As AT&T Looks to End Landline Phone Service, Ooma Offers Both Consumers and Businesses An Easy and Affordable Path to POTS Replacement
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Insights
The phase-out of POTS (Plain Old Telephone Service) in favor of more modern telecommunication solutions represents a significant shift in the industry, with direct implications for both consumers and businesses. The transition away from POTS is driven by the evolution of technology and the need for more advanced and cost-effective communication systems. As legacy carriers like AT&T prepare to discontinue their landline services, consumers and businesses must adapt to alternative services that can support their communication needs.
Ooma, Inc.'s introduction of products such as Ooma Telo and Ooma AirDial is an example of market adaptation to these changes. These products aim to provide seamless transitions for customers, ensuring continuity of services such as emergency calling, alarm systems and business communication infrastructure. The move toward internet-based communication solutions offers potential cost savings and enhanced features, which could be a strong selling point for Ooma's offerings.
However, the reliability of wireless connections and internet-based communication in comparison to traditional landlines, especially in emergency situations or in areas with poor cellular coverage, remains a concern. The adoption of solutions like MultiPath connection and LTE with Battery Backup illustrates an attempt to address these reliability issues.
From a market perspective, the discontinuation of POTS services opens up opportunities for companies like Ooma to capture market share from legacy carriers. The competitive landscape is likely to intensify as more players enter the space with innovative solutions to fill the void left by traditional landlines. Customer acquisition strategies will be critical, as will the ability to differentiate services through features and reliability.
Ooma's strategy to offer a one-time fee for number porting and a monthly subscription model for advanced features is an approach to generate recurring revenue while also providing flexibility and additional value to customers. The emphasis on ease of transition and compatibility with existing systems is likely to resonate with consumers hesitant to change due to the perceived complexity of switching to new technologies.
Long-term implications for the stock market and investors hinge on the adoption rate of new telecommunication solutions and the operational execution of companies like Ooma. Success in this transition could lead to increased market share and revenue growth, while failure to meet customer expectations could result in reputational damage and financial setbacks.
The announcement by Ooma, Inc. regarding its solutions for POTS replacement should be carefully evaluated by investors for its potential impact on the company's financial performance. The investment in new technology and infrastructure to support these services will likely incur significant upfront costs. However, if executed effectively, this could translate into long-term gains through customer acquisition and retention.
The pricing strategy, including the one-time number porting fee and optional monthly subscription for premium features, could enhance Ooma's average revenue per user (ARPU). Furthermore, the shift from a one-time purchase model to a recurring revenue model could lead to more predictable and stable cash flows, an attractive prospect for investors.
Investors should monitor customer feedback and adoption rates closely, as these will be key indicators of Ooma's ability to capitalize on the market opportunity presented by the discontinuation of POTS. Additionally, regulatory developments and the competitive response from other telecom providers will play a crucial role in shaping the market dynamics and Ooma's position within it.
As AT&T and other carriers look to end traditional landline phone service, consumers and businesses have options for replacing Plain Old Telephone Service, or POTS. Ooma Telo LTE with Battery Backup, shown here, delivers free phone service (subscribers only pay applicable taxes and fees) and stays connected during power failures for up to eight hours. (Photo: Business Wire)
AT&T recently mailed notifications to its landline customers in
AT&T said it would guarantee to continue providing POTS service for no more than six months after the request is granted. The Federal Communications Commission already removed price caps on POTS service in 2022, leading in some cases to big increases in monthly rates, and many other state regulators are in the process of allowing a gradual end to landlines.
This presents a dilemma for consumers and businesses who still rely on POTS. Consumers, for example, may live in a location with no cellular signal or may have a home phone number they don’t want to lose. Businesses may have safety equipment such as fire-alarm panels, elevator phones, burglar alarms and building entry systems that can’t be switched to an internet connection because of regulatory requirements or concerns with reliability.
Ooma has answers for both groups of users.
Ooma Telo (https://www.ooma.com/home-phone-service/) for consumers provides free internet home phone service, with subscribers only paying applicable taxes and fees. The service is designed to address the most common questions for customers switching from a traditional landline:
- Can I keep my existing home phones? Yes. Ooma Telo is compatible with all standard home phones.
- Can I still dial 911 in an emergency? Yes. With the E911 service included with Ooma Telo, first responders will see your address registered with Ooma displayed on the screens even if you can’t talk. What’s more, family members can get automatic alerts whenever 911 is dialed. For example, parents away from home will know if a babysitter makes an emergency call.
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Will I lose my home phone number? No. Landline customers can transfer, or “port,” their existing home phone number to Ooma for a one-time fee of
$39.99 - Will my home burglar alarm system still work? Yes. Ooma Telo has an Alarm Mode to support most home burglar alarm systems that require an analog phone line.
- Will my phone work during a power outage? Yes, if you get Ooma Telo LTE with Battery Backup (https://www.ooma.com/home-phone-service/residential-voip-phone-with-lte-internet-service/), which provides a wireless internet connection and a backup battery that will last up to eight hours whenever the power goes out.
The optional Ooma Premier plan at just
Ooma AirDial (https://www.ooma.com/business/airdial-pots-line-replacement/) for business is an all-in-one POTS replacement solution that combines hardware, software, connectivity, virtual POTS lines and remote management with a single monthly bill from one vendor. AirDial’s industry leading features include:
- Wireless connectivity that goes directly to the Ooma cloud without traversing the public internet for higher reliability.
- Remote management through an online portal for multiple AirDial devices across multiple accounts with a single sign-on for efficient monitoring and control.
- An option for MultiPath connection, where calls are carried simultaneously on both a wired and broadband connection, allowing for automatic failover if one pathway goes down without the call in progress being disconnected.
- Professional site audits and installation to smooth the transition away from POTS.
“The inevitable end of landline phone service is understandably worrisome to many consumers and businesses, but there are a range of choices for POTS replacement – including those from Ooma – that can meet their needs,” said Thad White, vice president of product management at Ooma. “Once landline users make the switch, we believe they’ll be both relieved and happy to discover they’re getting more features and more reliability at a lower cost.”
About Ooma
Ooma (NYSE: OOMA) creates powerful connected experiences for businesses, consumers and service providers, delivered through smart cloud-based communications platforms and services. For businesses of all sizes, Ooma offers advanced voice and collaboration features including messaging, intelligent virtual receptionists and video meetings. Ooma’s all-in-one replacement for analog phone lines helps businesses maintain mission-critical systems by moving connectivity to the cloud. For consumers, Ooma’s residential phone service provides PureVoice HD voice quality, advanced features and integration with mobile devices. Learn more at www.ooma.com or www.ooma.ca in
Forward-Looking Statements
This release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements in this press release that are not statements of historical or current fact constitute “forward-looking statements.” The forward-looking statements contained in this press release include, without limitation, statements related to the functionality, features and benefits of Ooma AirDial and Ooma Telo. Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results to be materially different from any future results expressed or implied by such forward-looking statements. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in Ooma’s filings with the Securities and Exchange Commission, including under Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2023, filed on April 7, 2023, and in its subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date they are made. Ooma undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240213853060/en/
MEDIA CONTACT:
Mike Langberg at Ooma
press@ooma.com
650-566-6693
INVESTOR CONTACT:
Matt Robison at Ooma
ir@ooma.com
650-300-1480
Source: Ooma, Inc.
FAQ
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