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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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VoIP in general
By archcommus on 3/24/2007 10:02:58 PM , Rating: 4
The reason VoIP in general right now doesn't seem to be a strong market to me is because it seems many households are transitioning to having no landlines at all. When you have three kids and two parents all with their own cell phones and a total bill of over $100/month, why add ANOTHER $25/month on top of that for a VoIP landline when nobody will even use it? It seems like America's youngest generations graduating from college and getting their own homes seem to be doing this.




RE: VoIP in general
By TheRequiem on 3/24/2007 10:50:24 PM , Rating: 2
The Service I have had with Vonage in general has been fairly ok. There has been problems, mostly because of myself, but Vonage is allright honestly. I've never had anything like a "horrible" experience with them, it's just a damn phone... and it works. To me it is almost unreasonable to pay for a land-line phone and have the same features as Vonage and pay over $100 when I can just pay 27.95 a month for little to no hastle. The company is on par with competitors, besides everytime I call... its to damn India. Thats allright though, as long as they speak English and I can get it working successfully. I give it a "fair" status, only for a few imperfections that could definitely take some improvement. Its definitely allright for the price.


RE: VoIP in general
By spwrozek on 3/25/2007 1:55:10 AM , Rating: 2
I would say you are right. None of my friends who have apts or rent houses get a land line. My parents only have a land line because they have to get DSL and they were forced to get a phone line. Why get a phone line when I have a ridiculous # of min and can call anywhere in the states and it cost me 40 bucks a month and can take it anywhere I want. Mobile phones will be the only way to go in the future. There will be no reason for land lines.


RE: VoIP in general
By vorgusa on 3/26/2007 10:43:58 AM , Rating: 2
While I agree with what you said there is something to be said about the quality of using a home phone.. I hate talking on cell phones especially when the person I am talking to has dropped calls and every cell phone I have had does not have good sound quality.


RE: VoIP in general
By Lazarus Dark on 3/25/2007 1:29:04 PM , Rating: 2
When I moved out from my parents house at 18 about 7 years ago I got a cell and just haven't ever needed a landline. And 3 years ago, I dropped the cell phone and have lived happily with skype and email for 3 years now. I am looking at getting a wifi phone though, for the rare occation I really need to call someone outside my apartment. But my generation has never had a real need for a landline. I say they won't exist within 30 years or less, even payphones and such will be cell or voip.


RE: VoIP in general
By hands on 3/25/2007 5:19:22 PM , Rating: 1
A lot of people complain about how backwards the U.S. is in terms of certain technologies, such as wireless networks. The biggest reason is because U.S. law was written in a way that for rural development to occur in certain cases, various utilities such as electricity and telephone lines must be paid for and funded by commercial entities wanting to move into those areas. The U.S. now has a very well developed network of traditional phone lines, but newer technologies are considered luxuries. Therefore, in the past, it has been cheaper and more reliable to get a traditional phone than a cell phone.

OTOH, in places where traditional phone lines aren't as ubiquitous, cell phone towers were/are much cheaper to construct than a wired network.

Now that wireless networks and the internet are ubiquitous (in developed areas of the world, including the U.S.), traditional phones don't make a lot of sense from an installation perspective. Traditional phones are no longer the cheapest option, and they certainly aren't as flexible as other options. So, I would agree that the traditional phone system is slowly becoming as obsolete as the telegraph.


"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone

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