SunRocket fires off new low for Net phone rates

That's what Internet telephony start-up SunRocket now charges customers in Baltimore, Washington, D.C., and Boston for unlimited U.S. calls and up to 100 minutes of international calls a month. On Monday, the company will introduce the $200-a-year plan in New York, Los Angeles and 29 other markets.

It's difficult to find a lower price among the hundreds of carriers that, like SunRocket, sell phone calls that flow over the Internet, thus avoiding inefficient and heavily taxed and regulated home phone networks. SunRocket charges $10 per month less than comparable plans from Net phone industry leaders, including Vonage Holdings. SunRocket even undercuts price extremists like Lingo, which sells unlimited calls domestically and to Western Europe for $20 a month.

Many Internet phone insiders believe the lowest an operator can charge is $20 per month, below which it becomes an unprofitable business. Asked whether SunRocket is actually losing money to offer a cut rate deal to stand out among the hundreds of other Internet phone service providers, SunRocket Chief Marketing Officer Joyce Dorris didn't answer directly.

"Here's an industry in chaos, there's lots of change, it's on the verge of transformation and there's a new technology enabling new things," she answered. "All the sudden, home phone service doesn't need to be annoying, confusing and more complicated. It's possible to put it all together and make it simple."

Voice over Internet Protocol (VoIP) is the technology at the root of a dynamic shift in the telephone industry. No longer do households have to rely on just a handful of local phone companies. VoIP technology turns any broadband connection into a home phone line, and at savings significant to what traditional phone companies pay. The number of VoIP households is expected to mushroom to 18 million by 2008 as service quality increases, already inexpensive rates continue to drop and more homes get broadband, which VoIP operators usually require.

Dorris and SunRocket co-founder Paul Erickson both left local phone company MCI around 2002 to enter the VoIP market. Dorris led MCI's consumer division, and spearheaded the creation of MCI's first-of-its-kind bundle of unlimited local and long distance called the Neighborhood Built by MCI plan.

"I know from my experience at MCI that there will be hundreds of competitors," Dorris said. "There will just be a few that make it into consumer consideration."