Say Goodbye to Standalone VoIP Providers

Carl Weinschenk

Business stories happen at two levels: the particulars of why a specific company does well or poorly, and the factors that are relevant to the overall category. The latter, naturally, are more interesting to the bulk of observers.


This VoIP News story details the rather bleak prospects for standalone VoIP provider SunRocket. The piece, which draws on and links to pieces by Andy Abramson and Om Malik, paints a Titanic-like picture in which the co-founders left and about 40 people were laid off. The debate is whether the cuts were due to a lack of money or to lure potential buyers.


It's difficult to determine to what extent SunRocket's predicament is due to internal problems or to issues that are endemic to all standalone VoIP companies. But clearly it's not a good time to be an independent Internet telephone provider.


There are three players on the VoIP circuit. The old timers are the standalones, who saw VoIP as a wonderful use of the Internet and had the moxie to start companies. Next to arrive on the scene en masse were the cable operators, who pictured VoIP as a killer app that would not only be profitable in its own right, but also would serve as the glue binding wireless, video and data services in compelling triple- and quadruple-play packages. Lastly, the phone companies finally understood that VoIP wasn't just a gimmick and that their legacy services were under sustained attack that, if not countered, could marginalize them. Thus, they began offering their own VoIP services. In this way, VoIP became part of the endless battle between cable and telephone companies.


Clearly, the standalones are the most vulnerable. Vonage is fighting what likely will be a losing patent battle with Verizon. It remains to be seen whether Verizon or other legacy telephone companies can generalize the court's findings and make similar claims against other VoIP providers.


Large standalone VoIP companies may be in the process of passing from the scene. It's a bit sad, since these are the companies that launched the industry. In addition to the patent issue, which could affect both the standalones and the cable operators, the Vonages and SunRockets of the world suffer from myriad institutional disadvantages. Cable operators and telephone companies have multiple revenue sources, established back-office engines, big marketing departments, stables of lawyers itching to file lawsuits and huge existing customer bases.


Standalone VoIP providers simply don't have these assets. What they do have, however, is VoIP know-how and brand names strongly associated with the new platform. I wouldn't be surprised to see one of the possible scenarios pointed to in the VoIP News piece -- an acquisition -- become the more general trend. Indeed, the company with the highest profile, Vonage, may become the prime target.

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Jul 17, 2007 9:54 AM rebecca rilea rebecca rilea  says:
have just been battling it out for the last month trying to switch to vonage for lower prices and more services after 221/2 years with verizon and now i read that vonage may become aquisition of verizon. what now brown cow? spent 4hours on phone with vonage friday(4 days ago) on hold and getting transferred to phillipines and back, getting all kind s of misinformation and findind out that the person who signed me up, the sales rep, told me several untruths. yesterday vonage called to see how i liked my service, not very well i told her since i had to resign with verizon to get my phone# back, which is not all vonage's fault, they were just players in along ugly ordeal, i told her that i was on verizon now and could not use vonage until they completed porting my number which was lost and it took verizon 2 weeks to retrieve, which meant i had to resign with thwm, pay them , and now i had two services, was supposed to be getting free trial period to see how i liked vonage but so far that had not happened and by the time my number got ported to me i would have less tan 5 days if that, perhaps not even that. i did not sleep last night and got up at 6.00a.m. pacific so i could go on hold again. yesterday i was put on hold for nearly an hour and a half, but finally gave up. spoke with nice young gentleman in cancellation dept. as my husband and i decided to get rid of vonage, everything is outsourced, so far i have talked to people in argentina, the phillipines on several differant occasions, india, this morning the nice young man was in canada, he talked me into staying by extending my free trial 30 more days so that i could actually try vonage. now i read that vanage is probably going to be gobbled up by verizon. guess i should have stayed with them and missed all the torture. Reply
Jul 17, 2007 10:01 AM Carl Weinschenk Carl Weinschenk  says:
Rebecca, that's a terrible story. I'm sorry you had to go through all that. Verizon buying Vonage is just a hunch by some analyst-types, not necessarily something that is going to happen. Hopefully, your trying times are over in terms of your voice service. Good luck. Reply
Jul 17, 2007 6:34 PM Tech Untangled Tech Untangled  says:
Hi, I agree with your title. However, the reasons the standalone VoIP providers will not survive has to do with their lack of brandname, high cost of acquisition, and entrenchment by PC-Centric voip providers such as skype. Read on at http://techuntangled.com/5-reasons-why-voip-providers-will-go-bust Reply
Jul 17, 2007 6:35 PM Tech Untangled Tech Untangled  says:
Aug 19, 2007 6:11 PM gemam mahmood gemam mahmood  says:
hi we are telecomunication company we need viop progrem thanks contect bye mahmoood Reply

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