Menu

Michael Gracie

Cheap phone service – the smell of a death in the family

Proving you can’t win ’em all.

Jeffrey Citron did some revolutionary things for online trading, but the luck isn’t coming for upending landline phone service and the spin isn’t too hot either:

First, Vonage loses their appeal in the Verizon patent case; the company’s weak response follows.

Then they lose another patent case to Sprint. The response is even weaker…they appeal.

I guess you have to give them credit for trying, although the remaining customers would probably benefit most if they just handed the incumbents the keys and called it a day.

Where Vonage’s trouble came from

vonage.gifVonage’s troubles keep getting worse, but why?

Questionable business plan – everyone has one of those. It wouldn’t be a plan if everyone wasn’t questioning it, hoping to get their money in at a discount. It is really all about execution, and you have to give the guys credit for getting all those little boxes plugged into those cable modems, and actually working.

Then there was the IPO – first touted, then despised by institutions, followed by a grassroots effort (a little stinky). Give ’em credit again for getting ingenuitive when adversity was staring them in the face.

Now, earnings are faltering – the incumbents are running at the space with reckless abandon, and those established telcos have the sales infrastructure to make it happen much more cost effectively than the upstart.

This doesn’t add up for me. Scrappy startup makes waves with end-around technology. Incumbents scream bloody murder about net neutrality, barely mentioning step-brother VoIP, instead targeting the likes of Google (which actually do pay for bandwidth at their end). Lobbyists rally on behalf of incumbents. Startup gets pummeled.

What’s wrong with this picture? The timing is just too good.

Vonage spyware, or renegade affiliate

Silicon Valley Sleuth says Vonage is using adware in its marketing efforts. This announcement comes on the heels of a piss poor IPO, including spamming subscribers regarding the stock hock.

I’ll withhold conclusions, as it isn’t apparent whether this is Vonage themselves or the work of a renegade intermediary. But if it is the former, and someone comes up with a way to port existing Vonage numbers to another service, say SkypeIn, someone is in deep doodoo (and no, there is no direct cause and effect relationship here, but the bad PR is not something Vonage needs right now).

How to stop telco innovation in the US

As if just letting the wireline incumbents ruffle their plumes wasn’t enough to keep the US in the dark ages of telecomm innovation, why not scare the shit out of the wireless companies while you are at it. They are “the establishment” just like the copper-loving crowd, and their customer service is just as bad, IMHO. So all you have to do to ensure that us American folks don’t ever get any fancy new services is to release a disruptive service for use on wireless networks.

The Register may call it the end of VoIP for guys like Skype and Vonage. I just say it is another nail in the coffin for US consumers and businesses wanting desperately for something competitive.

Vonage reprieve

I had little doubt that Jeffrey Citron, which has a history of bucking the establishment with his business models, would get his calls unblocked. While the news is a bit old, the culprits and terms of settlement are nice to have in the cache: Telco agrees to stop blocking VoIP calls | CNET News.com.

Good job, Mr. Citron

Vonage Versus The World

Everyone is paying very close attention to Vonage nowadays. If some ISP isn’t flat out blocking the service (see Vonage Says ISP Blocked Its Calls), someone is pissing and moaning at the latest outage (see Vonage Internet phone service suffers outage – 03/07/05).

That tells me that Vonage is positioned to kick everyone’s behind, and “everyone” is worried.
(more…)