone lines disconnected last week after SunRocket abruptly shut its doors, can have a try at this offer from Lingo.

binarypc
binarypc

I'm sure the shake-ups will occur. However, in the case of Vonage, I think that Verizon is trying to patent something that is really like breathing. How come Verizon isn't sueing every cell phone maker for connecting their cellular networks to the PSTN? It seems like a childish 60 million dollar lawsuit to me. It's sort of like my 3 year old jumping up and down saying to his older brother that he should have some toy because he was thinking about using it. The same as I tell my 3 year old no, so should the judge tell Verizon no. (Of course, my 3 year old never asked for 58 million in settlement plus 5% of all revenues my 6 year old will earn for the rest of his life either, go figure.)

Rick
Rick

I have had Lingo now on 2 years and it has steadily went from bad to worse FURTHERMORE they will NOT let you tranfer your number out of there so you are stuck with changing all BUSINESSS items to a new NUMBER I think the company sucks and for the last 3 months I have suffered outages THIS TIME ALL WEKEND from friday jan 25 thru right now still If I am out of phone service monday I am going to look into a lawsuit

PCAddict
PCAddict

I also was a Sunrocket customer and very pleased with them. The above article depicts very well how I felt about this closure. I was not so upset it went bankrupt as I was about how it was all handled and did not appreciate losing half my funds because I signed up for a year. But I also had to really rethink if I would go back to a landline or stick it out in VOIP Land. I was struggling back and forth between Viatalk and Lingo. I saw Viatalk is a BBB member and looked up their public record. But also, with reading countless reviews on different forums, I was not impressed with Viatalk on some accounts. I also chose Lingo and have had them all month and I am extremely happy with them. The only issue now, is finding out when they will honor the special credit I am supposed to receive for being a former SunRocket customer. Yes I am willing to give VOIP one more try. If it does not work this time, I will go back to more traditional means.

yobtaf
yobtaf

I don't know about Italy, but in the US, big companies like Verizon, can basically get whatever they want (like a VoIP monopoly) mainly because they can spend unlimited resources to skew the legal system, but partly because the judge in the Vonage case didn't really understand the issue. This was especially true under the "free market" Republican Congress. I don't care if I have to use two cans and a string, I will never give in to these corporate bullies.

edchinn
edchinn

Packet8 does offer the 2nd "distinctive ring" line. It is $5 per month.

Dr Dij
Dr Dij

this is a patent war, with stupid patent office people allowing patents for general, common and already thought of concepts rather than for detailed processes or devices. This is a blight to all the computer industry. Witness the patent amazon is fighting for 'one click buying'. It seems inherently obvious that someone would be able to click once and buy something. MANY more examples like this all over the computer industry. Reform is much needed.

poopka4
poopka4

Edited Message was edited by: beth.blakely@...