Yesterday Daniel Berninger of GigaOM posted a great piece on Vonage. In it he explains why they are not going away just yet despite the best efforts and wishes of land line and cell giants like Verizon.
Anyway, the loss of this patent case is not as desperate a situation as most think. In the most recent quarter, Vonage used only $28 million of its $500 million cash reserve; so paying Verizon $58 million (if the companies donâ€™t settle for less) does not threaten bankruptcy.
Secondly, Vonage gets $16 per month of incremental margin from each subscriber addition, so an injunction requiring payment of 5% or $1 per month per line does not destroy the prospects for profitability.
If you ever use a telephone you should read the whole thing.
After I read it, I thought it might be interesting to explain why we use a VOIP system at BlogWorld. We use a company called Packet8.
First of all my office / house is about 70 miles from Los Angeles, Everyone else in the company lives in San Diego in different locations and they all work from home as well. We need to communicate regularly several times a day. Our system allows me to dial any of their extensions and they pick up like they were in the office next door. We can conference each other or customers in no problem. If we are on the road as we often are attending / working other shows and events it forwards our calls to our cell phones.
All for a fraction of what a traditional phone company would charge us. Oh and our local phone companies never called us back when we tried to find out of they could do the same thing at a competitive price. Our VOIP company has been very responsive in helping us add new features when necessary.
For example, my office for the other show I work on is in Los Angeles. We were able to add a separate phone line with a (323) extension with a separate voice mail. If you call me in LA it rings me here. If someone in LA wants to transfer you to me no problem.
Finally we are a new media company producing a new media conference, tradeshow and media event. We felt it was important to walk the walk.
It’s not all wine and roses. We do have call quality problems from time to time but I would say no more than a normal cell phone and certainly much better than cell phones were in the early days.
As Berninger’s piece points out the big bells still maintain monopolies on our local calling. VOIP offers the hope of competition to consumers. As new media has shown competition is a very good thing for consumers.