Do Vonage Leadership Claims Ring True?

Reading the latest installment in the long-running series of 'we're the greatest' press releases from Vonage Holdings Corp., it seemed appropriate to run the text through the truth-o-meter.

Michael Harris

March 11, 2005

2 Min Read
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Reading the latest installment in the long-running series of 'we're the greatest' press releases from Vonage Holdings Corp., it seemed appropriate to run the text through the truth-o-meter. Let's start with the headline: 'Vonage Becomes First Broadband Telephony Provider To Activate Over 500,000 Lines.' Well, seeing as Softbank BB counts over 4.4 million broadband IP phone users in Japan, that claim seems a stretch. Vonage could try to weasel out saying by 'broadband telephone provider' they mean the category of VoIP players that do not also sell broadband access, as Softbank does. Or, that because Softbank makes its phone service available on-demand, its customer base is not a useful metric. Both arguments are lame. Then Vonage goes on to say: clearing 500K came from the provider 'doubling its growth rate, an industry first, with the addition of more than 15,000 lines per week up 50% from the 4th quarter.' Doubling its growth rate an industry first? The idiocy of that statement is undoubtedly self-apparent to our astute readers. Finally, Vonage says adding 15K lines per week makes it the 'fastest growing telephony company in North America.' This is also dubious, as they are referring to lines, not subscribers. Time Warner Cable is now adding over 11,000 IP phone subscribers per week. If Time Warner is capturing 1.35 lines per customer, they're already equal to Vonage's run rate. This is impressive, considering Vonage is marketing its service to every broadband subscriber in North America (as well as many overseas), while Time Warner is only selling to a portion of its own footprint. Cable's market entry aside, with AOL now readying its VoIP rollout, Vonage's days of collecting the low-hanging fruit will soon be over. The analogy is obviously imperfect, but Vonage's over-the-top, conquer-the-world bravado -- combined with its facilities-less, best-effort broadband service model -- eerily reminds me of Excite@Home. Without the cable partner squabbling, of course. Hats off to Jeff Pulver, CEO of pulver.com, who during his Spring VON conference this week, questioned the viability of the strategies of Vonage and its ilk 'I have a lot of concerns about where we are as an industry,' Pulver said. 'We have billions of dollars being spent to get $25-a-month customers. These numbers don't add up.'

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