Update: Vonage subscriber growth slows
616267
(InfoWorld) - Vonage Holdings lost less money in the fourth quarter of 2006 than a year earlier, but it didn't attract as many new subscribers to its VOIP (voice over Internet Protocol) service despite heavy marketing. The company, a pioneer in selling phone service that uses packet data networks instead of traditional circuits, now faces competition from cable operators and the established telecommunications carriers. The big players recognize the potential cost benefits of the technology as well as its flexibility, including the ability to give subscribers a browser-based portal for using voice mail and changing service preferences. But those big players are also bundling VOIP with other services, such as broadband Internet access and TV. Vonage ended the fourth quarter with a net gain of 166,267 subscriber lines, bringing its customer base to more than 2.2 million. But that was less than the 204,591 subscribers it gained the previous quarter as well as its gain in the fourth quarter of 2005, when it added 207,252 subscribers. Revenue soared to $181 million, up 91 percent from a year earlier, and the company's net loss narrowed. Vonage lost $65 million, or $0.42 per share, compared with a loss of $72 million in the fourth quarter of 2005. The company's margins also improved, according to a statement Thursday. But Vonage has built its business on being an early mover and drawing a big base of customers that can later drive profits. The company's marketing costs still amounted to 53 percent of revenue in the fourth quarter, although this was down from 71 percent a year earlier. Vonage still expects to reach its goal of making an operating profit, adjusted for certain factors, as early as the first quarter of 2008, the statement said. The company's stock (VG) dropped sharply after its initial public offering on the New York Stock Exchange last May at $17. Among other things, investors worried about the company's losses and growing competition. On Thursday afternoon local time, the share price was down $0.42 at $5.42. Though the future is cloudy for dedicated VOIP companies, VOIP itself is looming larger in major service providers' plans, according to IDC analyst Will Stofega. For example, mobile operators are looking at VOIP overÂ combined cell and Wi-Fi phonesÂ as a way to improve in-home coverage without the expense of beefing up the cellular network itself. However, it's too soon to count out Vonage. The company has started to focus on small and medium-size businesses, where it faces less competition from cable operators, Stofega said. Consumers may also see providers such as Vonage get into mobility themselves. Vonage could buy minutes from a cellular carrier and offer a service that lets subscribers hop on to Vonage via Wi-Fi at home, Stofega said. It has no traditional cellular minutes business to protect and could move early, jump-starting the trend, he added. The company could also team up with public hotspot providers or a municipal Wi-Fi operator such as EarthLink to provide mobile service over those networks, he added. But both of these are hard ways to make a profit, Stofega said.
563469
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.
432490
Revenue from its basic phone service is slipping as consumers make more cellular calls and experiment with upstart Internet-based phone providers.
284079
The two Internet phone services reach customer milestones--a sign to some that VoIP no longer intimidates consumers.
197417
Blog: The company says it needs the cash to fuel growth, but some bloggers think the problem is not enough subscribers.
120476
BSkyB reports a rise in first quarter profits and sales but there is further evidence that subscriber growth is slowing down.
134304
These cell-phone boosters promise more stable calls, but how much improvement can consumers expect?
555236
Customers want the service, changes are in the works, and counting Vonage out could be a mistake.
680460
Phone service that's available wherever there's a Net connection is approaching 2 million users.
683101
Internet phone company Vonage Holdings Corp. narrowed its fourth-quarter loss to $65 million as revenue nearly doubled with the addition of nearly 1 million customers during 2006.
236645
Russia's No. 2 cell phone provider slows down, but just a bit.
431353
(InfoWorld) - On Monday evening, my wife reached me on my mobile phone. She was spending a long weekend with her family in Maine. "I've called our home phone several times," she said. "And I keep getting a busy signal." That night, I didn't think twice about the phone problem. We have been VoIP customers for more than a year, and flaky service has been standard operating procedure. I reset my VoIP converter box and crossed my fingers. Then, on Tuesday, when the problems persisted, I called my VoIP provider, SunRocket, and got the message that the company was no longer taking tech support and sales calls. That's not good. Many free-market analysts and large telecom providers have hailed this as a new era of competition. It's a wonderful new world where your VoIP provider can cut off your home phone service without warning. This week, SunRocket went belly up without any communication to its 200,000 customers. SunRocket had been providing both my home and my home office phone service. I could charitably say that phone service since Monday evening has been intermittent. In reality, phone service has been mostly dead with occasional spurts of dial tone. Now, when business associates try to call my home office, they get either a busy signal, or they get one ring and a hang-up. I'm trying to switch my home and office numbers to Vonage, but they say it could take up to 10 days for the switch to happen. When I first heard about SunRocket more than a year ago, it seemed like a good solution to large monthly telephone bills. The local incumbent phone service was charging about $60 a month for unlimited local and long distance. SunRocket offered unlimited local andÂ long distance and even some international calling for $199 a year. The company also offered a second out-of-area-code phone number at no cost. That feature caught my eye because my home office is in suburban Maryland, but most of the people who call me are located in Washington, D.C. My wife and I looked at a savings of more than $500 a year and decided it was time to check out VoIP. The switch was not without problems. Voice quality was spotty at best, particularly when we were talking to someone on a mobile phone. For months, we had problems with frequently dropped calls. We soon became quite familiar with the "not-my-fault" phenomenon. SunRocket blamed the problems on Comcast, our broadband provider. Comcast, of course, blamed SunRocket. (Comcast: We can't guarantee quality of service for third-party applications. By the way, why don't you switch to our voice over IP service -- it only costs double what you're paying now.) After months of experimenting with equipment configuration, we finally got most of the problems ironed out. When it came time to renew our annual subscription, we had mixed feelings, but SunRocket was still significantly cheaper that most alternatives. We paid $199 for a year of service in March. In late June, in a sign of things to come, SunRocket laid off about a quarter of its workforce. The way I look at it, someone owes us about nine months of phone service, but we're not holding our breath. Now, in some ways, this is just a story about a couple hundred thousand VoIP customers who saw their phone service go dead without warning. But there's a larger context here. During the last couple of years, some telecom analysts, free-market think tanks, and telecom carriers have trumpeted a new era of competition. Their argument: Old, monopoly-style regulations aren't needed any more because there's all kinds of competition out there. They say that telecom carriers shouldn't have to share their networks with competitors and broadband providers shouldn't be prohibited from blocking or slowing Web content from competitors because there's all kinds of competition out there. Meanwhile, SunRocket, the second largest independent VoIP provider, has shut down. Vonage, the largest independent VoIP provider, has faced a patent infringement lawsuit from giant competitor Verizon, and its future is uncertain. Verizon contends it owns the patent to the technology that translates VoIP calls and allows them to connect to traditional telephone networks. Wireless phone carriers provide some competition, but the largest two wireless carriers are owned by the two giant telecom carriers. I'm not sure that counts as competition. In the broadband space, there are some indications that one or two new competitors are on the way, but it could take years. Right now, well over 90 percent of the U.S. has at most two broadband providers, the cable company or the telecom carrier. The telecom carriers are fighting against auction rules that would encourage a new broadband provider when a chunk of television spectrum is freed up in early 2009. Elsewhere, broadband customers in other countries, such as Japan and South Korea, pay less for faster service. Japanese customers pay about one-seventh what U.S. customers do per megabit of bandwidth. But few people in D.C. want to talk about the real reasons for this. It's not free-market competition; instead, telecom services in many other countries are highly regulated and subsidized by the government. For some of us, the promise of telecom competition seems a long way off. And, by the way, if you want to find me during the next week, your best bet is probably e-mail.
444671
Soaring subscriber growth in India led a 38 percent global rise in DSL (digital subscriber line) use in the 12 months ended June 30, according to an industry group.
492636
In the long term, the device will reshape mobile telephony.  But in the shorter term, don't expect upheaval.
223356
Investors have spoken: Vonage still gets no respect.
491013
There are just too many cards stacked against Vonage.
200796
Leading wireless phone provider sets subscriber bar a little higher.