Yesterday I blogged about the SunRocket bankruptcy and I mentioned how although pure-play VoIP is not easy, a company like 8×8/Packet8 is doing a good job. Today I came across an article on TMCnet discussing how Packet8 is the preferred replacement service for SunRocket customers.

 

I queried the company’s VP of Marketing, Huw Rees about what this means and why customers should switch. Most importantly I asked whether a pure play VoIP provider can be successful. Huw has some good points which follow below.

 

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We made contact with the company that is doing the wind down, Sherwood Partners. They had made contact (or been contacted) by several other potential providers and they seemed concerned that the preferred partner(s) needed to have sufficiently scalable processes and infrastructure to cope with the expected large number of additional customers (which we have). They also liked the fact we were public and financially sound.

 

 

We share common carriers with SunRocket (at least for the most part, maybe not entirely), so many ports will not really be ports at all, in that the number will remain with the same CLEC (e.g. Level3 or Global Crossing). In this case it should take 4-5 business days. The carriers are well aware of the situation and we are trying to improve this. I’m sure there will also be some cases where it will take longer, but we expect the vast majority will be quite quick to port.

 

 

We own all the core technology, which, we believe allows us to provide better overall quality and reliability. In addition, we offer a complete range of services from residential to the Virtual Office small business solution to our virtually unique Packet8 Tango video service.  

 

 

Yes, because the consumer can evaluate the financial condition of the company they are dealing with. In addition, public companies must disclose material issues and events such as lawsuits and perhaps letters of going concern and such which they can use to determine whether to stay with a particular company. With a private company they have no visibility as to the viability of the company and events like SunRocket’s demise can literally happen overnight.

 

 

We completely disagree (as you might expect). March 31 2007 we reported our 2007 fiscal year results and we grew revenues by 67% to over $53M and finished the year with $12M in the bank. Most importantly, we were darn close to cash flow break even in the fourth quarter, with just $492,000 reduction in cash. We have not yet released our numbers for the June quarter, but if you look at our financial trends you will see great progress towards cash flow positive and following that, profitability. The real key is a) don’t make nonsensical offers just to get subscribers (i.e.SunRocket’s 2 years for $199) and b) don’t let your customer acquisition cost get to a point where it takes you a ridiculously long time to recoup, if you ever recoup it. Other reasons we are confident we will survive and thrive are: as mentioned above we own the core technology, this means we don’t have to pay any significant license fees or royalties, so we have a low cost structure and by providing business as well as residential services, we leverage the residential volume to drive down our carrier and infrastructure costs and drive up our gross margins with sales of the business services. It is not impossible and we are proving it.

 

 

Our service is very similar to SunRocket’s so users will be familiar with the features etc. We believe our quality and reliability is at least as good as SunRocket’s and we are making a special offer for them to come over to Packet8; free activation, free equipment, free shipping and first month free. In addition, SunRocket subscribers can be assured that we are charging a fair price that enables us to cover our costs and potentially make a small profit, which is a good thing, not a bad thing as this means we will be around for the long term!