In the Spotlight: SunRocket's Paul Erickson

The newest newcomer to residential VoIP is a company founded by former MCI executives Paul Erickson and Joyce Dorris. Erickson, the company's CEO, spoke with Telephony's Tim McElligott about SunRocket's service launch last week.

Why VoIP and why now?

Ten years ago it would have cost billions of dollars to create a nationwide residential phone company. Now with the surging adoption of broadband in America and the wonders of Internet telephony we can create a phone service that is better than anything that's out there from a quality, feature, price and value perspective.

We look at VoIP as just an enabling technology. The real opportunity is create a far better phone company, one that delivers services to customers the way they deserve to get it. The technology and the economics of delivering VoIP have finally got to the state where it is ready for prime time.

What makes your service better?

It's better in two ways. And they both have to do with how you treat customers. Today when you get your phone bill there are all sorts of taxes and fees and surprises. Phone companies nickel and dime you on everything. I know how these big companies think. They go out of their way to make their bills indecipherable. We have a completely different perspective. We package the services most customers need and put them in the hands of our customers to use however they want. We eliminate the angst and concern about that their bill. We designed it so that month in and month out their bill will be $24.95. We have pioneered the concept of bottom-line pricing. The $49.99 all-inclusive package from a typical phone company becomes a $65 bill pretty quickly. In our world, $24.95 is the bottom line.

How can you afford bottom-line pricing?

Carriers have invested billions in the network and network technology and are all scrambling for ways to monetize that. Level 3, Qwest and others are all looking to deliver wholesale services to support new service providers like SunRocket. So we don't have the burden of companies who answered this VoIP space early with heavy capital investment. We have a big system integration task, which we have pulled off in the last four to five months, but we have had very low capital costs to get into business.

Analysts have questioned the long-term prospects for start-up VoIP providers. What are your thoughts?

Having paid [analyst firms] in the past for their advice, I know they are likely to tell their customers what they want to hear. I am not paying hundreds of thousands of dollars for their insight. The reality is, it is almost always new players that become market leaders as new markets emerge.

The consumer market has heard everything they want to know about brands like MCI, AT&T And Sprint. They are not really open to new messages from them. When you hear something new and fresh, that gets associated with the category. It is always new brands that make new markets. Consumers have a limited attention span and for every category, they think of two or three brands and it is the brands connected with Internet phone service that will end up dominating in this space. Consumers like hearing new things from new companies.

Is touting your history with MCI always a good thing?

MCI has been very successful. We doubled market share in the years I was there and did all we could to pioneer new services. But it was a big company with a big company mentality. That is to do whatever you can get away with and every quarter there was a cash flow crunch and rate increases got snuck in left and right. I hated it as much as anybody and that's part of the passion we have now for doing this right. Our experience at MCI has taught us what consumers want and don't want. We know how to reach them and talk to them and we believe we are taking the best of what we learned disregarding the worst of what MCI was.

[Chief marketing officer] Joyce Dorris and I worked together to design and roll out MCI's The Neighborhood. And in the early 1990s I was a key player in MCI's decision to move into the dial-around category (10-10-220) and pioneered 1-800-COLLECT. My role was mostly to understand the landscape of competition and identify what markets to enter and what products and services to introduce. So we know how to bring a new service to market.

What is your go to market strategy?

Our focus is to go directly to consumers. You won't see us doing a bunch of partnerships and alliances. Our focus is to bring the brand to consumers using offline and online consumer marketing tactics and direct market tactics. We believe strongly that if we deliver on making it easy and accessible to mainstream consumers, we will have customers that will be evangelists for us. Word of mouth and referrals really matter in the consumer market. There's not a lot of love for phone companies and cable companies. Consumers are tired of not being treated in the way they know they should be. You have to make it simple for consumers.

E-mail Tim McElligott at tmcelligott@primediabusiness.com.