- The Washington Times - Wednesday, July 18, 2007

ASSOCIATED PRESS

The abrupt shutdown of Internet phone carrier SunRocket left more than 200,000 customers scrambling for alternate service yesterday and raised questions about the viability of other stand-alone Internet phone providers.

SunRocket, like other companies that only provide phone service over broadband, attracted customers with cheap plans and innovative features. But traditional phone and cable companies also lowered prices and started bundling their services.

The competition proved too much for the No. 2 stand-alone Internet phone company after Vonage Holdings Corp.SunRocket, based in Northern Virginia, ceased operations without warning on Monday.

No one at SunRocket was available to explain its quick exit. SunRocket Chief Executive Officer Lisa Hook did not return a call seeking comment yesterday.

At the company’s Tysons Corner headquarters, the phones went unanswered, the doors were locked and a cardboard sign with “Out of Business” scribbled on it hung inside the glass front door. The lights were on inside, and computers and fax machines remained in place, but all the artwork had been stripped from the walls.

Customers are out of luck. Many paid for their service well in advance, drawn by aggressively marketed service plans that cost $199 a year. It was not clear whether SunRocket customers have any recourse with government regulators.

Bill Adler, a writer and book packager in Washington, relied on SunRocket for both his home number and a separate business line. Between the two lines, he estimated that he paid in advance for 18 months of service that he will not receive.

He is switching the numbers to another Voice-over-Internet-Protocol (VoIP) provider but was told that could take as long as three weeks.

“Hundreds of thousands of people rely on this service,” said Mr. Adler, who is relying on a Verizon line that he kept as a backup. “To not give people two weeks’ notice is really irresponsible.”

SunRocket’s customer service line offered callers a brief recording: “We are no longer taking customer service or sales calls. Goodbye.”

Mr. Adler admitted he is concerned that the new VoIP provider will go belly up just like SunRocket did, but he is enough of a fan of VoIP features, such as e-mail notification of voice-mail messages, that he decided to take the risk.

Meanwhile, a California company that is overseeing SunRocket’s liquidation, Sherwood Partners LLC, said it is in talks with other service providers to take over portions of SunRocket’s customer base. Sherwood spokesman Martin Pichison said he hoped to have such deals in place by today at the latest. He acknowledged that SunRocket customers are making their own deals for service with other companies.

Mr. Pichison said he did not know whether any deals would include credit to customers who paid their SunRocket bills in advance.

Many of SunRocket’s customers will opt for Vonage or another VoIP provider, some of which are posting “Welcome SunRocket” offers on their Web sites, said Stephan Beckert, research director at TeleGeography, a D.C.-based research firm.

Story Continues →