2 min read

Telephony for $4 bucks a month: can it be possible?

A company that actor Ashton Kutcher was once part of is trying to shake up the telephone market in Canada

Little known Ooma Inc., a Palo Alto, Calif.-based vendor of HD-quality telephony services, is making Canadian small businesses an offer too good to refuse.

The company’s vice-president of marketing, Jim Gustke, told CDN that Ooma (pronounced oooh-maw) will provide virtually free phone services if you buy its Telo product for $179. The phone service is virtually free because customer would still have to pay taxes and other fees, for a total of roughly $4 per month.

Ooma, which stands for Object Of My Affection, started in 2004 just in the U.S. market and moved into Canada last November. The company, which once had actor Ashton Kutcher working for them as creative director, has been forging business relationships with the retail and distribution channel. Gustke said that so far, Ooma has partnered with Best Buy Canada, Future Shop, Staples, London Drugs and online sellers such as Amazon.ca and Costco.ca. He added that Ooma inked D&H Canada as its sole distribution partner in the country.

“We are really in a fortunate situation in Canada. The Telo was released in 2009 and over that time it has been hardened. It works great now and there are no bugs. Everything was up to par with Telo as we entered Canada. This was a much better position for us than when we introduced the product in the U.S.,” Gustke said.

The challenge for Ooma in this market is one of awareness, Gustke said. “Phone service is a considered purchase and it’s tough to get people to switch even if they know they are paying too much,” he said.

One of the avenues Gustke is considering is working with solution providers. He acknowledged that the business model will be difficult as Ooma is a low cost hardware vendor and the service is for free. “We would love to figure out something there because it can be a compelling solution to the VAR channel,” he said.

The Ooma solution sounds similar to Vonage, which has been operating in Canada since 2006. But Gustke said there are several differences. For example, Vonage offers the phone device for free and charges the customer roughly $25 a month before taxes and fees. The Telo business model runs the opposite way and, in four months, the cost savings will pay for the device.