July 17, 2007 / 4:51 AM / 10 years ago

Internet-call service SunRocket cuts off service

SAN FRANCISCO (Reuters) - SunRocket Inc., the second biggest U.S. supplier of Internet phone services, appeared to have shut down its business on Monday without notifying its customers, which total more than 200,000.

Vienna, Virginia-based SunRocket, which is a rival to Vonage Holdings in the home and small business market for Voice over Internet Protocol (VoIP) phone services, gave no warning it was shutting down operations on its Web site.

Callers to its customer service line heard a brief recorded message, saying: “We are no longer taking customer service or sales calls. Goodbye.”

Companies offering calls over the Web were seen as rivals to established carriers when they sprouted up a few years ago, but many are having a difficult time financially competing against their big, deep-pocketed and entrenched rivals.

Calls and e-mails to SunRocket by Reuters were not returned.

A report in the New York Times quoted an unnamed source that had been briefed on the company’s status as saying that SunRocket had ceased operation and plans to move its customers to one or more companies.

Customers, many of them lured by SunRocket’s offer of unlimited phone calling for one year for an upfront fee of $199 within the Canada, the United States and Puerto Rico, reported patchy service or full outages on Monday on Web sites such as FatWallet.com and DSLReports.com.

SunRocket was founded in 2004 and backed by top-name Silicon Valley venture capital firms Blue Run Ventures, formerly known as Nokia Venture Partners, Doll Capital Management and the Mayfield Fund. No one was immediately available to comment at the three financial backers.

ViaTalk, a rival to SunRocket based in Clifton Park, New York, issued a statement offering a contract buyout to SunRocket customers.

The company added it was offering a coupon for free shipping of ViaTalk phone equipment to customers looking to switch services, although it did not lay out the what the overall cost to SunRocket customers would be.

ViaTalk offers a similar $199 per year calling deal. ViaTalk was founded in 2005 and is an offshoot of a Web hosting company, HostRocket.com. Spokesman Tom Nardacci said the company had between 50,000 and 100,000 customers.

Vonage, which has reported losses since it held its initial public offering in May of 2006, has been locked in a patent battle with Verizon Communications. It is struggling to retain customers who fear service disruptions owing to its legal woes.

Independent VoIP providers face mounting competition from established cable television and telephone companies who offer alternative services as part of packages that may include landline, broadband Internet, TV or mobile phone services.

Additional reporting by Ritsuko Ando in New York

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