Startup ooma Inc. says it offers free, unlimited local and long-distance calling for life. Whether that's your life or the life of ooma is a key question, though, because the service costs you $399 up front.

    Palo Alto, Calif.-based ooma launched last week, gaining lots of publicity for having "actor" Ashton Kutcher on staff as creative director. [Ed. note: They undoubtedly couldn't afford Uma.] The startup offers free local and long-distance voice service through a piece of hardware that connects to an end user's phone and broadband connection, just like VOIP modems used by pure-play VOIP providers like Vonage Holdings Corp. (NYSE: VG - message board). (See Ooma Announces Service.)

    Unlike Vonage, however, the ooma hardware works by sending voice packets over the IP network and then terminating calls through other ooma devices connected to the local PSTN. In this way, the company is able to terminate the call without paying interconnection fees to local carriers.

    So what's the catch? Well, there's the little matter of the $399.

    Perhaps more importantly, users may be wary of a new VOIP startup in the wake of SunRocket Inc. 's demise and ongoing litigation between Verizon Communications Inc. (NYSE: VZ - message board) and Vonage.

    (See Nuvio Picks Through SunRocket Debris, Vonage Taps SunRocket Users, Vonage, Verizon Fight to Go Into Late Rounds, Vonage Wins Stay, and Court Asks VG, VZ to Mend Fences.)

    Jupiter Research analyst DougWilliams says the $399 upfront cost is going to be an inhibitor for some users. "Users are going to be very hesitant about signing up, particularly with the way SunRocket disappeared in the blink of an eye."

    But ooma CEO Andrew Frame contends his company has a significantly better model than other pure-play VOIP providers, and even goes so far as to say ooma could be a "savior" for the industry.