Vonage vs. Verizon: Round 2
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Blog: The companies are about to face off in a federal appeals court over their ongoing patent dispute.
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(InfoWorld) - Shares of Vonag plunged Friday in the wake ofÂ a patent-infringement ruling against the companyÂ that some analysts called a grim outcome for the VoIP service provider. Vonage stock fell $0.69 to $4.17 on the New York Stock Exchange, losing more than 14 percent of its value, after a jury decided on Thursday that the company infringed three Verizon patents on commercial VoIP services technology. Vonage was ordered to pay $58 million in damages and a 5.5 percent royalty rate on future sales. Verizon also is seeking a permanent injunction to keep Vonage from using the technologies. Vonage plans to appeal. The ruling comes after a string of setbacks for the scrappy service provider, which has yet to make a profit. Vonage was founded in 2001 and has built up its customer base to more than 2.2 million through heavy investments in marketing. Along the way, it has become the most visible independent provider of VoIP, which puts voice calls on data lines for lower cost and some extra features. TheÂ company has claimed Verizon sued in order to eliminate a competitor to the traditional circuit-switched phone service that is its bread and butter. Although the judgment is not very big compared to some, it could be devastating to Vonage if it stands, analysts said. "It's a drop in the bucket, but they need every cent they can get," said Will Stofega, a VoIP analyst at IDC. The company is already dealing with shareholder lawsuits over its disappointing IPO last year along with difficulty meeting regulatory requirements like E911 emergency service and the Communications Assistance for Law Enforcement Act, he said. The $58 million sum is about as much as the company is losing every quarter, Ovum analyst Jan Dawson pointed out in a research note on Friday. Vonage lost $65 million in the fourth quarter of 2006. "As this case gets more coverage, potential customers will be worried about signing up for new service with Vonage, and existing customers may churn in larger numbers than usual. Both of these effects would be disastrous for Vonage," Dawson wrote. Verizon might also go after other VoIP providers for infringing the patents, Stofega said. Big providers like the cable operators could absorb royalties, but smaller independent players would be even more vulnerable than Vonage. Already, regulatory requirements and "a race to the bottom" on pricing are threatening the stand-alone VoIP service business, he said. In a few years, many more people will be using the technology, but VoIP companies as such may become a thing of the past. Jeff Pulver, a longtime VoIP booster who co-founded Vonage before leaving the company, was more optimistic in an entry on The Jeff Pulver Blog, in which he called the ruling "the end of the seventh inning," a reference to baseball, which has nine innings. "This isn't the end of the battle," Pulver wrote. "I hope and trust this decision does not curb innovation and progress in VoIP and other Internet communications products, services, and applications."
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In the name of developing simpler voice over IP solutions, Vonage Holdings has teamed with Boingo Wireless. Initially, the companies will target business travelers with Boingo&#39;s Wi-Fi service and Vonage&#39;s SoftPhone service.
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VoIP company suffers "delays," the second glitch in two weeks. Those affected are told to reboot their adaptors.
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The cost of Vonage's VoIP technology development policy - build now, ask questions later - hardened a bit more after the close of stock trading this afternoon. Vonage has agreed to settle with the first of its three aggrieved parties, Verizon, in an unusual deal that hinges upon a forthcoming ruling from an appeals court and a separate injunction ruling from a district court.
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Troubled VoIP service provider Vonage is rolling out new products and services at the Consumer Electronics Show in a bid to reverse its downward spiral.Intellectual property lawsuits brought by Nortel, Verizon, Sprint, and AT&amp;T have distracted Vonage for the past year. During that time, customer acquisition slowed, and defections grew to 3 percent in the third quarter last year.But Vonage says it is ready to turn a corner. The suits were a weapon that the phone companies used to defend their businesses in the face of competition from Vonage, said Jeffrey Citron, chairman, chief strategist and interim CEO at Vonage. &quot;It was a successful strategy. It distracted us and slowed us down,&quot; he said. &quot;Instead of rolling out MyVonage six months ago, we were dealing with workarounds.&quot; MyVonage is the name of a new campaign at the company to introduce a host of services geared toward customer lifestyles.While the lawsuits were ongoing, the company was developing workaround technology that would allow its business to move forward without infringing on the relevant patents. Vonage has now settled all four major lawsuits against it.That has left Vonage free to spend more time focusing on its business, said Citron. It hired new engineers who designed a router, the first time Vonage will sell its own router rather than one from Cisco or Motorola.The router has an unusual feature: a screen. It displays information about problems that the modem might have in plain language. For instance, rather than showing a flashing light like most routers, this one displays words telling users that the Ethernet cable is unplugged.New customers will be able to buy the V-Portal router online starting Wednesday for $9.99 after rebates.In addition to the new router, Vonage is beginning to roll out many new features that it is showcasing at alpha.vonage.com. For instance, customers can now use voice-activated dialing, simply speaking a name to place a call. Customers can also send a voice message to anyone via e-mail. The message arrives as an attached audio file.Call blast is a new feature that lets customers send out a voice mail simultaneously to a group of people. Citron anticipates that will be useful when he&#39;s in charge of calling 15 kids who go to school with his kids to tell them there is a snow day.&quot;We expect to roll out a new capability every month or two,&quot; Citron said.Vonage also plans to offer another service that lets users access the voice recognition system from any phone to make a call through Vonage. The company is also testing software that would let customers make Vonage calls via software on their laptops.Many of these services are free to Vonage customers.Citron said that the future for Vonage will be brighter. Despite continued high churn, last quarter it had a gain of 77,000 customers, which he says isn&#39;t as good as it should be. The company has worked to cut costs, and improvements in customer service should help decrease customer losses, he said.In the meantime, speculation continues to circle that the payouts Vonage made to settle the lawsuits will cripple it. But Citron was confident that the company&#39;s troubles are behind it.
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Vonage must pay damages and a 5.5 percent royalty rate on future sales in order to continue using Verizon technology.
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The second-largest provider of consumer voice-over-internet appears to have gone out of business. The rumor, started when SunRocket, second only to Vonage in terms of user base, stopped taking new service orders, is confirmed.
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gardel writes &quot;Voxilla reports that a VoIP price war was declared today. An announcement that AT&amp;T would drop its prices for its CallVantage Service from $34.
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Vonage and AT&#38;T, still locked in a price war, are separately planning new features in a battle for VoIP customers.
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Â A VOIP (voice over IP) service offered by Vonage Holdings Inc. is not subject to the public utility regulations of individual U.S. states, the U.S. Federal Communications Commission (FCC) declared Tuesday.
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An appeals court agreed that Vonage infringed on two Verizon patents but sent the case for retrial regarding a third patent.
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ALEXANDRIA, Virginia  - A jury dealt a blow to loss-making Internet phone provider Vonage Holdings Corp. on Thursday, ordering the company to pay $58 million plus royalties on future sales for infringing three patents owned by Verizon Communications Inc..
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Voice over IP calls are getting cheaper - Vonage and AT&amp;T both announced lower monthly charges late last week. AT&amp;T said it would reduce its monthly charge by five dollars to $30 a month for unlimited local and long distance calls in Canada and the US.
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For consumers, the benefit of VoIP has been found in the lower costs VoIP companies charge. Such service is usually cheaper because providers don&#39;t have to build huge networks of lines
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Vonage, an Internet phone company, may receive a temporary lifeline as it struggles to survive a patent dispute with Verizon Communications.
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A federal jury on Thursday found that Internet phone carrier Vonage Holdings Corp. had infringed on Verizon Communications Inc.'s patents and ordered Vonage to pay $58 million.