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Vonage Another Interesting Story...
http://www.newtelephony.com/news/66h2184036.html
Vonage
Another Interesting Story...
http://www.newtelephony.com/news/66h2184036.html
Vonage Gets Gray Hairs
By Kelly M. Teal
Posted on: 06/21/2006
Vonage Holdings Corp. has had a rough go of it the past few weeks. First, the Voip provider launched an allegedly overpriced IPO that landed it in hot water with shareholders. Then it was slapped with a patent lawsuit from Verizon Communications Inc.
But is Verizon really concerned about patent infringement, or are other motivations at work? And, perhaps more importantly, what can Vonage do to recover from this spate of back luck?
New Telephony asked two analysts for their input on these questions.
“Vonage has been a high-visibility company for years,” says Victor Schnee, president of telecom consulting firm Probe Financial Associates Inc. “It sounds at least a little bit strange that Verizon wouldn’t have any idea how the technology worked.” Schnee adds that Verizon’s VoiceWing Voip service is “an embarrassment,” explaining that it drops his calls and loses his voice messages. “If they have these wonderful patents, why don’t they have service that works?” he asks.
Brian Washburn, principal analyst for network services at Current Analysis, also is skeptical of Verizon’s timing and goals related to the Vonage action. “It does seem odd to me,” he says. “An S-1 is usually filed a long time before an IPO. … It doesn’t sound right that [Verizon] just happened to notice right after [Vonage] went public that something potentially infringed.”
Vonage registered its intent to go public on Feb. 8. Verizon filed its lawsuit in federal court on June 12, several weeks after Vonage went public.
In its complaint, Verizon alleges that, “Vonage has unfairly capitalized on Verizon’s investment in Voip research and development by using Verizon’s patented technology in its Voip service offerings, including Verizon’s inventions relating to (a) gateway interfaces between a packet-switch and circuit-switched network, which is critical to implementing commercially-viable Voip telephony; (b) billing and fraud detection in commercial Voip telephony; (c) call services in commercial Voip telephony, such as call forwarding, follow me, and voicemail; and (d) methods relating to the use of Wi-Fi handsets in a Voip network.”
While Schnee and Washburn decline to comment on whether Verizon’s case has merit, Schnee says that patent claims in general are frequently questionable, while Washburn notes the Verizon action could drive down Vonage’s market valuation even further, which could drive the Voip pioneer out of business and/or make it a prime target for a buyout.
“Patent claims are often weak or bogus,” says Schnee. “I don’t want to say Verizon doesn’t have a lawsuit … [but] patent strike suits have been a way monopolies or bigger companies try to thwart smaller competitors … so it raises, at the least, a serious red flag.”
Washburn adds that the suit is likely to “grind along for a long time.”
So what’s a Voip provider to do?
Schnee says Vonage should try to recover from its rough ride by continuing to sign new subscribers, despite the high costs; exploring a joint venture with a company with common interests; push for Voip provider consolidation; and establish an antitrust case against the RBOCs.
For the joint venture, Schnee suggests that Vonage consider a relationship with Clearwire, the wireless broadband ISP, or a similar entity. “If we look at companies like Clearwire that are trying to go public, Clearwire is going to need products and customers and national marketing, and Vonage has a pretty good start on those things,” Schnee says, adding that this also would help Vonage cut some of its costs.
As for consolidation, Schnee says Vonage should “put the heat on all of the other little guys who are out there selling Voip” to consolidate with Vonage. “A lot of those little guys are never going to have an exit strategy,” he adds. “Even though Vonage’s stock may be beat up, it’s still a currency … it can go up.”
As for the antitrust suggestion, Schnee says Vonage should “start building a case against the RBOCs. … There is no question that the RBOCs have discriminated against them and other Voip carriers … I know it firsthand.”
If Vonage takes such steps, Schnee expects the company could rid itself of the stigma that surrounds its IPO and its overall reputation. If they get some of those things right, he says, executives “could begin to maybe create a different aura about the company.”
Current Analysis Inc. www.currentanalysis.com
Probe Financial Associates Inc. www.probefin.com
Verizon Communications Inc. www.verizon.com
Vonage Holdings Corp. www.vonage.com
Read The Full Thread: Interesting Story about Vonage and where it might be heading
• Interesting story
http://gigaom.com/2006/06/09/is-vonage-the-new-mci/
• Thanks for posting that, it was very interesting.
It would probably be unfair
• This is the most clear-headed assessment of VG's competitive position I've read.
• Very good article, Thank you for the post.
I would have to say that vonage has
• Here's part of an article in tomorrow's Wall Street Journal:
Poor Debuts
• Forget the academic research. VG's growth rate has got to be above the average
• Another good story, it deserved its own thread and a descriptive topic title.
• http://gigaom.com/2006/06/09/is-vonage-the-new-mci/
I thought this
• So a former employee and friend of the crooked Jeff Citron thinks Vonage is a buy.
gfoulks posted "Another Interesting Story...
http://www.newtelephony.com/news/66h2184036.html
Vonage" on 06/23/2006 |
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