Vonage

Cingular's former CMO to head Vonage

Sue Marek — Wed, 30 Jul 2008 12:24:41 -0400

Can Cingular's former chief marketing officer work his magic at troubled VOIP provider Vonage? That's a question many are asking today as news circulates that the marketing whiz is taking over from Vonage interim CEO Jeffrey Citron. Marc Lefar, of course, was known for revamping Cingular's brand. He left the carrier in April. Article

Sprint sues over VoIP patents

Fri, 25 Jan 2008 06:59:57 -0500

Following up on its $80 million settlement from its Vonage lawsuit last year, Sprint is milking its 115 VoIP patents by suing NuVox Communications, Broadvox Holdings, Big River Telephone and Paetec Communications. The carrier claims the four companies are violating six of its patents and is seeking both damages and an injunction. Reportedly, Sprint did not try to negotiate a licensing agreement with any of the companies before filing the lawsuit. GigaOM quipped that Sprint may see patent litigation as an easier means to cashflow than its much needed corporate turnaround.

For more on the suits:
- read this report from GigaOM

The Top 5 Wireless IPOs of 2007

Wed, 05 Dec 2007 06:59:59 -0500

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The Top 5 Wireless IPOs of 2007

Last December my colleague Jim Kim over at FierceFinance concluded that the IPO market "staged something of a comeback" in 2006. By the end of last year, IPOs had gained 24 percent on average and the amount of money raised through IPOs totaled some $38 billion for the year. The talk of Wall Street was the Mexican food chain, Chipotle's successful IPO as well as MasterCard's equally impressive offering. Investors hoped to forget the IPO dud of 2006 that topped them all: Vonage. Back then, the IPO market looked prime for success in 2007.

So has 2007 lived up to expectations? The jury may still be out on that, but here are the 2007 wireless IPOs that you need to know: Airvana, Clearwire, Glu Mobile, MetroPCSÃ‚Â and Virgin Mobile USA. While every single one of these companies' share price is down (as of this writing)Ã‚Â since they went public, the money raised from their offerings has driven innovation in the wireless market. Click here to see our report. -Brian

ALSO NOTED: Sprint wins patent suit against Vonage; 42 percent of small businesses depend on wireless; and more...

Wed, 26 Sep 2007 06:59:50 -0400

> Sprint Nextel won a patent lawsuit against VOIP provider Vonage. A jury in Kansas City ruled that the Internet phone company infringed six patents owned by Sprint. Vonage has been ordered to pay $69.5 million in damages, plus a 5 percent royalty on future revenue. Article

> A small business survey conducted by AT&T indicates that 42 percent of business owners could not survive without their wireless technologies. Fifty-five percent said they expect to depend even more on these type of technologies two years from now. Article

And finally... Contact this woman if you want your cell phone coated in gold. Article

Corrected: Nothing travels swifter...

Tue, 17 Apr 2007 20:01:39 -0400

Nothing travels swifter...
The tech industry, and wireless industry in particular, loves rumors. Today's issue boasts three of them: our number four story about Dell maybe developing a PDA, an "Also Noted" about more rumored details surrounding the supposed "Google phone" and this editorial regarding Sprint buying Vonage. While each of these three may sound implausible on some level, the third is certainly the less digestible. Dell just hired ex-Motorola executive Ron Garriques. Google said mobile is the future. Sprint, well, Sprint has enough problems--it doesn't need Vonage's too.

A recent report from Light Reading claims that Vonage is considering selling itself to Sprint. The talks arose amid discussions over the patent issue that the VoIP service provider has with Verizon. Of course, that issue could lead to a service shutdown for Vonage over three VoIP-related patents Verizon holds. In a week's time a federal court will decide whether to uphold a lower court order to prevent Vonage from signing up new customers because of the patents. So why would Sprint want Vonage? It doesn't seem likely that Sprint has a license to use those Verizon patents, but that would be the only logical basis for acquisition talks.

As Techdirt points out, Light Reading's sister site Unstrung recently claimed that Palm would be sold by Thursday, March 22. No dice, there. Of course, that would factor in nicely with the Dell story below, so maybe time will tell. -Brian

SPOTLIGHT: FCC Chairman makes light of telecom regulations

Thu, 12 Apr 2007 20:01:32 -0400

FCC Chairman Kevin Martin made a comedic appearance at the FCC Bar Association event this past week, cracking jokes about the FCC, his policy decisions and criticism that he's too friendly with telcos. One joke was that FCC's answering machine message says: "Hi, you've reached the FCC. If this is AT&T, please press 1 for our merger approval hotline. If you're calling from a Vonage phone, please hang up and dial from a Verizon phone. If this is the cable industry and you're calling about a waiver, your call is very important to us [extended pause] goodbye." Article

EarthLink beta tests WiFi handsets

Tue, 20 Mar 2007 20:01:35 -0400

One of biggest ISPs in the U.S., EarthLink has begun a beta test of WiFi handsets for local home VoIP use or for use near any public hotspot. The pricing is remarkably low: A package including a cradle that doubles as the access point and a handheld unit costs just $100. The company is positioning the service as a less expensive alternative to a landline, or in some cases, cell phones. Vonage also recently inked a deal with EarthLink to offer wireless VoIP services in its muniwireless deployments.

For more on EarthLink's latest beta test:
- check out this article from InformationWeek

Verizon wins Vonage patent suit

Thu, 08 Mar 2007 19:01:38 -0500

Verizon Wireless won a patent suit against Vonage that found the VoIP provider had infringed on three of the wireless carrier's patents, including one for VoIP over WiFi that might mean trouble for Vonage's recently announce deal with EarthLink for voice over WiFi. The ruling requires Vonage to pay Verizon $58 million, but since the court determined Vonage's infringement wasn't on purpose the figure is considerably scaled back from Verizon's asked for $197 million in damages. In addition to the damages, Vonage will have to pay Verizon a royalty of 5.5 percent of its future revenue for any continuing infringement.

Telecom analyst Jeff Kagan told FierceWireless "this ruling does not mean the end of VoIP or anything, and it's not going to put anybody out of business." What it will do is tighten things up a bit between POTS and VoIP service providers. Kagan also said he's not sure about the ramifications of the ruling on the Vonage-EarthLink deal: "We're going to have to wait and see."

For more on the Vonage-Verizon patent suit:
- read this WSJ article (sub. req.)

Editor's Corner

Sun, 25 Feb 2007 19:01:39 -0500

Skype cried foul with the FCC last week. It formally asked the commission to force mobile operators to "open up" and allow hardware and software created by third parties to connect to their networks. The VoIP company wants the FCC to apply "Carterfone" rules to the mobile operator industry. These rules were enacted in the 1960s to force the POTS industry to allow devices other than those provided by old Ma Bell to connect to the network.

The filing is interesting timing considering owner eBay's revelation last month that it is taking longer than anticipated to generate a financial return from Skype, which eBay acquired in October 2005 for $2.6 billion in cash and shares. eBay's fourth-quarter results revealed that Skype fell short of the revenues it predicted at the time of the 2005 purchase. Skype's 2006 revenues were $195 million against the $200 million anticipated by now. At 171 million subscribers, Skype brought eBay 39 cents per subscriber. In comparison, eBay's marketplace business, which boasts 220 million subscribers, brought in net revenue of $1.24 billion, or $5.64 per subscriber. Speculation is that Skype didn't reach its first set of performance-based goals, resulting in missed payments, or so-called earn-outs.

eBay CEO Meg Whitman said during the company's quarterly conference call last month that while Skype is growing well in terms of user and adoption rates, the monetization efforts the company outlined at the time of Skype's acquisition weren't developing as fast as the company had hoped.

Analysts note that it's difficult for VoIP companies to rake in the revenues. Both Vonage and Skype are signing up customers but aren't fairing well when it comes to economies of scale, which is hurting revenues and profit growth. They have to get creative or risk succumbing to other companies that can offer VoIP as a part of a suite of services.

Whitman indicated that Skype is looking at new ways to monetize, which includes introducing a service that enables Skype users to send SMS to mobile phones. She also said that subscription-based pricing, already offered in the U.S. and Canada, should further push up revenues when launched elsewhere.

Efforts to monetize so far haven't yielded many results. The business segment has been a major focus for Skype since March 2006, but analysts note that the powerful global brand has made little headway as a preferred communications tool in the corporate market. Meanwhile Skype has not been able to team up with major operators like Vodafone to include Skype on handsets--although it scored its first handset deal with Hutchison's 3. In the U.S., Skype claims it has been rebuffed by mobile operators for the last two years.

Certainly mobile wireless represents the next great frontier for Skype--the ability to leverage millions more users and get creative about bundling services and applications. So its answer to get at this potentially lucrative market, at least in the U.S., is asking the FCC to force operators to open up their networks.

The filing is premature, however, given the fact that it appears operators are softening to the idea of third parties connecting to their networks, or at least turning a blind eye to it. Smartphones with Internet browsers can already connect to Skype, Slingbox or any website with streaming video. Sprint Nextel, which is rolling out 1xEV-DO Rev. A, recently said it won't try to block users from downloading handset clients from Skype or any other VoIP company to make VoIP calls that bypass the traditional mobile network. Verizon Wireless is the operator that is most dead set against any third party applications on the network, sending disconnect letters to users who violate its usage policies.

Just last month, Skype itself said it believed the mobile-phone world isn't ready for a general solution that can be downloaded to any mobile phone because data plans are still too costly. The last thing Skype wants is a situation where it advertises that Skype is free but end users are socked with a huge data bill at the end of the month. We aren't seeing an indication that operators are ready to dramatically reduce broadband pricing either.

Finally, there are technical and commercial hurdles to VoIP clients on mobile phones. Both opponents and proponents concede that technical issues relating to how networks pass on IP addresses of mobile users have not been fully resolved. Emergency phone service and "always on" connectivity are also big issues, since staying online takes up valuable capacity on mobile networks.

It's clear Skype is under some financial pressure to increase revenues and improve profitability, but trying to force a market to open up before it's ready looks to be a non-starter for mobile VoIP. Maybe Skype figures the fight will be drawn out long enough and produce some nice publicity to encourage mobile customers to rise up and make their demands. -Lynnette

P.S. You're invited to join FierceWireless' webinar, "WiMAX Deployment Realities," at 2 p.m. EST tomorrow, Feb. 27. Don Stroberg from Sprint Nextel along with Alvarion's Carlton O'Neal and Peter Jarich, principal analyst with Current Analysis, will discuss the challenges facing equipment vendors as they prepare for a major commercial deployment with Sprint. Click here for more information.

More talk of Vonage going wireless

Tue, 20 Feb 2007 19:01:37 -0500

We reported in January that Vonage will begin reselling Earthlink's muni-WiFi services, but now a report in Business Week has caused a frenzy in the blogosphere by implying that Vonage is looking to launch an MVNO that makes use of cellular-WiFi. As the report notes: "Vonage says it will start offering wireless services to subscribers during the second half of 2007. The company also expects to announce new agreements to resell other carriers' broadband Internet access services, as well as new content deals later this year, according to a spokesperson." Vonage won't say much more beyond that, but it did confirm that it will start selling dual-mode phones offering cellular as well as WiFi access during the second half of 2007.

For more on Vonage's wireless plans:
- check out this Business Week article

Vonage gets into the muni-WiFi game

Sun, 07 Jan 2007 19:01:35 -0500

Vonage has inked a three year deal to sell EarthLink's wireless Internet service as a complement to its Internet phone service. The double play is a strategic move toward creating a bundle to take on incumbent cable companies and telcos that are already ramping up their own quadruple plays (voice, television, Internet service and mobile phone service). EarthLink is in the process of building out muni-wireless networks in cities across the U.S. The deal allows Vonage to sell EarthLink's service wherever it is available, and Vonage may sync up with other muni-wireless providers where EarthLink is not deployed.

For more on Vonage's deal with EarthLink:
- read this article from the WSJ (sub. req.)

ALSO: Esme Vos over at Muniwireless.com gives a detailed analysis of the EarthLink-San Francisco contract. It's not a done deal--yet. Article

Vonage to investors: Pay up

Tue, 12 Sep 2006 20:01:35 -0400

Vonage is telling those folks who signed up to buy shares during its disappointing IPO in May to pay up or face legal action. Some of Vonage's customers who got in on the deal have refused to pay for more than a million shares. At its IPO, Vonage's share price was $17 but the price plummeted 13 percent on the opening day of trading. It hasn't recovered either. Trading on Wednesday was at $7.62. Letters have been sent to the delinquent payers threatening legal action.

For more about Vonage's threats:
- check out this article from Red Herring

SPOTLIGHT: Vonage customers won't pay for IPO shares

Tue, 01 Aug 2006 20:01:29 -0400

Not surprisingly, Vonage has revealed that customers who bought into the company's disaster of an IPO in May have refused to pay for for more than 1 million shares. Vonage had been pushing its customers to buy into the IPO, and they bought up about 4.2 million shares. Vonage said it's going to pursue collection of the money from those who reneged on their commitments to purchase stock since the price plummeted on IPO day. Vonage reported a second-quarter loss in its first earnings release, saying it had spent $11.7 million to cover the cost of about 25 percent of the shares in the customer program that customers didn't pay for. It also will have to pay an additional $6.2 million to underwriters under terms of the offering. Article (WSJ sub. req.)

Verizon sues Vonage over VoIP patents

Sun, 18 Jun 2006 20:01:35 -0400

Vodafone is rubbing more salt in the wounds of Vonage after its dismal IPO. Verizon Service and Verizon Laboratories have slapped Vonage with patent infringement lawsuits, claiming the company infringed on seven patents related to VoIP technology. Vonage said it was surprised by the lawsuit and will "vigorously defend" the lawsuit.

To read more about the patent infringement lawsuit against Vonage:
- take a look at this article from The Wall Street Journal (sub. req.)

Vonage won't repurchase shares from customers

Wed, 31 May 2006 20:01:35 -0400

Vonage isn't going to repurchase any of the shares of common stock from its customers after all. The company, coming off a disastrous IPO, released a statement saying it was clarifying the company's position on the matter. "Pursuant to the terms and conditions of our Customer Directed Share Program, if a customer was allocated shares in the Customer Directed Share Program, that customer is obligated to purchase their share allocation from the underwriters. To be clear, we have not offered and are not offering to repurchase any of the shares of common stock from our customers," the company said. The media speculation came from Vonage's IPO prospectus that detailed its intention to cover the underwriters' costs if customers refused to pay and its comments released to CNBC indicating that Vonage didn't want to alienate its customers. We could see lawsuits fly on both sides of the issue.

For more about Vonage's intention not to buy back shares of its customers:
- read this article from TMCnet
- check out this report from The Wall Street Journal (sub. req.)

Vonage to pay for shares customers don't want

Tue, 30 May 2006 20:01:35 -0400

Fresh from its dismal IPO last month, Vonage said it will cover the costs if its own customers who bought shares of the company refuse to adhere to their agreements to buy shares. The plan was explained in Vonage's registration documents filed with Securities and Exchange Commission before the IPO and before customers started having second thoughts about their agreements to buy shares when the stock tumbles. Vonage set aside up to 13.5 percent of its $531 million IPO for its customers, selling to them via email and messages left on voice mail. The plan backfired when the shares, priced at $17, fell.

To read more about Vonage's plan:
- check out this article from The Wall Street Journal (sub. req.)

Vonage expects to net $531.25B from IPO

Tue, 23 May 2006 20:01:35 -0400

How will Wall Street react to Vonage? The VoIP provider priced 31.25 million common shares in the mid-range at $17 per share, for an IPO take of about $531.25 million. The company will trade on the Nasdaq under ticker symbol VG. The price implies a value of about $2.65 billion for a company that is far from profitable. Vonage has already raised around $396 million in total VC funding, including a $200 million Series E deal in 2005 at a post-money valuation of $915 million. Vonage will use the proceeds primarily for marketing costs and customer acquisition as it is spending a bundle to capture customers amid the competition. With analysts saying the company might never reach profitability because of strong competitive VoIP offerings, and the company's unsuccessful attempts in the past to sell the business, you have to wonder if this is the exit strategy.

To read more about Vonage's IPO:
- check out this article from The Wall Street Journal (sub. req.)

Vonage plagued by service problems

Wed, 17 May 2006 20:01:35 -0400

As Vonage moves closer to its planned $494 million IPO, it's encountering more bad press. It has come to light that Vonage's VoIP service is plagued with service problems as message boards and consumer forums continue to fill with complaints about poor sound quality and dropped calls. Remember last week folks were irritated by the company's move to spam its own customers to urge them to buy in to the IPO. "Our growth has caused some unforeseen customer service issues which we are working hard to fix," said Vonage spokeswoman Brooke Schulz. Meanwhile, the prospects for a successful IPO just don't look that great. Profitability looks like it's a long way off. It doesn't help that Skype recently introduced SkypeOut calls that allow users to make VoIP calls from their computers to any land-line number for free for a short time.

To read more about Vonage's service problems:
- take a look at this article from The Wall Street Journal (sub. req.)

Vonage uses VoIP spam to push IPO

Tue, 09 May 2006 20:01:36 -0400

Vonage really wants to go public, but it appears institutional investors aren't too keen on the company's fundamentals, i.e. profitability looks far away. So Vonage announced it was giving its customers a chance to buy into the IPO, and now that move has taken an ugly turn. It appears Vonage has embarked on the first case of a VoIP stock spam. The company sent out mass voice mails and emails asking customers to buy into the IPO. Not a good move considering the fears over VoIP spam. Who would have thought the first case of spam would come from the provider itself? The SEC already has Vonage founder Jeffrey Citron on its radar screen over an alleged stock scam.

For more about Vonage's VoIP stock spam issue:
- read this report from TechDirt Wireless
- check out this blog from Silicon Valley Sleuth

Vonage looks to raise $687M in IPO

Sun, 30 Apr 2006 20:01:38 -0400

In what many see as a sign of a forthcoming IPO, Vonage has recast the size of its planned public offering and indicated the company is worth as much as $2.8 billion. The company will sell 31.25 million shares worth $16 to $18, which puts the IPO figure at $687 million at the high end. Previously, the VoIP provider planned on raising $250 million. Vonage said it will use the proceeds to fund its marketing efforts, which have cost hundreds of millions of dollars the past few years. The company is still not profitable.

For more on Vonage's IPO:
- take a look at this article from Red Herring