An Internet Phone Pioneer, Poised to Go Public, Has Rivals at Its Heels

The New York Times ^ | 5/23/06 | Ken Belson

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Thanks to its relentless marketing and low prices, Vonage has quickly become synonymous with phone service over the Internet. But when Brandon Sehlke and his wife, Jennifer, moved into a new home in San Antonio two weeks ago, they chose a new Internet phone service from Time Warner Cable, not Vonage or AT&T, his old provider. Skip to next paragraph

The deal Time Warner offered was just too good: phone service with a television package and a broadband connection for a promotional price of $89.95 a month.

"Getting all three services was better than anything else we could find," said Mr. Sehlke, a 24-year-old dental student in San Antonio. "I briefly looked into Vonage. But paying $90 for all that was hard to pass up."

As more people make similar choices, Vonage's run as the industry leader is likely to end. While Vonage is still the largest Internet phone company, with 1.6 million subscribers, Time Warner, Cablevision, Cox and others are rapidly catching up, using their marketing heft and their ability to offer bundles of services.

The Internet calling market, which also includes independents like Primus, SunRocket and Packet8, is still just a sliver of the overall phone business. But it is growing at the expense of Bell phone providers like Verizon and AT&T, which have introduced their own Internet phone services to keep customers from defecting. The Bells are also developing television services to win over cable customers.

[Pop Fly]

I find the VoIP industry to be very interesting, and this article caught my eye. It will be interesting to see how Vonage's IPO does. As the article notes, there is still a lot of other competitors, and I would think that SunRocket's lower costing packages will help them start cutting into Vonage's market share.

[pikachu]

Looked up 'VG' on CNN/Business and it opened at 17 and sank.

[Pop Fly]

They spent so much money (something like $200 per subscriber) to get people to sign up. That helped build a big subscriber base, but there is now nothing stopping those people from switching to a cheaper, more reliable service like SunRocket.

[Cementjungle]

Being a Vonage customer I received an email from them regarding the IPO. I followed the link to ready about it and it made me go through countless pages checking the box stating that I understand it's risky and I could lose money. I finally gave up, as it never seemed to get me past those endless disclaimers.

In any event, I love my Vonage service and might be interested in buying a few IPO shares (understanding the risks!).

[TommyDale]

I have been with Vonage for a year now, but I will be moving to another company. Vonage has ignored customers' request for Anonymous Call Rejection and/or manual entry of Blocked Call capability. Toss in the fact that customer service tends to be a bit "Eastern Dialect" and I gave up.

Moving to another company called Voice Eclipse, with 2 phone numbers, unlimited local and long distance, Anonymous Call Rejection, manual entry Call Blocking, all the other goodies for only $19.95 per month. Vonage will have lots of competition, and probably better customer service. Oh, one more thing -- Voice Eclipse has their customer service in Palatine, IL and they speak fluent English!

[sageb1]

"The deal Time Warner offered was just too good: phone service with a television package and a broadband connection for a promotional price of $89.95 a month."

That's what I use. I don't have a cell phone, so the only drawback for me is if cable goes, so does my phone.

[Pop Fly]

Nice. Sounds like you might have found a plan for you. You might also want to check out Sunrocket...I'm a big fan because all my friends have told me such good things about it. It's $199 a year for unlimited calling ($16-something a month) and has all the features you mentioned.

[HAL9000]

It's the biggest IPO disaster in a few years.

[steve86]

VG down 13% today.

[ssstewar]

Being with Vonage also, I got the same e-mail. I at least made it to the offer phase and got assigned 100 shares. Now, we'll see how it goes, but I'm like you....I cut the cable to AT&T three years ago and have never looked back.

[Pop Fly]

Everyone I know with VoIP, whether it's Vonage, Sunrocket or something else feels the same way...they never looked back and love how cheap their service is.

[GregoTX]

Im Vonage too, and my complaints were the same. I had not heard of Voice Eclipse, I will look into that.

[Just another Joe]

There are advantages and disadvantages to each type of telecomm service. There are also advanteges that are common to each type and disadvantages that are common to each.

For my money, the landline (old telephone) is for emergency home service only, 911, fire, emergency, etc.
Time Warner, Cox, etc are good for voice quality but not, necessarily, for emergency home service.
Vonage, etc is good for price but voice quality, many times, is not as good as the other two.

[Dahoser]

If I'm not mistaken, Time Warner is actually using Vonage.

[AnotherUnixGeek]

For my money, the landline (old telephone) is for emergency home service only, 911, fire, emergency, etc.

I use Packet8 for my VoIP ($19.95/mo) and have no landline. We had a medical emergency in my home back in February and used the E911. Worked fine and the ambulance turned up within 5 minutes (which is a function of emergency services in my area, but it's nice to know 911 works with VoIP).

Of course, if my internet connection goes down then I have to rely on my cell phone and 911 routing through the California Highway Patrol, which would probably take a little longer.

Anyway, unless SBC/AT&T knocks my eyes out with a discounted offer, I'm never going back. I'm about to try Skype and if I like it enough, I'm done paying Packet8, too.

[Just another Joe]

We had a medical emergency in my home back in February and used the E911

Don't get me wrong, you can still call 911 and get through to emergency services.
If you hang up before they answer, or even after for that matter, they don't have a clue where you live until you give them your address.

Your power goes out, your phone goes out.

If you can live with those two disabilities, VOIP may be the way to go.

[BurbankKarl]

Depends on where you live...the E911 switchover is well along....should be routed direct to your local PD if you are not adjacent to a fwy.



>>>Of course, if my internet connection goes down then I have to rely on my cell phone and 911 routing through the California Highway Patrol, which would probably take a little longer.

[Pop Fly]

Yeah most of the services have been required to get all areas fully functioning for E911. Last I heard Sunrocket was up to about 98% E911 coverage, and Vonage passed 50% about 6 months ago.

[AnotherUnixGeek]

If you hang up before they answer, or even after for that matter, they don't have a clue where you live until you give them your address.

Not if your VoIP provider has implemented E911 in your area. Mine has, but I think E911 is still unimplemented in a lot of places.

[Pop Fly]

As I said, I know SunRocket is close to full compliance, and I believe most of the other major companies are getting close as well. Check out broadbandreports.com, they probably have more info on the level of E911 coverage of each company.