Vonage Holdings Corp. says it intends to quickly settle its legal tangle with the State of Texas and its Attorney General, Greg Abbott.

Or maybe it will fight back.

"Yes, we are going to try to settle it," says Brooke Schulz, Vonage's VP of corporate relations. "We are going to sit down with them and try to reach an agreement that is favorable for everybody. Whether we settle or defend, they are both ways of settling."

Background: The Texas Attorney General announced this week that it is suing Vonage, claiming that the VOIP provider is misrepresenting its service as a real phone service -- allegedly Vonage implies that dialing 911 from one of its lines would yield the same results as would using a phone connected to the PSTN.

The lawsuit stems from an incident in Houston when a teenage girl had to run to a neighbor's house to call 911 while her parents were assaulted and shot during a robbery. The family were Vonage customers, but their phone was useless as they didn't properly activate Vonage's 911 service.

But it's not as if they weren't warned, Vonage says.

“There are a lot of disclosures we make to our customers about E911," Schulz says. "During the subscription process there are several reminders that our 911 service is different and that there is a need for the customer to activate it.”

Schulz says that the extra steps required to turn on Vonage's version of enhanced 911 (E911) is available “within two clicks” of entering the company's Web site. New Vonage customers encounter reminders about the E911 service at the beginning and at the end of the online subscription process, Schulz says.

“At the front page of [a customer's] Web account there is a big red sign that tells you it’s not automatic,” she says.

So what's the difference between real 911 and VOIP 911? Location, location, location.

Most VOIP 911 calls are routed through public safety access points (PSAPs) -- facilities where an operator can alert emergency response agencies. But it's noteworthy that these PSAPs often don't have Data Management System/Automatic Location Identification (DMS/ALI) systems, which allow operators to immediately identify the caller's location (see VOIP 911 Still Trails Wireline).

The Texas AG's lawsuit alleges that Vonage is deceiving consumers by not revealing in its television commercials and on sales calls that customers must take extra steps to turn on its 911 service. "Even after signing up, there are limitations to the service that Vonage customers may never know about unless they read the fine print buried on the company’s Web site," the AG's press release contends.

The suit invokes the Texas Deceptive Trade Practices Act and asks the courts to take measures to stop Vonage from allegedly misrepresenting its 911 capabilities. It seeks damages of $20,000 per violation, but there's no mention of how many alleged violations have occurred.

For its part, Vonage says it will work to put this behind it, which may lead to a settlement. "We are looking forward to working with the Texas Attorney General to resolve this issue," Schulz says. "We still have not talked to them directly."

"They sent us a letter last week asking us for a few different things like a list of our resellers in Texas, and how many customers we have in Texas, but we had no idea they were going to file suit against us -- it came as a complete surprise.

"We didn’t even get a courtesy call.”

— Phil Harvey, News Editor, and Mark Sullivan, Reporter, Light Reading