There’s been a lot of buzz in the VoIP community recently about ooma, a device that the company advertises will allow you to “own your own dial tone.” The key here is that you buy a box — not a service.

You pay for the ooma hardware — $599 MSRP, with a special introductory price of $399 when the product finishes beta testing and debuts in September. Thereafter, you get free VoIP, with no monthly fees.

This isn’t the first company to come up with the concept. PhoneGnome got there first, but there’s an important difference. With PhoneGnome, calls are free to other PhoneGnome users. But if you want to make calls to landlines or mobile phones, you pay: 2.1 cents per minute in the United States with varying rates for international calls.

Granted, you can still save a lot of money; a call to Afghanistan from a PhoneGnome box or its soft-phone software costs 2.1 cents per minute. Calls to the same locale through traditional VoIP carriers such as Vonage or Lingo cost around 70 cents per minute.

Ooma, on the other hand, promises free unlimited calling within the United States for life to any kind of number, including landlines and mobiles. International calls still cost extra.

Free phone calls forever? Doesn’t that sound too good to be true? You might be wondering, as I did, what’s the catch? I dug a little deeper into the available information about this “VoIP in a box” solution, and I’ve requested an evaluation device that I can try out. Meanwhile, here’s what I found out.

What’s in the box?

When you pay the up-front cost of a few hundred bucks, you get a silver-colored device that resembles a futuristic answering machine and features a simple keypad with backlit keys. This is the ooma hub, and it’s the base station for your ooma calls. Then, for each extension phone you use, you get a smaller, but similar in appearance, device called an ooma scout.

This hardware boasts features such as three-way conference calling, instant second-line capabilities by which two people can be on different phone calls at the same time with no extra charges or extra equipment, and broadband answering machine technology that combines the advantages of voice mail and an on-site answering machine. In addition, the ooma Web site notes that with this product, you have reliable 911 service, even if you lose electrical power and/or your Internet connection.

What’s the catch?

We all know that “there ain’t no such thing as a free lunch (TANSTAAFL).” Although you don’t pay monthly fees to a VoIP provider with ooma, you still, of course, have to pay for an Internet connection. And it appears that the reason you have that reliable 911 service even when you lose power or your Internet connection is because you still need a landline.

According to the ooma documentation, in the future, you’ll be able to use the device without a landline. However, unless there’s some sort of magic at work, I suspect if you do so, you’ll lose that 911 capability.

Meanwhile, having to keep your traditional phone service may somewhat negate the cost savings of deploying VoIP. You can pay $19.99 to $29.99 to one of the more traditional VoIP providers and drop your landline completely.

But if you must keep the landline to use ooma, PSTN service can easily cost more than the monthly cost of other VoIP providers. (My “bare-bones” PSTN line with no extra services costs $42 per month with all the taxes and fees.)

On the other hand, if you need to keep a landline anyway (for example, to work with your security alarm system or fax machine or because you want to have 911 service when the power goes off), using ooma instead of a traditional VoIP provider for a second line could save you money over the long term. At $399, the ooma box would pay for itself in less than two years.

How does it work?

According to reports, the ooma hub is a Linux-based device that uses a P2P-type technology that uses those landlines ooma users are currently required to retain. The hub sends the call across the Internet to the hub of some other ooma user who’s in the calling area that you want to call. That hub uses the other user’s landline to complete the call, which is a free local call because it’s coming from the line of the ooma user in the area you’re calling instead of from your own landline, which would be long distance.

It’s a somewhat ingenious idea, and it explains why users must have landline service in order to get the ooma boxes. Although the company says it will eventually offer service to people without landlines, there will still need to be a substantial number of ooma users with landlines for this scheme to work.

Is it reliable? Ooma says it has the same uptime as a class 5 telephone company switch, which is 99.999 percent. It doesn’t get much better than that.

The whole thing is still in beta testing (with actor Ashton Kutcher serving as “creative director” in a massive campaign to build up the customer base). The company has dubbed its beta testers White Rabbits, who get their boxes for a penny. Word of mouth will presumably spread the word and encourage others to sign up when the boxes go on sale to the public in September.


Ooma is an innovative way of using VoIP in combination with the public telephone networks to provide a whole new payment model for customers. If it works as claimed, it could be a very attractive idea to those looking to save even more money than they can with regular VoIP, especially those who want to keep their landlines anyway.

Is shelling out $400 up front for an as-yet-unproven technology risky? Not a lot more risky than prepaying for an annual SunRocket account, as so many of that company’s customers discovered when their provider went out of business with no refunds of those prepaid amounts.

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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