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Vonage can hear Verizon now after losing infringement lawsuit

A suit filed in June by Verizon Communications against Vonage made its way to court last week.  Verizon claimed that Vonage infringed on several patents including the technology Vonage used to connect phones from its Internet Protocol service to traditional phone networks.

Vonage claims it had never violated any of Verizon patents, saying that it has been using third party technology that is already the standard throughout the industry.  One of the such is the voice gateways from Cisco Systems, to route voice traffic over the internet.

The final decision made by a federal judge stated that Vonage Holdings Corp. must pay out $58 million in damages to Verizon along with 5.5% future revenues royalty for any continuing infringements, according to a press release.  The decision came from the U.S. District Court of the Eastern District of Virginia, filing the infringements of three of the five patents under consideration.

The number of Vonage subscribers dropped from 256,000 from the second quarter of last year to 204,591 in the third quarter and then to 166,000 in the fourth with is Q4 loss from $72 million last year to $65 million this year.  Company executives say this is partly due to the bust of the company's commercials.  The next step is to replace the commercials and design infomercials that use customer testimonials to promote the service.

The pull themselves out of the hole, Vonage formed an agreement early this year with Earthlink to begin reselling wireless broadband in Earthlink’s covered cities.  To add to diversity of the companies marketing, Vonage executives have also mentions the company's stake in dual-mode handsets that will allow VoIP along with cell phone calls.

"We are confident in Vonage's future health, growth prospects and longevity," said Jeffrey R. Citron, Vonage's chairman and chief strategist.   Vonage has announced that it is not going out of business and its service will not be disrupted.

Currently, Judge Claude Hilton issued a permanent injunction against Vonage.  The reason behind the injunction is that the judge believes that providing monetary damages "does not prevent continued erosion of the client base of the plaintiff."  The injunction will not formally be entered for another two weeks, said Hilton.

Vonage is requesting to stay the injunction of either 120 days or until its appeal is heard.



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Poor commercials=droped subscriptions? Right...
By arazok on 3/24/2007 8:40:56 PM , Rating: 4
quote:
The number of Vonage subscribers dropped from 256,000 from the second quarter of last year to 204,591 in the third quarter and then to 166,000 in the fourth with is Q4 loss from $72 million last year to $65 million this year. Company executives say this is partly due to the bust of the company's commercials.


As a current Vonnage subscriber for 3 months now, I can say that the drop in subscribers is not due to a poor advertising campaign (who drops a subscription because they don't like the commercials?), it's because the service stinks.

In my experience local calls are fair game, but long distance is a nightmare of poor sound quality, unreachable numbers, and false busy signals.

I'm just waiting for my 3 month minimum to wrap up, so I can leave without penalty.




RE: Poor commercials=droped subscriptions? Right...
By edpsx on 3/24/2007 8:50:11 PM , Rating: 2
I have been a subscriber to Vonage for over 3 years. I have had very little problems with their service and would give them the thumbs up to anyone who is considering VoIP. VoIP can have problems if your internet connection is not up to snuff, but thats not a Vonage only problem. So before you bad mouth a company you should probably check your own stuff first. As soon as you switch to another VoIP provider Im betting you have the exact same issues. Even tradition POTS lines can do what you describe with long distance.


RE: Poor commercials=droped subscriptions? Right...
By SunAngel on 3/25/07, Rating: -1
By vorgusa on 3/26/2007 10:35:59 AM , Rating: 2
I have had Vonage for years now and I think it is even better then a landline phone. I use the phone forwarding feature all the time when I go out of town and you can look at phone calls and all sorts of information online. The costs compared to my local phone service is also great considering all the features


By Bootstrap on 3/24/2007 9:11:44 PM , Rating: 3
Well, I can't speak for anyone else, but I've been with Vonage for almost 2 years and overall I've been very happy with their service. I use it primarily to speak to my girlfriend long distance (I'm in the US, she's in Canada), and I don't notice any difference between those calls and local calls. Of the few problems I've had, most have been the fault of my ISP, and those problems that were on Vonage's end have usually been resolved very quickly.

It's true that the reliability isn't up to that of a traditional land line yet, but for what I use it for, it works very well. Far cheaper than the cell phone plan I was previously on, unlimited calls to Canada, and it's far more reliable in my area than any cell phone service I've had.


By dblagent on 3/24/2007 9:53:34 PM , Rating: 2
I tried Vonage and also had horrible overall service myself. Same problems mentioned, I could not reach some numbers for no reason, echoing calls, just overall a bad service for me. The worst part was totally unreachable tech support. I actually waited on hold over 1.5 hours twice! I had the proof in the web record of calls and was not very happy.

I also have hooked up Vonage for others as part of my job and I know that several customers have gotten rid of it too due to problems with the service.

I really wanted to like the service - but I have tried other competing services and found them to work much better. Now, granted, the service may vary by the area you are in so it may work fine in most places, but this has bee my experience.


By AnotherGuy on 3/24/2007 9:55:13 PM , Rating: 2
Same Thing for me... I dont think i can say it better... I ve had vonage for almost 2 years now and never had trouble with it... Canada free, all over US free.. wth u want more for 30$ a month... if i had a poor line that was always because of me downloading 2 much torrents and my Internet connection was crappin out...


RE: Poor commercials=droped subscriptions? Right...
By FujiT on 3/24/2007 10:45:24 PM , Rating: 2
Same here. My parents have vonage and it's fine. We've had it for about 8 months and it's gone down once or twice and that was either b/c of the cable modem or the MTA. Other than that, it's been great. It does get kind of choppy if the weather is bad. Why is beyond me, but that's what happens. For the people that have had troubles, maybe increasing the call quality would help or maybe a different phone?


By Milliamp on 3/25/2007 1:11:15 AM , Rating: 2
Vonage for 3 years here. It saves me $34/month over what my phone bill was and I have no complaints with the service.


By Targon on 3/25/2007 9:59:34 AM , Rating: 2
I had some problems with the service which turned out to be an issue with my ISP. Since those were resolved, I have very few problems and I find the advantages are HUGE compared to Verizon land line service.


By Chaotic42 on 3/26/2007 12:11:04 AM , Rating: 2
Poor quality? Do you have QoS turned on on your router? My Vonage connection is excellent and I have crappy internet service.


By perhaps314 on 3/26/2007 8:48:12 AM , Rating: 2
I had vonage for about 6 months, the call quality was fine. It has it's down times but I thought that was just because they were a young company. The worst part for me was when I wanted to download a torrent it would mess up my speed and reset the connection over and over. I caught off vonage because I have my cell and didn't see a need to spend money on two bills.


By peldor on 3/26/2007 9:57:14 AM , Rating: 3
A poor article summary.

Vonage didn't lose subscribers (they have over 2 million in total). The number of NEW subscribers in Q4 was lower than in Q3. Slower growth, not a decline in size. And that could be blamed on poor advertising.

What's more interesting is nobody has even commented on the effects this judgement could have. Personally I think Vonage is going down. They probably need to double in size to turn a profit, and that was before this multi-million dollar ruling and the extremely painful 5.5% ongoing revenue "sharing". If this ruling stands, Vonage will never turn a profit.


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