Vonage Survives a Year of Living Dangerously

Carl Weinschenk

Vonage had, to say the least, a challenging year. That's why it seems fitting that the company should end 2007 on a high note. It did, announcing on New Year's Eve that it had reached an agreement with Nortel Networks to end the last remaining patent suit lodged against it. It was particularly good news for Vonage because it will pay no damages. The core of the agreement is cross-licensing of three patents from each company, Reuters reports.


Previously, Vonage settled suits against AT&T, Verizon and Sprint.


One of the major activities during the past year has been predicting when Vonage would sell itself at a steep discount to a carrier or go out of business. Indeed, a scan of Google News entries for Vonage during the past few months almost all focus on various aspects of its legal troubles. Perhaps the year ahead will be filled with other news about the company, such as how good or bad its service is. It has some work to do in this area as well, it seems.


Discussion of the company's fate may not totally cease, however. Indeed, it's possible that settling the lawsuits makes it more likely that the company will change hands. Clearly, interested parties are more likely to jump -- or to make an offer attractive enough to be accepted -- if the lawyers have gone home.


Lifting the legal clouds doesn't change the basic dynamics of the business, however. Vonage has advantages in flexibility and name recognition. It is the VoIP company. Clearly, however, the deck is stacked strongly against it: Vonage doesn't have the technical or back-office infrastructure or marketing muscle of a telcom or cable company.


Those realities, perhaps, are best considered on another day. The champagne will taste a bit better for Vonage executives this evening knowing that the company weathered a horrendous year. Challenges lie ahead, but Vonage will enter the year in control of its own fate.

Add Comment      Leave a comment on this blog post
Jan 3, 2008 12:34 PM Paul S Paul S  says:
I just recently became aware of the issues with Vonage on a discussion board (investing) and I found this post on a Google search. No wonder it's so cheap- if they need something, they just steal it. And from the sound of it, crime does actually pay. Reply

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