Vonage struggles to attract new customers
Internet telephony provider Vonage is struggling to attract new customers, as the company is forced to spend less on advertising.
For the second quarter, Vonage reported it had lost $6.9 million, compared with a whopping $23.2 million loss during the same quarter a year ago. The company also increased revenue about 11 percent to $227.5 million.
But the positive gains in the company's financials came at a price. During the quarter, Vonage added only 2,080 new subscribers. A year ago, when the company was still marketing heavily on TV, it added 56,691 during the quarter. In total, Vonage has 2.6 million subscribers as of the end of the second quarter.
On the positive side, the company slightly reduced its churn, or the rate at which people leave its service, to 3 percent from 3.3 percent the previous quarter. This is an important metric as Vonage must hold onto every customer it can.
When it comes to churn, Vonage is near the bottom compared with other service providers, such as wireless operators. It's better than low-cost wireless operator MetroPCS, which had about a 4.5 percent rate of turnover during the second quarter. But it's not even as good as beleaguered wireless operator Sprint Nextel, which had a churn rate of 2 percent during the second quarter. And it's much worse than strong wireless carriers, such as AT&T, which has a churn rate of 1.6 percent and Verizon Wireless, which has a churn rate of 1.1 percent.
In an interview with The Wall Street Journal, Marc Lefar, the company's newly appointed CEO, said the top priority for the company is to push the churn rate even lower. He told the Journal he is reviewing the company's customer relations operations to see where it needs to improve.
"A 3 percent churn rate is not something we're happy with," he told the Journal.
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie. 
I suggest that anyone looking for VOIP solutions look at Vonage's growing list of competitors. I have been trying Phone Power, which is pretty doggone good. Not sure how long I'll stick with them though, because my cable company seems intent on giving them and all other VOIP providers a RUN FOR THEIR MONEY. In any event, you can go m2m with most of these providers, so the sky's the limit.
While you're at it, get a Grand Central phone number so you don't need to worry about "keeping your landline number".
Anyway, let's just hope the consumers win. Got some news for y'all out there (including Marguerite): We're already paying for all this bandwidth. It's about time we can use it however we choose.
I am very happy to see them having trouble - its karma at it's best!
YEARS with the service and it just gets better, and no there not paying me!
Me for one have had Vonage service (the $14.99/month) for well over three years. We - wife and I - are VERY (extremely) happy with their service. Even when including overseas calling at $.01/minute and taxes, the monthly bill rarely go north of $20 (about half of what I paid Verizon before for only local service).
I am no fan of Comcast, but in our area Comcast DO provide good "connectivity" and hence provides a reliable backbone for Vonage. Should I ever consider to go Comcast for phone service? Only when their pricing is in line (or better) than Vonage and they have the same neat features (e-mailing voicemails, sending SMS when VM has been received, etc). Also being able to go back (on-line) and look at billing/calls made years ago, does sometimes come in handy (you might be looking for an old number).
And, if you ever switch ISP (going Comcast to FiOS), sticking with Vonage makes it simple. If you dump Comcast, you also dump their (expensive) phone service, and the equipment you have installed.
But, you do need some basic technical skills in order for Vonage to work at its best, and I guess that will always prevent Vonage from being a true mainstream provider. It will never be as simple as POTS, but it will never be as bad or expensive either.
A very strong competitor to vonage is T-mobile's "@home" service. For an additional $10/month, hard to beat as well.
I like Vonage, and those who don't or have had bad expericnes AT LEAST have to give vonage the credit for putting VoIP out in the consumer market place, and dramtically driving down the cost of making calls.
I called Vonage and they pressured me into signing up then and there. I explained that i still needed the telephone service and that my Cable Broadband equipment was still days off to arrive. They assured me that there was no problem that my service would not be affected until I had their portal and called them. Well I started getting cell phone calls asking what was wrong with my landline, guess what? They had already called an order to AT&T and shut of my phone. Fortunately the cable modem got here and I got it working before the DSL died too.
I was very angry and when their crap got here I went through the instructions as I had their online info and it was not clear that I could use my phone and fax together on one line. My room mate doesn't like cell phones so he wanted the phone and I need a fax so I wanted that but not enough to have two lines. So I called them to cancel and first off they wanted $39.00 to return their gear. Then they told me it could be a week to get my phone back. SO I got an RMA but canceled the credit card charge for the return.
Then when I called AT&T to get my phone back they couldn't get the number and Vonage said that they did not have it either. Then I called back to AT&T and found that if i didn't get the same number I'd have to pay for a new install, they give win backs free "install". I then called the California PUC and got a fire under AT&T. They got me back my old number, but the lines had been disconnected in some terminal down the street, so a tech had to come out so I still had to wait a day.
When Vonage got my stuff back they refunded me less the $39.00 the start up fees I paid them.
My advice is stay away from Vonnage and probably VOIP in general. I have heard good things about OOMA though. A reporter for KFI radio here in LA has it and after the recent earthquake here he couldn't get his ISDN, Cell or POTS line to work to call the station but he got through on OOMA and it sounded better than a phone usually does. He now does endorsement commercials for OOMA. But I'm sticking with AT&T because OOMA admits that they don't do faxing well.
- by nmonnens August 18, 2009 1:37 PM PDT
- I have been a Vonage customer for two months and am very happy with the customer service and call quality. It is not as clear as a landline, but better than Skype (I also use Skype). I moved to Spain and needed to keep my cell number and Skype doesn't allow for that. I first chose Lingo.com and that was terrible. Lingo.com's customer service was horrible and after 3 months they were still unable to transfer over my cell number. Over a three month period I called them weekly (spoke to Lizzy, Angela, Victor, Jed, Karen, Louise, Melanie) to get the status and twice faxed them my info (last 4 of my social, previous ATT bill, and permission to change). They never got it right.
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(17 Comments)Today when I called to cancel because they were unable to transfer my number, Nicolas said Lingo can't transfer cell numbers and he would charge me $99 to cancel. I was told just the opposite when I signed up. I told him they have no right to charge me the cancellation fee since they were never able to transfer my line. He didn't care.
Vonage transferred over the same number within a week. I have since blocked payment to Lingo. What a scam.