SunRocket Goes Down, Customers in the Dark

With independent and small businesses, it has been the proverbial David vs. Goliath battle. And this time around, it is not David that has been winning. SunRocket, an independent Internet phone provider, went the same way on Monday.

SunRocket went into abrupt cessation mode, stopping all its operations on Monday. With senior executives leaving for greener pastures and staff having to be laid off, the closure had seemed a logical conclusion. It was the abruptness that caught all by surprise.

The company, which has been around for three years now, had been looking for a fourth round of funding to supplement the $80 million investors had pumped in since March 2005. With funding hard to come by, options were limited.

Speaking on condition of anonymity, three former employees of SunRocket said the company laid off one fourth of its local workforce, around 30 to 40 people on June 29, 2007. This was done to keep the payroll manageable and lure investors.

From then on, it seemed more a matter of when. On 11 July, CEO Lisa Hook, who came on board in March 2006 after long years at AOL, announced to the entire staff in a meeting that though there were people interested in acquiring SunRocket, bankruptcy was still an option.

Friday, the 13th of July, was a grim day for all at SunRocket, with most of the remaining staff being laid off and the CEO resigning. A skeletal staff was retained to handle basic operations for subscriber. Finally on Monday, all the remaining employees were allowed to leave. This included about 200 employees of a company call center in Springfield, Mo.

What has irked subscribers is that the company did not let them know about the way things were shaping up. Unaware of the inside details of the company, most customers were in fact happy with the service being provided. Some had come away from SunRocket’s rival, Vonage, because of SunRocket’s better pricing.

Now, the sudden stoppage of service by SunRocket means customers have no Internet phone service. The customers stand to lose not just the company services, but also their money. This is because unlike its rival, SunRocket offered no monthly billing facilities. Customers had to pay for two years of service in advance.

Other competitors have stepped in to fill the void now. Customers of SunRocket are being offered special prices; the lure game is on all over again. Vonage is offering a free switch to its network, along with two months of free service, to SunRocket customers through a premium plan.

Primus, a competitor, is offering its Lingo service free for a month. Nuvio Corp., another competitor, is offering to let SunRocket customers move to their service at SunRocket rates.

Based out of Vienna, SunRocket had a customer base of 206,000 and was second behind independent provider Vonage (which has 2.4 million customers). The closing down of the company is being taken care of by Sherwood Partners of Palo Alto, Calif. A spokesman for Sherwood Partners said SunRocket was hoping to sell all its existing contracts.