Vonage in the News

The NY Times has an interview with Jeff Citron, the Chair of Vonage. Telling item: "A chief concern is that Vonage, which helped popularize Internet telephone calling, faces brutal competitive pressure from well-heeled and bigger telecommunications players. That makes it expensive for Vonage to acquire customers and, in turn, to make them profitable. Internet calling allows voice traffic to be sent as packets of data, using the infrastructure of the Internet rather than expensive phone networks. Competitors, particularly cable companies, continue to erode Vonage’s market share." Then there is the SunRocket challenge amid a $33M VC push. Jon Arnold points out that Vonage is spending $1M per day in advertising. It's ARPU increase was from its new 911 cost recovery fee - and is eroded by free calling to Europe. "Finally, some commentary about the costs of doing business. As Vonage grows and competes more intensely against incumbents, they must bear a variety of costs, such as termination fees to legacy carriers, E-911 compliance, co-locating fees to expand their network, and porting phone numbers for new subscribers. So, while they report a slight decrease in direct costs from last year - $7.52 per line – it seems clear that over time, these costs will likely creep up." Big problem: "Q2 monthly churn was 2.3%, up slightly from 2.1% a year ago."