It's on the wall....

Posts: 8 · Posted: Mon Apr 16, 2007 1:39 am Post subject:

Reluctantly, I concur with the conclusion that Vonage is doomed.

Let me begin by stating that I have been a subscriber for over four years. The service has been excellent, married to an Adelphia and now Time-Warner 4000/384 cable connection. The savings have been breathtaking. So too was the joy of convincing friends and family to sign on too, allowing us ALL to live happily in uber-cheap 500-minute plan-land as we connected the dots that most frequently communicate.

The bad news is simply that only a legal victory can save Vonage (see the article at http://www.usatoday.com/money/industries/telecom/2007-04-15-vonage-usat_N.htm?csp=N008 for the end of the hoped-for "technical workaround").

I am a lawyer, but the intricacies of patent law are far too arcane for even someone who fearlessly treads across the Internal Revenue Code to fathom, so I cannot handicap the outcome of that contest. I can confidently predict, however, that Verizon's deeper pockets will give it a huge and probably insurmountable advantage, regardless of the merits of Vonage's case. That's the American way of justice (for a better way, Google "English rule"--but I digress).

If I were a bettin' man, I'd see Verizon using its legal victories as leverage to buy Vonage out from underneath itself (remember, as a publicly traded company, the directors are duty-bound to get the best deal for the shareholders, which may just be a dollar-a-share to get off the ship before it sinks), and use its nationwide customer base as a way to provide a CLEC-like service in all the other ILEC's sandboxes. Freed of excessive marketing expense, Vonage is a cash-printing machine with exceptional brand awareness due to previously excessive marketing. The cost of providing the actual service is astronomically small, probably what Verizon spends on coffee stirrers.

Verizon's Voip, VoiceWing, is a "who?" competitor in the market. It also indicates that Verizon will continue to offer voice even when it FiOS's its territories over the next decade, so it makes sense to acquire the mindshare Vonage has, cheaply, and abandon its also-ran offering.

IBM no longer makes personal computers, which I offer as evidence that being first-to-market doesn't guarantee that you will even stay in the market, much less dominate it.

Posts: 85 · Vonage Forum Senior Joined: Jan 30, 2005 Posts: 85

You know...even if Verizon wins the lawsuit and they have to pony up the money and pay a 5% royalty..wouldn't all of you happy Vonage customers be thrilled to pay an extra 5% to keep your service??
Worst case: Vonage looses some cash up front, and then they charge us the 5% and everyone's happy! The lawsuit goes away, Vonage is free to grow and what's the big deal?

Posts: 8 · Posted: Mon Apr 16, 2007 2:33 am Post subject:

I would happily pay 5, even 10, percent more. Unfortunately, there is no guarantee that Verizon will agree to license the technology in their patents to Vonage (or anyone else) at any price. They are free to deny the use of the patented technology to anyone in the U.S. for as long as the patent runs for any reason or no reason, and they cannot be compelled by any court to do otherwise. (In a bizzaro scenario, the patents can be breached, but only by Congress, and only upon payment of their worth, this a result of the Constitution's Fifth Amendment. THAT will happen when my breakfast bacon not only reconstitutes itself into a living pig, but takes flight.)

If Verizon wins, I don't see the business case for licensing any of their technology to anyone; they can own Voip entirely, at least as it involves connecting to PSTN. Pure-play Voip (like Skype, but not SkypeOut or SkypeIn) may be beyond their reach, but until that happy day when we are all on the web (and our cellphones too), he who owns the VoIP-PSTN bridge (Verzion, apparently) owns the future. Why rent it out to someone else?

Posts: 241 · Vonage Forum Master Joined: Mar 17, 2006 Posts: 241

Surprised not to see this bit of news posted here:

http://www.usatoday.com/money/industries/telecom/2007-04-15-vonage-usat_N.htm

Quote:

NEW YORK — Vonage has finally confirmed what many had feared: The embattled Internet phone company has no "workaround" in hand to sidestep Verizon's patented Internet phone technology.

Posts: 17 · Vonage Forum Associate Joined: Feb 19, 2007 Posts: 17

The question is not so much is Vonage dead but is Voip dead. Does Verizon's all encompassing patents not also kill cable Voip as well? From other comments about the patent case it appears that no interconnection between Voip and the regular system would be allowed without Verizon's approval. Perhaps the FCC could mandate that interconnection privileges be allowed for a fee, at least then Voip could continue.
With over 2 million subscribers and Voip being a cash cow, it seems to me that some other Voip enterprise might take up the challenge.

Posts: 113 · Posted: Mon Apr 16, 2007 11:51 am Post subject:

Well with my hardware investment, and the fact that my service still works, I will stick with Vonage for now. If they die I will just have to go somewhere else.

We will see what happens.

Posts: 172 · Vonage Forum Master Joined: Apr 19, 2006 Posts: 172

Patience will be rewarded as the saying goes...Patience is a virtue.

Nice to know there are people here who are optimistic like me and still could see the good side of the coin.

_______________________________________________
Who said being Beautiful automatically means you're dumb?

Posts: 241 · Vonage Forum Master Joined: Mar 17, 2006 Posts: 241

Well, switching to something like SunRocket would make me await the day when Verizon goes knocking on their door. My other options would be going back to Verizon or switching to Comcast Digital Voice, and neither of them appeal to me ($ mostly). I'll sit tight for the time being as well.

Posts: 172 · Vonage Forum Master Joined: Apr 19, 2006 Posts: 172

Yes I'll have to agree with you Chris.

If you wanna go Voip it seems one is force to have no other choice but Verizon (if they win)

What's sad though is that this is the Land of the Free...

_______________________________________________
Who said being Beautiful automatically means you're dumb?

Posts: 113 · Posted: Mon Apr 16, 2007 12:55 pm Post subject:

hopefully a settlement can be worked out where Vonage is able to license the technology from Verizon, and/or pay royalties.

The best case scenario is that the patents are invalidated on appeal. We will see.