SunRocket

» see sunrocket.com as it lived, on the wayback machine

~ the last words ~

i have never paid for a year of telephone service in advance. The line into the house belonged to Türk Telekom, the bill arrived after the calls had already been made, and there was no rival company standing there willing to take the money instead. That gap is most of the distance between me and SunRocket, and it is also why its ending looks so foreign from here. Two hundred thousand households had already handed over the money for service that was never going to be delivered.

Joyce Dorris and Paul Erickson, both former MCI executives, started the company in early 2004 in Vienna, Virginia. The product was a small box it called the Gizmo. Broadband went in one side, an ordinary telephone plugged into the other, and the socket in the wall stopped mattering. You kept the handset you already owned and the call went out over the internet connection you were already paying for.

The pitch was the price. A hundred and ninety nine dollars bought a year of unlimited local and long distance calling, which works out near sixteen and a half dollars a month against the twenty five that Vonage was charging. Later on there was a promotion that stretched the same hundred and ninety nine dollars across two years, which tells you something about how badly the company needed cash in the door.

Investors were happy to help. Twenty five million dollars arrived in September 2005 with Mayfield leading, and another thirty three million followed in August 2006 with BlueRun Ventures and DCM alongside. Roughly eighty million went in over three years, and it went out about as fast as it came in.

~ the record ~

~ the price ~

Prepaying a year is a beautiful thing on a balance sheet and a dangerous thing in an operating business. Cash arrives on day one and the cost of honoring it is spread across the next twelve months, so growth feels like profit for as long as the growth lasts. The service already sold has to be paid for out of whatever new customers bring in this month, which is fine until a month comes along where they do not.

The costs were also worse than the marketing suggested. Every signup came with a subsidized box, and on top of that sat the regulatory charges the traditional carriers had spent a century learning how to price. After the FCC's 2005 order there was a genuine emergency calling obligation with real money attached to it. Selling below the incumbent is a strategy that requires the incumbent to be lazy, and the phone companies were many things but they were not new to this.

~ the day the phones went dead ~

The exits started early. Both founders left in February 2007 along with about thirty other people at head office. The chief technology officer and the chief information officer were fired on 28 June, and the chief financial officer resigned on 2 July. Anyone watching the trade press could see the shape of it by the second week of July.

Customers could not. On Monday 16 July they picked up the phone and got nothing. Calling the support number produced a recording saying the company was no longer taking customer service or sales calls, which is a sentence that manages to be both true and useless. No notice went out and no refund process ever existed. For the households that had made this their only telephone, there was also no way to call anybody about it. Wikipedia's article still carries a line claiming operations ceased at midnight on 3 July, which cannot be squared with two hundred thousand people having a dial tone until the sixteenth.

~ the long tail ~

The rest of the industry moved within days, partly out of decency and mostly because a stranded customer is a cheap customer. Packet8 and ViaTalk both put up offers, and Net2Phone went as far as twelve months of unlimited calling for anyone who could prove they had been a SunRocket subscriber. In August SunRocket's estate sued Vonage, claiming it had bought and used the customer list through a third party.

Two years later the FCC extended its service discontinuance rules to cover internet telephone providers, so that a company walking away from the business would at least have to tell the people paying for it first. The domain was sold out of the estate in early 2009 to a private equity firm in San Diego, which ran unrelated services under the name for a while. Today sunrocket.com answers nothing at all, which is at least consistent with how it treated its customers on the way out.

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