Vonage VoIP Forum Digest - May 19

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May 19, 2006

By Daniel Connor

Welcome to today's edition of the Vonage VoIP Forum Digest. Because there is so much talk about the Vonage IPO next week, I decided to make this issue a special edition about the Vonage IPO and the Directed Share Program. That means we'll run our Friday In The Blogs feature on Monday.

By far the biggest news about Vonage is the upcoming Vonage IPO next week, and the Directed Share Program that lets many Vonage customers buy stock in Vonage at the IPO price. I have been reading lots of blogs, online articles, news stories and of course, Vonage Forum posts about this.

Of course you know that while the Vonage Forum is not affiliated with Vonage in any way, we are the largest independent resource about Vonage, and watch the company and its technology very closely. I know that a number of you members are curious what I, the administrator of the Vonage Forum, think about this IPO and the DSP. So I am going to tell you here.

I should tell you that I am personally looking forward to this IPO.

Now I have been reading some negative opinions about this IPO, in newspapers and on blogs I respect. But to those writers, I would say that to those writers who criticize Vonage's service to make a point that the IPO might not do to well, that only a fraction of the Vonage customer base is complaining, a small fraction (we have 27,000 members,) with only a fraction of them posting negative comments. And that's out of 27,000 Vonage Forum members, and 75,000 posts (which we reached on Thursday), and an even bigger - far bigger- universe of 1.5 million Vonage customers.

I have also been reading stuff in the blogs from some bloggers who try to compare Skype and their promotions with the Vonage service. While I know many Skype users, and have even tried Skype a bit myself, most Skype users would admit that comparing Skype and Vonage is like comparing apples and oranges. Vonage is a VoIP provider, more like a phone company than a company like Skype that still specializes for the most part in PC to PC calling.

Now I want to tell you about some Vonage Forum posts that I believe back up the points I am making here.......

On vonage-forum.com/sutra78091.html#78091">this area of vonage-forum.com/ftopic13803.html">The Vonage IPO Thread, you will find a great post by Vonage Forum Member vonage-forum.com/member-viewprofile-26972.html">pguy40, along with my response.

1. Why was it bad for Vonage to contact customers via email, voicemail, and postal? (I got one of each). How else could they have communicated the offer to customers? and why does the way they did it reflect badly on Vonage? If someone wants to offer me a legitimate financial opportunity should they not contact me? Should I read their minds????

2. Skype is nothing like Vonage. Vonage can be used by anyone with little technical knowledge and doesn't need a computer to be used or even on. Vonage is the most recognized name in VoIP and has the best reputation in VoIP. They are in every office supply store and every consumer electronics store. They are THE name in VoIP.

3. Comments on Vonage customer service are unfounded in my experience. I have two accounts, home and business and in the last two years have had to contact them 2x. Both times they solved my problem within minutes. I have noticed no downtime in the last year at all.

4. You will find a lot of negative articles before any tech IPO, SEC rules do not allow the company to respond. Remember all the bad press before Google's IPO? Look how that turned out.

Well, that's what pguy40 writes. Want to know what I wrote back- and what I think?

I answered pguy40 by writing that I agree with everything he has stated and have a few comments to add.

I am remarkably surprised by the number of new members who have joined the forum in the past few days only to post what I call "Bash -N- Dash" posts, almost as if it is an organized effort to deface the Vonage IPO.

Many companies stand to collectively lose Billions of dollars at the hands of Vonage's success, every RBOC, long distance carrier and dozens of VoIP companies. This is something to consider as you read the negative press.

Then blakadher, a former Vonage Forum Member of the Week, posted a question in which he wanted me to clarify what I meant when I wrote "all the way."

"I am in for 5000 shares and as I stated, I would be for 10,000 had I known of this opportunity before hand. I believe in this IPO and that is coming from someone who has read every single thread on this site, negative and positive. I have also met the executive management. Citron has put together a team of leaders, the best of the best. These are not the kind of guys that hang around a sinking ship, if you know what I mean.

"So, is this the right move for you?," I then asked. Maybe/maybe not. But it is for me and I am happy Vonage gave me an "in" on the IPO purchase."

For More About The Vonage IPO

On May 9, I published a special edition of the Vonage Forum Digest in which I presented some key facts about the Vonage IPO. You can find a link to that Digest edition vonage-forum.com/article2705.html">here.

Although I encourage you to read that edition for full information, here's the basics, as I included in that Vonage Forum Digest edition:

First, let us go to the basic facts:

To be eligible to purchase common stock at the IPO price in the Vonage IPO, customers must meet strict eligibility criteria. Vonage customers may be eligible to participate if they meet all of the following criteria: -- they opened accounts with Vonage America on or prior to December 15, 2005, and -- maintained their accounts in good standing through February 1, 2006, and -- are a U.S. citizen, and -- reside in the U.S. when the offering closes, and -- have a valid social security number.

I should also point out that we have a Vonage Forum thread already set up to discuss the subject. It's called vonage-forum.com/ftopic13803.html">The Vonage IPO Thread.

Now, let us get into the meat of what this Vonage Directed Share Program is about.

Vonage Directed Share Program

The specifics of Vonage's Directed Share Program is contained in a Vonage Prospectus that you get when you visit vonage-forum.com/outgoing/out.php?url=aHR0cDovL3d3dy52b25hZ2VpcG8uY29t">http://www.vonageipo.com and go through a brief process. If you meet the criteria asked about in this process, you get access to the Prospectus that describes the Program, as well as the Vonage IPO itself.

Here's what Vonage says in its Prospectus about the Directed Share Programs many of you Vonage Forum Members are showing so much initial interest in. I wrote the subheads, but the rest of the language is Vonage's.

We have requested that the underwriters reserve up to 13.5% of the common stock offered in this prospectus for sale to certain of our customers at the initial public offering price in the Vonage Customer Directed Share Program. The Vonage Customer Directed Share Program will be centrally administered through the program website at ipoinfo.vonage.com. A Vonage customer may be eligible to participate in the Vonage Customer Directed Share Program if he or she meets all of the following criteria:

The customer opened an account directly with Vonage America on or prior to December 15, 2005.
The customer must have opened an account with Vonage America and not through a third-party wholesaler.
The customer maintained the Vonage account in good standing through February 1, 2006.
The customer is a U.S. citizen.
The customer resides in the United States as of the date of the consummation of this offering.
The customer is a natural person and has a valid U.S. social security number. No entities are eligible to participate.

You Have To Open A Brokerage Account

In order to participate in the Vonage Customer Directed Share Program, the customer also must open a limited purpose brokerage account at either Smith Barney, a division of Citigroup Global Markets Inc., Deutsche Bank Alex. Brown, a division of Deutsche Bank Securities Inc., or UBS Financial Services Inc. Eligible customers will be permitted to purchase shares of our common stock in the Vonage Customer Directed Share Program only through a limited purpose brokerage account at one of these financial institutions.

Other conditions to participation also may apply.

How Much Do I Need To Buy?

Eligible customers who choose to participate in the Vonage Customer Directed Share Program must submit conditional offers to purchase at least 100 and no more than 5,000 shares. In the event that eligible customers submit valid conditional offers for more shares than have been reserved for allocation in the Vonage Customer Directed Share Program, we will allocate shares for purchase by eligible customers as follows:

We will first attempt to allocate shares to all customers who submitted a valid conditional offer by reducing each customer's conditional offer by a percentage and allocating shares to each customer in the amount of his or her reduced conditional offer.
Each customer's conditional offer will be reduced by the same percentage, rounded up to the nearest 100 shares. No conditional offer will be reduced, however, to below 100 shares as a result of this pro rata reduction.
We will reduce the conditional offers by the lowest percentage that will allow all conditional offers, as reduced and after rounding, to be filled. We will not, however, apply a pro rata reduction that exceeds 75%.
In the event that not all of the conditional offers, as reduced by 75% and after rounding, can be filled, the following allocation model will be used: Conditional offers, as reduced by 75% and after rounding, will be filled in size order, with the largest conditional offers filled first. For example, any conditional offers for 5,000 shares would be reduced by 75% and rounded up to the nearest 100 shares, resulting in conditional offers for 1,300 shares. Each of these conditional offers would be filled with 1,300 shares prior to filling any conditional offers for fewer shares.

In the event that not all of the conditional offers of a particular size can be filled, but there remain shares available for allocation, conditional offers will be filled within the particular size by lottery.

Once again, I would like to point out that we have a Vonage Forum thread already set up to discuss the subject. It's called vonage-forum.com/ftopic13803.html">The Vonage IPO Thread.

Given that we have devoted this entire edition of the Vonage Forum Digest to the Vonage Directed Share Program and the Vonage prospectus and IPO, this is a good place for me to point out once again that this Site is exclusively owned & operated by 4Sight Media LLC and is no way endorsed, sponsored, provided, owned or otherwise controlled by Vonage. For official information on Vonage Services please proceed to the Vonage website at: vonage-forum.com/vlink6.html">www.vonage.com.

Tell you what. Even though this is a special edition of the Vonage Forum Digest, let us not lose sight of why we are here. In that vein, let's go to the Vonage VoIP Forum and leave you to start your weekend with an interesting thread.

On The Vonage VoIP Forum

On a new Vonage Forum thread entitled vonage-forum.com/ftopic13927.html">Router Recommendation, new Vonage Forum Member vonage-forum.com/member-viewprofile-26781.html">jimmyc asks his question.

"We've been experiencing what I believe are QoS issues since starting with Vonage a year ago - choppy audio, inability to send faxes. We've finally decided to upgrade to a router that can handle it all," jimmyc writes. He adds that he's looked at the Draytek 2900 and 2900VG. He writes that he interested in reviews on that, but is wondering if there are other good choices out there?

"We would like a router (placed behind the cable modem) that will offer VPN tunneling (server to server, not just client to server), Firewall, Ability to setup a DMZ network QoS management and VOIP (at least two phone ports)."

NateHoy, who in his more than 1,500 posts in little more than six months on the Forum has helped so many Vonage Forum Members, posts, "I'm one of the ones who uses a Linux based router (Linksys WRT54GL), with aftermarket firmware, and it works very well for me."

Then Nate adds links to two articles he has written with more details on the subject. These links are: vonage-forum.com/outgoing/out.php?url=aHR0cDovL3ZvbmFnZS5ubWhveS5uZXQvcW9zLmh0bWw%3D" target="_blank">http://vonage.nmhoy.net/qos.html and vonage-forum.com/outgoing/out.php?url=aHR0cDovL3ZvbmFnZS5ubWhveS5uZXQvd3J0NTRnbC5odG1s" target="_blank">http://vonage.nmhoy.net/wrt54gl.html.

As we close out today's Digest, I'd like to remind you once again about some more options you have to receive the Vonage VoIP Forum Digest every day. If you go to this page: vonage-forum.com/syndication.html">http://www.vonage-forum.com/syndication.html, you will see a list of RSS Newsreaders from which with one or two clicks, you'll be able to get your Digest delivered directly to your Newsreader each morning. The Newsreaders we've linked to on that page include such reliable and trusted services as Bloglines, Feedster, My Yahoo!, Newsgator and Feedburner. I am open to add others, just contact me with the info of the Newsreader.

Vonage VoIP Forum Digest - May 19 - 21, 2006

For More About The Vonage IPO

You Have To Open A Brokerage Account

On The Vonage VoIP Forum