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Vonage's lucky break?
April 3, 2007 -
Vonage ordered to stop using Verizon VoIP patents
March 23, 2007 -
Vonage to pay $58 million in Verizon patent case
March 8, 2007 -
Vonage, Verizon spar in court over patents
February 27, 2007 -
Verizon sues Vonage for VoIP patent infringement
June 19, 2006
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Even before the jury found that Vonage was infringing on Verizon's patents, the company was struggling to add new customers. In the fourth quarter of last year, Vonage added 166,000 new subscribers. That was down from 204,591 subscribers in the third quarter and 256,000 in the second quarter of 2006. This drop in new subscriber growth occurred despite the fact that the company spent $365 million on marketing in 2006, a 50 percent increase from the previous year.
The high marketing price tag has translated into hefty losses for the company. During 2006, Vonage lost $286 million on revenue of $607 million.
Vonage's slowing subscriber growth is in stark contrast to cable operators' subscriber growth, which has been setting records.
Despite its losses, Vonage has a strong cash position. The company ended the fourth quarter with almost $500 million in cash, which means that the $58 million in damages it was ordered to pay to Verizon accounts for about 12 percent of its total cash.
Analysts say there is a glimmer of hope that Vonage could still come out of this situation all right.
"The good thing for Vonage is that there are many options for getting VoIP technology as evidenced by the hundreds of other providers in the marketplace," Lin said. "Thus, this is disruptive, but not fatal."
In its original court complaint filed in June 2006, Verizon accused its growing rival of infringing on seven of its patents, but it later scaled back the scope to include only five patents.
The patents Vonage was found to have infringed cover technologies that deal with connection of VoIP calls to the regular phone network, some features for implementing call-waiting and voice mail services, and VoIP calls using Wi-Fi handsets. (The jury found Vonage had not infringed two other patents, which involve billing systems designed to detect fraud.)
Vonage has maintained that it did not infringe on any of the Verizon patents and that its service rests on commercial, off-the-shelf technology.
The company has also said that even if the verdict is upheld, its subscribers will not encounter disruptions because it is developing a technological workaround.
But it's unclear how far along Vonage is in that process. In a recent government filing, the company reported signing a licensing agreement with a VoIP wholesaler that appeared to provide a replacement for two of the Verizon-patented technologies. Vonage said Thursday that the deal actually has nothing to with its patent woes.
The Internet phone provider's remaining options are all uphill battles, said Rebecca Arbogast, an analyst with the firm Stifel Nicolaus. The technical workaround Vonage claims to be preparing, for instance, is not a sure thing, as the judge's broad reading of Verizon's patent claims could imperil any replacement technology as well, she said. Another path could be to work on negotiating a settlement with Verizon to license its patents, but it's not clear that either company is interested in that route.
Verizon "may be more interested in putting (Vonage) out of business," she said. And given the string of legal setbacks for Vonage in this case, she added, "the price tag could be getting so high that Vonage is going to have a hard time making it."
The court could hear Vonage's appeal on the injunction next week, said Susan Pan, a partner who specializes in patent law with the firm Sughrue Mion. She said Vonage likely has a 50-50 chance of winning its case on appeal.
"If you think of a patent as a fence, the lower court has viewed it as covering a large area like an entire acre," she said. "It's possible on appeal that the federal circuit will say that the patent actually only covers two-thirds of that acre. And the other one third could be the area where Vonage is operating, which would mean Vonage isn't infringing."
See more CNET content tagged:
Vonage Holdings Corp., injunction, Internet phone, Verizon Communications, Internet phone company
What got me was: 1)a box on the account home page saying that they were aware of an issue with customers not being able to use their service. Okay, about an hour and a half after I read that, my service came back up - after I had rebooted the adapter twice thinking that a small powere glitch we had here might have caused it.
2) If you try to log into your Vonage account now, either a)it takes forever before you get there, or b)you get a page that says they are upgrading.
Personally, I'd start checking into the judge's qualifications to deal with cases like this. Not all judges are technologically savvy enough to understand patents, VOIP, etc. And I'd start checking into the patents that Verizon alleges that Vonage infringed on, especially after Verizon lowered the number of patents.
All this smells of Verizon wanting to kill off the competition and they'll use whatever they can to do so.
And for the conspiracy folks...I wonder if the judge has Verizon stock or an interest in Verizon.
Just my three cents worth.
For many years I had an issue when we'd get a heavy rain. One or the other line, sometimes both, would stop working for a day. By the time Verizon got there, they worked OK again. Sometimes they'd rerun one of my connections, sometimes they'd just say, call us when it breaks again. They insisted the problem was in the wiring in my house. Funny thing, Vonage connects to the same lines and I haven't had a problem since I switched a couple years ago!
Verizon service is atrotious (sp?) at best. Any time I had a problem or wanted to change something it would take like two weeks. So once I switched over I called Verizon to let them know I would no longer need their services. After hanging up I decided to make a call on what should have been the rest of my months service Verizon and found to my suprise that my phone had been turned off within seconds.
CRAZY!!!
The moral of the story is that outside cable splices are subject to moisture penetration. Unless it rains in your house, I wouldn't look for a problem there. (although jacks & such can go bad) It's easy enough to test at the entry point.
A dedicated Vonage user.
I do believe that if Verizon ends up buying Vonage (I suspect it will), I'll just have to go somewhere that isn't Verizon to get phone service... and meanwhile not patronize Verizon for anything else.
/P
I begged my wife not to get a mobile phone from them, but she said they have a monopoly on providing service in the subway.
The calls go over AT&T lines. I don't think Verizon will take on SBC/AT&T on this crappy patent thing.
Any techno geek out there knows, that Cable Modem is faster then DSL, regardless of what analysts say.
Verizon it must really stick in your crawl, that you as a company have invested all that time, effort and money into a VoIP system that is slower then your competitor can provide, or has provided, they just used the existing technology that was there...
In the long run saving themselves and there customers lots and lots of money..
Serves you as a company right..
As a company you guys will probably not go belly up, but I hope my comments will fuel others to think and dig deeper on issues and things dealing with business dealings..
You guys got bested by another company, providing a better service, sucks doesnt it?
Well seems you got what you wanted for the time being anyways...
Anyways, he is another question:
How does Verizon corporate people sleep at night?
And Judge I wouldnt be surprised to see your interests in this case have something to do with a financial gain, and nothing to do with law or justice for that matter..
Money, good ol greed, who has it, or wants it, and how to get more of it..
Forget the customer paying for the service..
Verizon did, that is why people dont like Verizon as a provider anyway, rofl..
Go Vonage
Now had I been the judge in this case and having listened to all this rabble from both sides for almost the past year, here would have been my final judgement on this matter..
If there really is a problem, and Vonage is doing what Verizon has said, and then I have Verizon retract 4 of those initial patent infringement charges, I would judge this way..
Neither Vonage or Verizon should be able to enlist new customers at all, until said appeals, judgements and the whole case can be heard over its proper channels..
But hey that is just my opinion..
Think about it.
As far as I can see, this (VOIP)is the best thing that's ever happened to the consumer. The Bellophone monopoly is dying, and of course they are fighting for their life. Just like M$, they will do anything they can to destroy their competition.
What is the diference between the technology Vonage uses and the major (read cash rich and with armies of lawyers) cable companies usefor VOIP?
FWIW, we have Verizon for our cell phones, as they have the best coverage of any of the major providers in our area. Can't speak to the quality of thier phones as we use ours as phones, rather than hockeypucks etc. However my next one will not leave the store without Sousa's "Stars and Stripes Forever" as an available ringtone, not just an empty promise from the store staff. (It's the little things ...)
http://www.google.com/patents?id=OfwkAAAAEBAJ
There is no end to this.
I do hope this is cleared up properly but i need to seem more solid proof of a real infringement that's special to Vonage.
It doesn't even seem like a hardware vs software issue.
- Verizon is a Criminal corporation
- by hhaque June 30, 2007 1:36 PM PDT
- I have had extremely bad experience with verizon service. Their policy is to get a customer to sign a contract and then rip that person off in every way possible. I hope Verizon would cease to exist in near future. Ivan Seidenberg - you have made verizon a monster.
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