Problems using My Ooma? Ideas on how we can make it better? You’ve come to the right place.
#55194 by sfhub
Mon May 10, 2010 12:02 pm
There's a difference between a price comparison of

1) is it a value for the features I'm provided
vs
2) is it a value for the features I want/need/use

Ooma could bundle in free stock trades at Fidelity for $5/mo more, which would make it a very good value, but if you don't trade stocks, it is meaningless to you.

Everybody needs to evaluate for themselves whether Ooma's feature set and pricing make sense for their situation. Personally I think if you are happy with Ooma's base features, Ooma is a no brainer (especially at $0 or $11.75/yr). If you need Premier, Voice Transcription and/or do a lot of Intl calling, you just need to do the math and see if it works out for you. The services aren't going to be exactly the same and what is right for one person won't necessarily be right for someone else.

It does kind of suck if you actually don't care for 99% of Premier features but just need it for network failure call forwarding because that is a lot to pay for a single feature that should really be included in the base package.
#55298 by cbrillow
Tue May 11, 2010 12:32 pm
DTMF wrote:BTW, the main charges on the service outside of Premier are being levied by your Federal government and in some cases, your state and local governments. <snip> Don't like the fees? Blame the government, not the merchant!

Ding, ding, ding, ding - we have a winner! :!: Sad that it took 4 pages of a rather lengthy thread for someone to make this point -- it's the one that's been going through my mind since I first read of the imposition of these fees.

Those who ignore this simple fact are probably the same ones who excitedly rip open their tax return checks, smiling with great love and appreciation for the kind and benevolent government that so generously gifted them with $.
#55318 by sfhub
Tue May 11, 2010 3:55 pm
cbrillow wrote:
DTMF wrote:BTW, the main charges on the service outside of Premier are being levied by your Federal government and in some cases, your state and local governments. <snip> Don't like the fees? Blame the government, not the merchant!

Ding, ding, ding, ding - we have a winner! :!: Sad that it took 4 pages of a rather lengthy thread for someone to make this point -- it's the one that's been going through my mind since I first read of the imposition of these fees.

Actually we haven't even had the privilege of seeing the taxes levied on you by your government. What you are seeing now are fees (and costs associated with regulation) levied on/incurred by *Ooma* which Ooma is recovering from you. There's a whole different category of taxes directly levied on the *customer* which, according to Ooma, they aren't yet collecting on behalf of the government. Fortunately it seems those taxes on the customer are often much less than the fees you are currently seeing.
#55324 by Hollywood
Tue May 11, 2010 5:00 pm
I'm just jumping in here without reading all of the posts, so forgive me if I am rehashing anything.

The new fees as far as I can see for new Ooma's are about $3.50/month or $42 a year (3.50x12). Other then Ooma having a better hardware VOIP device, MagicJack offers similar low cost yearly service for $20 a year. I assume Magic is a "for profit" company. How are they able to offer unlimited calling in the USA and Canada for that $20 when Ooma says they need $42 just for fees?
#55328 by sfhub
Tue May 11, 2010 5:45 pm
Hard to say, they are a different company with different focus.

For instance they sell ads based on their profiling of their customers.

Ooma is more a traditional VOIP provider where they are concentrating on communications.

Ooma was ok with $11.75/yr last year, so possibly they just see enough demand that they can charge more for a superior experience. Maybe MagicJack is willing to work with lower margins or they are borrowing more money to fund operations. Maybe MJ is living more day to day and Ooma is looking a couple of years forward. Maybe because of ease of use, the avg customer on Ooma will make more phone calls than the avg MJ customer. Maybe Ooma's cost structure is higher because they have more engineers and customer service devoted to development and operations. There is no rule every VOIP provider needs to bash each other on pricing until there are no margins.

As consumers we just look at the cost and what we get, the reliability, the features, and the attitude of the company and decide whether something is worth it or not.
Last edited by sfhub on Tue May 11, 2010 6:09 pm, edited 2 times in total.
#55329 by lbmofo
Tue May 11, 2010 6:00 pm
I know someone with Magic Jack. The quality is really bad a lot of the times. Very dependent on PC; when that goes busy, adios phone call.
#55333 by Hollywood
Tue May 11, 2010 6:25 pm
all good points. I do like Ooma. It works just fine for me. my main point was that Ooma is the $40+ in fees as costs for taxes or connect charges and such, but offer "free" phone service after you buy your Ooma. The charges, as I interpret them are not for the free service on their end, but for taxes and charges that they have to pay out. If some of that is not "profit", then I was wondering how MagicJack does not have to pay out a similar cost.

If fees for a normal customer was about $11.75 a year, then it would look like MagicJack is making about $8.25 + advertising a year for that customer. If fees for a normal customer was about $42 a year, then it would look like MagicJack is losing about $22 a year.

Something doesn't add up to me. Personally I was paying about $26 a month to Verizon without any features and not including long distance. I am happy to have a personal system where now I can take my number anywhere with me plus many more features in ooma, and I am happy to save anything, but I was just wondering about the real costs.

If ooma is really advertising free service (plus fee$) after you buy the Ooma, I don't see how they can just average or estimate the fees. If it is not exact, it is either not free, or ooma looses money.

My fees are $11.75 so I am happy, but a lot of people (including myself) wonder how long a company can sustain if they don't make a profit? My telo was $199 and I seen hubs as low as $139 (referb), so if their answer is to collect the money on the initial purchase, they are already not getting their full list. I know the count on premier subscribers too, but for me omma seems too good to be true. I hope it lasts and I hope they fix some of the problems that some of the forum posters have, but for now, my ooma will have payed for itself in July and after that I will be about $30/month ahead! As I said, I hope it lasts!
#55334 by Hollywood
Tue May 11, 2010 6:27 pm
lbmofo wrote:I know someone with Magic Jack. The quality is really bad a lot of the times. Very dependent on PC; when that goes busy, adios phone call.


I know, I tried it. it is not a "real" replacement for a home phone service like ooma is.
#55335 by lbmofo
Tue May 11, 2010 7:42 pm
I don't quite understand how that is either (Magic Jack getting $20 per year being enough and ooma $40+).

Maybe Magic Jack is considered "nomadic?" http://en.wikipedia.org/wiki/VoIP#Legal_issues

They offer "voluntary" E911 service meaning they are not required? If they weren't "nomadic," E911 wouldn't be "voluntary."
#55338 by sfhub
Tue May 11, 2010 8:05 pm
Hollywood wrote:all good points. I do like Ooma. It works just fine for me. my main point was that Ooma is the $40+ in fees as costs for taxes or connect charges and such, but offer "free" phone service after you buy your Ooma. The charges, as I interpret them are not for the free service on their end, but for taxes and charges that they have to pay out. If some of that is not "profit", then I was wondering how MagicJack does not have to pay out a similar cost.
...
My fees are $11.75 so I am happy, but a lot of people (including myself) wonder how long a company can sustain if they don't make a profit? My telo was $199 and I seen hubs as low as $139 (referb), so if their answer is to collect the money on the initial purchase, they are already not getting their full list. I know the count on premier subscribers too, but for me omma seems too good to be true. I hope it lasts and I hope they fix some of the problems that some of the forum posters have, but for now, my ooma will have payed for itself in July and after that I will be about $30/month ahead! As I said, I hope it lasts!

Fees do *not* have to go to the government. They are used to recover costs of doing business associated with government regulations. For example, if the government requires Ooma to maintain E911, that could be an Oracle database and a $6k server plus an admin to maintain the system. That might cost Ooma $30k/yr (assuming this is a part time thing for the admin) They have to pay that whether they have 1 customer or 100k customers. Ooma then can "recover" the costs associated with this E911 regulation. They might charge their 150k customers $1 each as a regulatory recovery fee. So it costs them $30k but they collected $150k. The extra doesn't get returned and it doesn't go to the government.

A "tax" on the other hand is something the government mandates on the transaction with the customer. It is collected by the carrier on behalf of the government. The amount is regulated and all of it goes to the government. According to Ooma they haven't started collecting taxes yet.

So basically your assumption that what gets collected all goes to the government is not correct. Actually it could be the case that none of it goes to the government, especially if Ooma starts collecting taxes in addition to the existing fees. Right now it seems they are just eating the taxes.

When you pay Ooma $200 or $150 for that initial box, some accountant breaks that down and amortizes the amount. Part of it goes to hardware costs. The rest goes to "service" and the revenue probably isn't recognized immediately. If the hardware costs $40, then that $160 may get amortized over the expected life of the product, let's say 8yrs. That means Ooma has assigned around $20/yr of service fees to each customer. They will probably end up having to pay tax on that $20/yr which is probably under $2/yr. They are eating that now, but will probably end up passing it on.

You have to also keep in mind, when people on other carriers call Ooma, their carrier *pays Ooma* termination fees. Also when you call an 800 number, Ooma gets paid termination fees. When you call another carrier from Ooma, Ooma pays termination fees. Carriers have a lot of termination fees, both outgoing and incoming.

Theoretically if Ooma gets a lot of customers and lots of their calls are to other Ooma customers then the termination fees they pay will decrease since Ooma to Ooma costs them next to nothing.

Also if Ooma attracts a lot of customers who just keep a landline around but don't actually use it that often, ie the crowd that is most upset at the phone company for jacking up fees to $30+, then they will be profitable on those amortized service fees, even at $20/yr.

If you want to give Ooma an extra boost to make sure they are financially healthy, make lots of 800 calls from Ooma and encourage your friends to call you rather than you calling them.

I should add a caveat that I'm just choosing these #s as an example. I don't know Ooma's actual cost structure or how they amortize their revenues.
Last edited by sfhub on Tue May 11, 2010 8:14 pm, edited 1 time in total.

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