The Engadget Interview: Jeffrey Citron, chairman and CEO of Vonage
posted May 23rd 2005 1:15PM
Before we get into some of the specifics of what Vonage is up to right now, what's the big picture with Voice over IP?The telecom industry is shifting dramatically, and right now you've got everyone rethinking what business they want to be in. I think many are drawing correct conclusions, others are drawing improper conclusions, and I think it's really too early to say how all of this is going to play itself out.
In my world, particularly Voice over IP, I view the issue differently than a lot of others. I think that broadband is utility. I think it's like electricity, and I don't think you should treat it any differently than electricity. If you have to regulate it, you might as well regulate it like electricity gets regulated, because broadband on its own delivers nothing. It's the services that it enables, the same way electricity is useless unless you can plug a lamp into the socket, or a blender, or a microwave, or a computer. It is an enabler of things. Broadband is enabling things like IPTV. Like Voice over IP. Streaming video. Streaming audio. Music. Radio. All the ways in which we communicate or use and consume content are being transformed by this process.
The Voice over IP industry is doing very well. The cable guys have done a great job in online services, and we commend them for that. We've done a great job, too. And right now some of the other players have to be thinking, "Well, what am I going to do in this world?"
Just because lots of people offer a service that doesn't make it a commodity.
What about when it's priced like a commodity?
Well, we'll go through that in a second. Some people have estimated in articles, and I don't put this estimate at all,
that there are 1,100 Voice over IP providers in this country. I don't think it's that high because I can't find 1,100.
I'm barely pressed to find over 100. But even if there are 100, or 1,000, there are really only six that account for
95%. So it's really one of those six deals that really matter, because those are the six that are going to drive the
marketplace, or seven, or five that are going to drive the marketplace. Or seven. Or five. Now, I don't think Voice
over IP is a commodity-based product, and I don't think it's being commoditized. And I don't think it's priced as a
commodity.
Do you think it's headed that way?
I don't think it's headed that way. I think quite the opposite. Typically commodities themselves are very stable
products. They're a fixed known quantity of something that is ubiquitous no matter where you go. So oil is a commodity.
Quantity doesn't change. Oil is oil, gas is gas, electricity is electricity. Broadband is broadband.
But you could look at voice minutes themselves as a commodity.
Vonage is service. Maybe voice itself might be a commodity per se, but I don't think so. And I'll explain why in a
second. But Vonage's service is more than voice. That package of what we offer is changing and growing to provide new
and unique applications on a pretty regular basis. While we might think that wireline voice might be heading towards
commodity status, clearly wireless voice is not a commodity, and its pricing trends aren't the same pricing trends as
wireline trends. Wireline trends have really subsided at this point, and quite frankly the value that's coming is not
in the area of the voice components as much as it is in way in which the voice components are accessed: mobility,
video, whatever the feature set is.
But in terms of wireless now, there's a high barrier to entry compared with Voice over IP.
There's a high barrier to entry in Voice over IP now.
What's the barrier?
Well, if you want to be a top five player, you've got to compete and dislodge Vonage, Time Warner, Cablevision and
Comcast. So tell me, how much money will it take to go sign up and get one million Voice over IP lines, right? Lines
that are going to replace your home phone service, or replace your Vonage service or your cable service? That's a
pretty big barrier.
What do you see as the cost per customer acquisition?
For us, customer acquisition costs range between $150 to $200. So you want to go get a million customers? Before you
do anything, you're going to go write a check for $200 million, and that's if you're perfectly efficient. And it's
going to take you two years. If you're inefficient, it might take 300 million, 400 million. Just to go get the
customers. Then what about the operating costs to service those service those customers, while you're ramping up that
growth. You can't just go out and acquire those customers and say that you'll figure out support later, you've got to
build a support infrastructure ahead of that, and then you've got to go get them. And the question is, what are you
going to offer Time Warner's customers? What are you going to offer Cablevision's customers? What would you offer
Vonage's customers to make the switch from us to you? If you're going to offer a price differential you've got to go
under $20. You've got to go under $15. And quite honestly, if you look at the other providers out there, there are
plenty of providers. There's a whole long list of $15 and $18 and $23 that have been unable to dislodge us as a leader.
And quite frankly, they have not impeded cable who sells their product at $35 and $40. So maybe there's something more
to this than just the price of the service.
But what if one of those cable companies decides that they're going to approach VoIP as a loss leader and just
start giving service away in order to get customers to sign up for cable TV and Internet packages?
That is an interesting proposition, but it doesn't make economic sense to the cable operator. And I'll give you an
example. Today the cable industry as a whole controls about 40% of the overall market. The average price of cable Voice
over IP broadband is about $40. $35 to $40. Let's use a number of thirty-five for simplicity. And the cable operates,
let's say they're making about $15 per user. Now if they drop their price like $5 per user, how much market share do
they have to gain to make the same amount of money? If they drop their price from $35 just to $30, they're going to go
from making $15 profit to $10 profit. That means they've got to sign up 15% more customers. They have to go from a 40%
market share to a 60% market share to get to the same place. Does that make a lot of sense? Probably not. And if they
dropped the price from $35 an average to $25 just to match Vonage, they'd have to increase their market share from 40%
to 80% to make the same amount of money. But what they're doing is they're pricing perfectly to match their anticipated
market share and maximize their profits.
What if someone gives the service away just to bleed Vonage dry?
Why would they? They're going to bleed themselves dry, too. As a matter of fact, Comcast has come out, the largest
operator, and said, "We're not going to compete on price." Time Warner has said, "We're not going to compete on price."
Cablevision has said, "We're not going to compete on price." Because their shareholders won't allow them to cut their
price to try and gain marketshare. Even if they gained all the marketshare they anticipate, they're going to make less
money. It doesn't make tactical sense to them at this juncture in the marketplace. And along the way, the cable guys
are doing a fantastic job of getting customers. They're not going to grow any faster by cutting the price at this
current juncture.
I haven't heard you mention AT&T yet.
Well, AT&T is out of it. When AT&T came to market with CallVantage everyone said AT&T is going to put
Vonage out of business. They own their own network. They're the biggest brand. They have 29 million customers. The
whole nine yards. AT&T ended the year - you know the numbers. 54,000 subscribers. A big disappointment to Wall
Street. A big disappointment to AT&T's management. AT&T said they'd have a million customers by the end of this
year.
What did they do wrong?
Well, I don't know what they did wrong. I can tell you they did nothing right. (Laughing) And that's
unfortunately, not uncommon for AT&T now, is it?
Was it a brand issue? A pricing issue? A marketing problem?
I think AT&T came to market with the wrong view and the wrong expectations. They came in and said, "We're going to
offer you AT&T." And people didn't want AT&T. People wanted VoIP. They wanted Vonage. They wanted what we were.
And we were able to get a large part of that market. I mean, Vonage means something to people. It's a brand. It's a
formidable brand. The fact that AT&T dismissed the power of our brand, and of course, likewise, over-confident in
the value of their brand, caused them some issues. You know, AT&T is a great brand, but remember brands have got to
stand for something. It's got to mean something to the users. Just because I know who you are doesn't mean I want to
buy something from you.
Now what about Skype? In the long-run are they really your big competition?
No, probably not at this juncture. We follow Skype pretty closely. We like the guys at Skype. We think they're doing
some really cool things. We're doing some of the same things. I mean, this whole concept of free in-network calling?
It's not a new concept for us. The cellphone carriers offer free in-network calling, too.
What is Skype's real business and who are they really hurting right now? That would really answer your question. So
we're not losing customers to Skype. We do consider Skype to be an ancillary service. It's an adjunct to your
telephone, it doesn't replace your telephone. What other kinds of ancillary telephone services are out there that are
simple to Skype? The closest analogy I can give you is the calling card business. Lots of people in the calling card
business. Lots of telecome companies offer calling card services. And that's really what Skype is. A little more
sophisticated. A little more electronic. But it's still a calling card. It augments high cost international rates with
a lower cost alternative route. And they're taking a lot of business away from the calling card industry and the
calling card industry is going to suffer because of Skype's success. Now Skype hopes they can transition their
ancillary calling card business into a replacement business. And by the way, so does every calling card company. I
don't know if it makes any difference. And they're going to have a challenge to go from being a cheap calling card to -
I'll give you an example. If you go to sign up for Skype and you go make 1,000 minutes worth of phone calling outbound
to non-Skype users you're going to pay more for your Skype service than you would for Vonage and all the other Voice
over IP competitors.
So you're not worried?
You're always worried in this business about what's going on, but today, Skype's business is a calling card business.
We are always concerned about with Skype is, what are they going to do next? Where are they going to try and go with
this? We've articulated where we're going to go, and Skype's articulated where they're going to go. The question is,
Can either of us do what we think we can do?
Now no matter what happens, the Bells have to be very worried. Not just from Vonage but from Skype and from the cable
operators, who are all each executing really well. Think about how much money AT&T must be losing in the phone card
business because of Skype.
Now Vonage isn't losing anything, because if you actually compare Vonage's international rate to Skype's international
rate, it's the same. (Laughing) Actually we're cheaper in a number of markets, it's actually a little cheaper
than Skype. And no inconvenience of their credit card system. I'm sure you read those articles about what's going on
with their credit card costs.
They have been having some trouble on that end.
Well, billing isn't easy. (Laughing) Listen, anything free is always easy. Paid? That adds a little extra
layer of complexity.
I wanted to ask you about the WiFi phone that we reviewed last month—
Yes, we've got a new version coming out. We're going to update the old ones.
What is your strategy related to wireless? Because more and more people are deciding that they don't even want
a land line in the house, they're deciding to just have a cellphone and nothing else. How does Vonage grow if the trend
is away from people having any sort of land line in the house, whether it be a broadband VoIP line or a
wireline.
That trend is very misunderstood. That isn't a trend. Yes, people are switching services to cellular. But it's a very,
very small segment of the population. Most people today, and as people get older, use their phones in very predictable,
social patterns. I want, as an individual user, a phone attached to a physical location. I also want a phone attached
to me, as a physical person. Some users don't need a phone in a physical location. There are a lot of them out there.
And those are the people who are most likely to go to cellular only. But those people will, over their lifetime, change
that position. An example would be you. You're a single guy, right? You don't need a fixed line in your home. You
probably do just fine with a cellular. When you get married and have your kids, when you go drop your dry cleaning off,
you don't want to leave your phone number for your cell phone anywhere. You want it to be your home phone number. When
you own your own house, you don't want the plumber calling you to schedule an appointment when you're in the middle of
this interview right now. You want that call to go to your house and a message left on your voice mail.
But there's no denying that an increasing number of people, especially young people, are getting used to the
idea of not having any kind of wireline at all and doing everything with their cellphone.
Yes, but those habits will change. Young people today don't do the things that married people do. They don't do the
things that homeowners do.
But is there evidence to support this? It seems like we're seeing a definite increase in the percentage of
people who don't have any sort of land line.
You are seeing an increase in that area. Well, obviously Vonage is causing part of that because our lines don't get
picked up anywhere. So we may be adding to that trend. But there are lots of people who—in fact I was having dinner the
other night at a restaurant in New York and the waiter was talking to me little bit about Vonage since he recognized my
name. He was a cellphone customer only, and was thinking about getting land line service because of a variety of
issues. We talked a lot about why he would have it, and why he wouldn't have it. There's always going to be that issue
there. That said, Vonage believes that we should not limit our view just to the hundred million people who are going to
have wire lines in this country. We want to expand our view to open up and tackle a new market known as wireless. And
we want to see if we can do this in a very different way. We have some novel ideas about what might happen in the world
over the next few years.
Can you talk a little bit more about what that wireless strategy would be? There's the WiFi phone, but what
else is there beyond that?
The WiFi phone is really a test to prove out the technology and viability. It's still clumsy and its interface is a
little difficult. And the reason why we've done these tests is so we get that feedback to try and streamline, and
mainstream the product.
It seems like very much of a niche product.
Right. And it's going to be that way for a little while. The question is, is what happens in the world of wireless
broadband? If you can tell me what happens to wireless broadband, I can tell you what happens with wireless VoIP. Now
there're a lot of interesting discussions going on right now. The city of Philadelphia is a very interesting project.
And obviously we're going to be involved in this project because Vonage's phones may have the capability of providing
seamless service throughout the city of Philadelphia when you walk around. Now is that a replacement for your cell
phone? Probably not for most people. But for a teenager? Yeah, it could be.
Is Vonage actually working with the city of Philadelphia on this?
We are working with some of the providers today in talking about how this project might work. There's also another
WiFi project going on in the city of San Francisco. And this is really for emergency services personnel. And so what
the emergency services there want, of course, is to build a backup network based on the WiFi network and Wi-Fi Voice
over IP to operate communications in the event of any kind of big disaster. That's another really interesting approach
to the technology in service. But I don't think we should stop and think about WiFi as the end-alll, be-all of wireless
broadband. I think we have to think as technologists about what might happen in the next few years. I think the most
exciting technologies we're seeing is really in the area of WiMax and OFDM. If that technology is deployed, then these
Wi-Fi phones will be multi-mode phones for both WiFi and WiMax. They'll be multi-mode in the sense of being able to
respond and handle multiple different kinds of wireless broadband connections. And that might provide a new
secondary-like cell network. And will it replace cell networks? No. Not for a long time.
You're testing a standalone WiFi phone, but how much demand do you really see for a standalone
device?
Until we know what the WiFi coverage is going to look like, it'd be very hard to know. Here's the thing that's
interesting. WiFi and WiMax will continue to grow. So today's niche very well might likely be tomorrow's mainstream.
It's our goal to be early enough to be able to gain as much share as possible on that trend. Now with that said, we're
also scoring dual-mode where we can do Wi-Fi or wireless broadband and cellular. Whether that's GSM or CDMA, or if
you're in Asia, PHS. We think that that's another option, we'll just have to see how that goes.
What do you think about Motorola and Skype's arrangement where they're going to preload Skype onto some
cellphones? Oviously in many cases it's up to the carriers what actually ends up on cellphones, but—
I don't think that's going to come to fruition in the US.
Does Vonage have any plans to try and get its softphone preloaded on any cellphones?
No. We don't. We're going to take a very different approach. We want to partner with the carriers to develop a service
and revenue for the carriers that makes sense. Skype is looking to bypass that product.
Are you talking with any carriers right now?
We're talking with them. I think at this point we're talking every carrier in the U.S. Some are receptive. Others are
a bit concerned. But net/net people are interested in this because we bring a new kind of customer to their network,
and obviously that's an attractive offering for them.
You already have a softphone for Windows Mobile, where's the softphone for the Palm OS?
If the Palm OS were a little easier to work with it might be here already.
Is it a problem with PalmSource? Is it palmOne?
The horsepower to do this isn't there on many of palmOne's devices. Much of the Palm devices out there don't have the
capabilities that we would need, and the ones that do have the capabilities we need, that's what we're focusing in on
our efforts.
Any sort of time frame on when we might see a softphone for Palm? This year maybe?
This year. I think there's a good chance this year you'll see an expansion of the softphone client. Not just in the
area of being able to run on other operating systems, but I think we're going to continue to invest in additional
softphone capabilities from different vendors, so you might actually see another vendor or two make available. Just
like consumers have a choice of devices, you'll also have a choice of software to go along with the services.
What about Symbian?
We're working with Symbian. We're working with the actual manufacturers themselves.
I wanted to ask you about Vonage and E911. Vonage has been in the news a lot related to this issue, and not
always in the most positive light.
Well, I think people don't understand what's really going on here.
What is the underlying issue that's causing the problems for Vonage's integration with E911
system?
Let's talk through the problems. We've already handled successfully nearly 200,000 911 calls. That's a lot of 911
calls. We've had two or three incidents that are disconcerting to us. Now irrespective of the two or three incidents,
no incident is a good incident when it comes to 911. And clearly no matter what happens, we're going to continue to
roll out for national E911. But when you look at the two problems that we've faced so far in the public press, one has
been the issue over a user who did not register his services that fully knew that he had to register it. And that's a
problem. So to resolve that issue, we're going to be changing some of our processes and systems.
Two fundamental changes. One, when you sign up for the service, you're going to get E911 unless you explicitly say you
don't want it. We think that's helpful.
You'll automatically register the user's billing address as their location?
You have to tell us or you're not getting it. And that'll be very clear. But two, even if you tell us that you're not
going to get it, and you dial 911, we're still going to send the call to an ERC, an emergency response center, who will
still ask you to identify who you are and what's the nature of your problem, so in the event that someone says, "I
don't want it," and dials 911 we still could handle the emergency call. And I think that's a very good way of handling
the user error problem and the expectation problem. And those are changes that we were doing in response to what's
happened, and also quite frankly, just to better serve our customers.
The second problem, which is the problem that happened I think in Florida, where a call was registered, we knew which
emergency service center to send the call to. We sent the call there over the emergency line, and an operator didn't
answer the phone. An interactive voice response system did. Right? And that was what happened in Florida. Now, I've got
to tell you honestly, I could have never possibly anticipated that the emergency services center would ever have voice
mail.
Is that what a person would get if they called 911 on a land line?
No, it's not. Well, it could actually. It depends. And we'll go through that, but I want to talk about this problem we
just had which is quite interesting, because I think it's really odd that that would ever occur, so what we're doing to
stop that from happening is in the event that we need to transmit a call ever to a Public Safety Answering Point, the
emergency center, whereby we think that call might be intercepted by an IVR system, we're going to send it back to our
ERC center and make sure that we have a human operator answering that call. That's what we're rolling out right
now.
Now, beyond those two problems, when you send a call to the PSAP, it's very interesting on how the call gets there.
Now it depends on where you are in the country, and where we are in our rollout base. In Rhode Island, the IP call goes
directly to the PSAP in IP, and that works great.
In New York City, for example, when you dial 911, that call will go to the emergency service center in New York City.
It will travel over dedicated facilities - not the PSTN. In Chicago, for example, the call will go over a 10-digit
phone number, but it'll show up to the operator exactly the same way it would in New York. No difference. The
difference is how you access the network. Today, where we have agreements we access the network over dedicated
facilities like New York and Rhode Island. Where we don't have dedicated facilities, we try to access 10-digit numbers,
which is exactly how wireless has done it. And it's exactly how the satellite guys have done it for a very long time.
And our goal is to migrate off of that ten digit solution. Which by the way, over 200,000 911 calls have gone over it.
So we're quite pleased to have a dedicated facility, and that's a complicated problem. Now to get those dedicated
facilities we do need the help of people who own the infrastructure. And Verizon has agreed to do this with us.
It's the Baby Bells that generally control that infrastructure?
They control about 90% or 80% of it.
Are they reluctant to grant Vonage access? Do they say it's a cost issue and that they want you to share the
cost with them?
No, no. It's interesting. Every Bell will make a different excuse. Verizon is the one that is to be most commended.
Verizon says, "Let's put all this crap to the side and let's figure out a way to make this work." And Verizon actually
has multiple solutions, depending on the market. And they work really well, and our goal is now to roll it out
territory-wide. Verizon makes available to us the same things it makes available to a combination of wireline entities
and wireless entities.
So we've gone to the other RBOCs and said we want these same things. With Qwest we have an agreement in principle, but
we're still working on details. Bell South and SBC have been very reluctant for every reason under the sun. Bell
South's made some progress and they're starting to come around, but still not there yet. SBC keeps issuing press
release after press release of how they're going to offer this, but they don't offer us the complete solution to do all
the pieces like the wireless guys have so we can do it all real and right.
SBC finds that E911 is a competitive advantage over Vonage and they want to extort that competitive advantage. I've
got to tell you, the last thing anyone should be doing in this country is using E911 as a competitive advantage and
risking people's lives. It's not the right thing to do. Remember, these Bells were given 911 as a public trust.
Originally given by Congress to AT&T and then by AT&T through divestiture to the Baby Bells. And they should
really honor their public trust commitment. Verizon has. We're very pleased about that.
How much does this damage the Vonage brand?
Every carrier in America has had E911 problems over their lifetime. You know. The Bells. New York City for example
when they had their outage. The wireless carriers. This is really the first time Vonage has been negatively affected by
something that it was trying to do to benefit the customer. And we felt a long time ago that we were taking on a risk
by going out and offering 911, but we felt that being able to save 200,000 lives was worth it, knowing that there might
be something that might happen that we can't anticipate. The Texas issue is one where we had user error that we
wouldn't have anticipated and, of course, we're fixing that. The issue in Florida is another. We never would have
anticipated hearing a recorded message on an emergency helpline and, of course, we're going to take action by moving
those routes from our system and routing to our emergency response center.
This will be an emergency response center that Vonage will be operating?
The center is actually similar to what OnStar has, for example. We're not going to do it ourselves. We're going to use
something similar an On Star or Tyco or EVS, we're contracting a company which has the facilities infrastructure to
take the call, has the experience how to handle that call, access the caller's location information, and then get the
call transferred to fire, police, medical.
How does your customer base break down geographically? Is it primarily people on the coasts?
Initially we had a propensity towards early adopters, who tend to be slightly more technical savvy. We've clearly
crossed the chasm to late stage adopters. We hear this in our customer inquiries our calls, our installations. The rate
of customers needing help with installation has gone up because even the simplest of tasks have become complicated for
people who are not familiar with the terminology or the equipment.
In terms of the geography breakdowns, we've got a high concentration of people in New York, New Jersey, California,
Florida, Chicago, Texas. But we have phenomenal penetration in lots of rural markets. There's been a lot of great
stories about how we've attracted a lot of rural customers, because really, rural customers don't have a lot of
options. A lot fewer than you have here in New York.
Are you seeing a growing percentage of people who sign up for the service and then take their adapter with
them overseas?
We don't know exactly how many people take it overseas permanently, but we look at our database and at any point in
time there's a good 5 to 10% of our boxes that are not in the U.S. based on IP addresses. But they're moving. They come
back to the U.S. and then go back out again.
So they're being used by people who are traveling a lot?
We know for sure that lots of people are traveling with their service, and that's one of the great advantages of
Vonage is that it allows you to actually do that. You actually pick up your box or your Wi-Fi phone or your router.
Some people are traveling and staying there for a few weeks. Some are for a few days. Some for months. I know people
that go out on these assignments to other parts of the world for a few months, and what a great thing to be able to
take your phone service with you when you're in India for three months working on a project. And then you come back
home, and you take your phone service with you. It's pretty phenomenal.
Recently Vonage raised another $200 million in venture capital. Is that money going to be put towards customer
acquisition? Is the consumer VoIP market that competitive that you need that kind of money?
No. We're very fortunate. We had an opportunity to raise $100 million last year. A majority of that money is still in
the bank today. And we've been able to execute our own strategy really well. So we took this opportunity to go out and
you know, increase our balance sheet, strengthen our capital position by raising $200 million. And we feel confident
that we can deploy that capital effectively and get a great rate of return to our investors, both existing and new.
What we're going to do is we're going to attempt to expand our marketing focus here in the U.S. to acquire customers.
We're going to attempt to expand our presence in the U.K. and Canada. We're going to invest that capital to build up
new products, features, and services, and we're going to look at other overseas expansion opportunities.
Is there an IPO in the works?
You know I can't comment on that question, but I will thank you for the courtesy of waiting til the end of the
interview before you asked that. This morning I got asked that on the third question. (Laughing)
Anyone else notice how much Vonage advertises on the web? Almost every major website has bigger Vonage banners at the top...
This must have cost them a fortune.
I am just ticked it's been over a month and still my number isn't ported yet!! Other than that things are great and I love my Vonage!
glad to see a CEO that actually seems to know exactly what he is talking about without throwing about a lot of spin. Definate addition to the portfolio when they decide to do an IPO with the company... unless Cisco gets greedy and moves out of hardware, into services and just decides to buy them out!?
not worried about commodity pricing? not worried about skype? either he's completely deluded, or he's lying in the interview.
Nice interview, very in-depth! I am a recent switcher to Vonage and I have nothing but good things to say about the service. It really is one of those rare consumer experiences where you can get much more for much less.
One question I would have asked is if he sees competition from iChat, especially the video chat aspect of things. Sans the phone number iChat really is VOIP.
I have a lot of respect for this guy, he knows the market, he isn't reluctant to talk about it, and he doesn't beat around the bush... No wonder Vonage is such a success.
nice interview...
Last summer, I had a job offer to be a Software Developer for Vonage but turned the job down because i didnt fell like traveling to Edison from North Jersey everyday. I also didnt like the idea where I may have to be there in the middle of the night if needed (I know it can happen in any developer position, but since they mentioned it i thought the odds where good that it will happen). I am still very curious about them and am pondering "what if." I def want to know when they do an IPO.
#3, I don't agree. I see VOIP as an IP service that actually replaces the regular VOICE service, Apples ichat is just a PC<>PC chat solution that has been around for almost 8 years. For the same reason I don't see Skype as a true VOIP service, people want to keep their own number, their own phones and the system they are used to, the success of Vonage is IMHO based on the fact that you unplug one service (POTS) and plug in another, everything from the * services to the dialtone are the same. I don't think we are anywhere close to the majority of people moving to pc based calling.
I disagree - i did not like how he came across at all. He seems all over the place
Until you get to the point with zero outages and no fuzzy connections than you'll have a hard time selling this to the general public. Just last week there was a system wide outage and my number didn't exist. These things can't happen.
I agree with Scott, pc based calling is just too complicated and involved for most people as it stands right now. Plus most people don't want to always have their PC on (and deal with the annoying whir of the fans).
I for one am I huge Vonage fan...I use it at home and have multiple Vonage lines for my business (all using the same T1 line).
It's true that the Vonage brand is very strong and is in a better position than the big telco's. I can't remember how many times I've been ripped off, over charged and shafted by the SBC, AT&T, GTE (Verizon), etc. They take advantage of the fact that they have monopolistic control over the infrastructure.
Some horror stories: Once I had to pay SBC $800 to setup two stupid phone lines in a small office...$800!! They charged me for every little thing they possibly could, and the taxes on each line were just ridiculous. I remember setting up a phone line in a new apartment and paying over $300 bucks just because their union technician had to come out and connect a freakin wire...it took him like 5 minutes. I remember being a teenager and calling friends around L.A. and sometimes running up a phone bill for like $180 bucks...man would I get in trouble. Things like this leave a permanent impression on you. It's no fun to get overcharged and taken advantage of by a big company that has been given many benefits by the public. I'll tell you, I sure don't get a monthly fee from the electric or phone companies for that phone pole that sitting in my backyard, on MY property.
I like Vonage because they let me stick it to those Telco bastards. I like Vonage because they are not afraid of the competition and want to give customers more for their money. I like Vonage because they don't go crying to the government whenever they feel threatened by innovation http://www.engadget.com/entry/1234000530034631/I like Vonage because they decided to lower their monthly rate by 5 bucks per line, and it even applied to existing customers. They actually LOWERED their monthly rate...that was something I had not experienced in a really long time.
If anyone who cares is reading this, I would love Vonage to have a "calling card like" feature, where I can call my voicemail (not toll-free), enter my pin and then be able to connect myself to any other number. This is useful if I am somewhere where I want to make a long-distance call but I don't want to use the person's long-distance service, or if your cell phone (like mine) does not include free long-distance.
Arriba Vonage!
-Carlos
Having released the service WITHOUT 911 support is criminal! 1 infant died directly because of this.
For shame!!!
Mike (#12), posting ignorant statements like this should be criminal too... Vonage has ALWAYS supported 911, but it was a user initiated action to set it up. This has always been CLEARLY stated in the welcome emails and in the box, but some people don't read these things. FWIW, Vonage was NOT to blame for this unfortunate incident:
http://www.broadbandreports.com/shownews/63372
I'm a big vonage fan. I see much potential in where Vonage is going. I *WOULD* like to see them open up more of their capability to software developers so we can make more innovative solutions with the Vonage backbone and interface it with other systems that perhaps even Vonage isn't thinking of.
As far as this interview is concerned, this is one of the more intelligent CEOs I've heard from in quite some time and at some level he has garnered a level of respect from me. He has a realistic vision for the future that is both implementable and profitable. I do hope that they can resolve some of their issues with customer support and end user migration though as that is the tallest barrier to more widespread adoption of vonage.
I was particularly impressed that Vonage partnered with someone that did alarms for VOIP systems. I do hope that they also start working more closely with Brinks and the like because when it comes to my peace of mind for my alarm system, I won't pick up a new alarm provider when I have one that works and works well.
Keep your eyes on the number of people closing their accounts. The service is horrible. I tried it for over 6 months. Most of the time people on the other end heard an echo. Then I couldn't send faxes because the line quality was too low. Their customer service was unhelpful. I am no neophyte and I found it frustrating. Just wait as they continue to get the "late stage adopters" and beyond. Their growth is currently hype and once it becomes common knowledge how bad the service is...
I hope they IPO before then.
I'm hoping vonage hears this, because I do like them as an alternative to the big bad telcos with their $50/month plans, but Vonage Customer Service sucks (outsourced to india) and their call quality is becoming haphazard. In the beginning it was pretty good, but now they just don't have the infrastructure to keep up. I hope they take some of that money and get their customer service improved.
Verdict: As of now Vonage is about as good as the worst cellphone provider. If you can deal with spotty calls and terrible customer service, then you're go to go.
He's just another common criminal. http://www.sec.gov/litigation/complaints/comp17929.htm
My number took about a month to port with Packet8. Vonage doesnt offer local numbers in my area, but Packet8 did. Customer service isn't very good with Packet8, either... but the service works. Will be interesting to see what the 911 requirement does to VOIP.
Great interview with some excellent insights! The comments about the wireless business are very pragmatic as well as the keen observations about how usage behaviors change with your familiy profile.
Since he makes the point to go after AT&T it would only be fair to set the record straight. Here is a link to the AT&T VoIP commitment from Feb 2004, http://www.att.com/news/2004/02/25-12936, which specifies that "the company expects to have more than 1 million business and consumer users across its portfolio of VoIP services by the end of 2005". AT&T has many products using VoIP today, CallVantage is not the only one it just happens to be the one that continues to be compared favorably over Vonage and their single-product company. Vonage should be worrying more about how to avoid being the next Tivo, bringing an innovative product to market only to legitimize it for others better equipped to offer it. Vonage's best hope for survival could be a deal with a national wireless player because they aren't going to beat the ILECs or CableCos. The cost of not owning a network could be rather high, this article puts the cost of just two markets at $400/month/customer. http://www.xchangemag.com/hotnews/55h1915195017379.html. If you get another interview it would be great to hear how acquiring a $25/month customer for $200 becomes a profitable business, and that doesn't even count the costs for new 911 investments! Can you say "House of Cards"?
I don't get why people think setting up vonage is so complicated. 2 ethernet ports and a phone jack. It's not that dificult.
Also, #11, I may be misunderstanding your opening paragraph, but to clarify, you do not have to leave your PC on to use vonage.
I love my Vonage,it is phenominal. My only complaint is when I am transfering files from my TiVo to PC, there is a clicking on the other end that only the person I am talking to hears. This could be how I have my system set up here. I live in a basement and have my vonage box set up between 2 wireless routers and that could be affecting my quality of service.
I am with www.sunrocket.com and am very happy. The benefit with sunrocket over Vonage, is they offer you the option of payng for the whole year in advance!!!! And it's only $199.00 - And, they give you (TWO) free Uniden cordlessphones....they have a lot of features too. The only thing i'm P.O'd about is that they haven't worke dout blocking the anonomys calls yet..they still come through....other than that, it's better than vonage with regards to price and features...
I am a Vonage user with a few lines and am overall happy with their service. I need to add to the one comment above about the Number portability issue, I have had my paperwork resubmitted to SBC (Michigan) two (2) times since Jan 12th 2005, and still SBC has not released my home number for transfer. Vonage has been very apologetic and gave me a full refund for one of my lines since signup of Jan 12th due to no activity and the delay of transfer.
Sad part is SBC is sitting on this because I believe they know they will lose another customer how true this is. I am debating whether to follow litigation in civil or small claims against SBC the difference in price due to the time factor (Principal for the time delay is what I am after, but this would give a valid reason I believe for the litigation).
Regards,
Ted
My neighbor had Vonage for a few months but could never get good sound quality (over Comcast Broadband) and finally ported back to Verizon. One annoying thing I noticed is that their name didn't show up on our callerID when they called, just their number. This is because Vonage doesn't update the Telco industry CNAM database with the customer's name. CNAM is queried with the calling party number by the called customer's switch to get the name. Other VoIP providers (e.g. AT&T) do update CNAM. By not updating CNAM, it lets everyone know you don't have "real" phone service.
US centric thinking obscures where VoIP is and is going. VoIP ultimately is as global as the internet. VoIP is a global play. Vonage with approximately 700K subscribers is tiny when compared to Yahoo Broadband coming in with 5MM subscribers. Vonage is roughly the same size as Free (France) and Fastweb (Italy). Vonage is certainly the largest when one looks at costs to acquire customers. Reportedly spending $10-12MM/month on media.
The driver outside the states is expensive telephone services. That's why Skype can claim 39MM users...surpassing Vonage's base every 5 days. As processors and broadband builds out globally and pervasively. Voice communications will become free. The drivers are not in the US...watch China, India and Brazil...watch Skype.
I am a vonage subscriber and I am happy with the service. It took 23 days to port my number from verizon. The call quality with voange is good for me and I love the free long distance. The real killer for me with vonage is all the extra services included in the monthly plan, caller id, call waiting, ringbacks, and so on. Included in those services is the ultr-cool, imo, voice mail service. For starters, voicemail can be configured to send an email when a voicemail arrives. The voicemail respondent is great with a ton of options. I love the deleted queue. Nice going Jeff C. and corp!
Hey Mr. Jeffrey Citron, why is your company advertising in my area Fresno, CA (559) if you aren't going to back it up by providing a local area code? I'm switching to Myphonecompany who has my area code, so you just spend $150-$200 advertising bucks to get me interested in VoIP, only to have to go with your competition. Smooth move.
Funny how Vonage a cheaper privately held co. that AT&T has beaten in every head to head VOIP QOS test is laughing about AT&T doing "everything" wrong. Seems to me its Vonage that is doing everything wrong, and now finally they are imitating ATT by going with SONS ATTs VOIP vendor for class5 MGs, and class4. Funny yep. Well Vonage has clear market subscriber lead but seems SBC behind ATT now will kick Vonage butt all over the street. I think ATT has to laugh when they hear guys who cannot take their co. IPO due to their criminal backgrounds that they are not too worried. HMM ATT did everything wrong, well they tested before going to market rather than doing testing on customers and so ATT has highest cust. satisfaction rates. SONS their VOIP vendor is the clear leader in quality of VOIP equipment and its distributed extensible architecture is surely the best, maybe if VONAGE goes all SONS they might actually be able to catch ATT feature set that will soon blow their doors off. Seems that AOL also followed ATT footsteps with SONS, so seems that Vonage is an out the door 1st co. that will be gone in 3 years when ATT/SBC, VZ/MCI, AOL, YAHOO,GOOGLE etc. all have portals based around SONS so very flexible pure SW architecture running over Level 3 adn XO wholesale SONS backbone. Oh yeah Vonage IPO, not they are lucky if NT or VZ buys them for the subscribers alone, they got nothing on ATT Callvantage. I have had it for 1.5 years and not ONE BUG on ATT VOIP, not one, seems SBC did their homework and they chose ATT, not VONAGE!!!! LOL, now I am grinning ear to ear and snickering, you should not be smug and insult ATT they are the 1st voice co. and they will lead the VOIP model for 21 century..
ATT did everything right while VONAGE is now imitating ATT by going with ATT vendor SONS. Seems AOL also chose to go with SONS ala ATT and seems most important that SBC bought ATT not Vonage and chose to use their architecure exactly in going to their VOIP cutover. SO VONAGE is out first and yes has more customers but ATT Callvantage is superior in QOS, beat VOnage in every head to head test and they will have so many more features than VONAGE with the alliance from SONS SW that VONAGE will be a short memory and has had its 15 mins. of fame. I do not know why anyone would choose VONAGE when ATT Callvantage is superior in every respect. I have haad ATT VOIP for over a year and 6 mos. and NoT ONE BUG, number retained from VZ, and soon VZ will dump NT and go with SONS over MCI, see VONAGE cannot go IPO as the man U talked with is a known charlatan and the street will not allow a person with criminal past take a co. IPO- whos grinning now?LOL-Vonage, well at least its VOIP not hybrid like NT, but ATT/SBC eats them alive then VZ/MCI and then Quest, then finally every other VONAGE undercutter, VONAGE has the QOS of SKYPE barely and crappy features. Compare to ATT no comparison. VONAGE does not even know what DOCSIS QOS classes are or for that matter DSL IP Tags or MPLS core tags need to make sure you get voice QOS end to end-Bruce Pietsch
ATT did everything right while VONAGE is now imitating ATT by going with ATT vendor SONS. Seems AOL also chose to go with SONS ala ATT and seems most important that SBC bought ATT not Vonage and chose to use their architecure exactly in going to their VOIP cutover. SO VONAGE is out first and yes has more customers but ATT Callvantage is superior in QOS, beat VOnage in every head to head test and they will have so many more features than VONAGE with the alliance from SONS SW that VONAGE will be a short memory and has had its 15 mins. of fame. I do not know why anyone would choose VONAGE when ATT Callvantage is superior in every respect. I have haad ATT VOIP for over a year and 6 mos. and NoT ONE BUG, number retained from VZ, and soon VZ will dump NT and go with SONS over MCI, see VONAGE cannot go IPO as the man U talked with is a known charlatan and the street will not allow a person with criminal past take a co. IPO- whos grinning now?LOL-Vonage, well at least its VOIP not hybrid like NT, but ATT/SBC eats them alive then VZ/MCI and then Quest, then finally every other VONAGE undercutter, VONAGE has the QOS of SKYPE barely and crappy features. Compare to ATT no comparison. Bruce Pietsch
PS. When VONAGE learns what QOS means then it might have a chance, do they understand DOCSIS QOS classes, MPLS tagging, and IP TOS or DSL IP taggin so voice gets QOS, apparently not from the failed head to head tests, they lost PC magazine, Washington Post head to head, UNH and on and on ATT callvantage is hands down the model to beat in VOIP.
I've been with Vonage exclusively (no PSTN line)since January 2003. In March, I decided to try Broadvoice becasue of the unlimited calling to 21 countries for 19.95/mo. Broadvoice has huge potential, but very unreliable and super slow response to tech issues. Vonage has been rock solid.
I'd rather give Vonage 24.99 a month, than give SBC another dime of my money for the years of frustration, shitty service, and over-priced features.
Waiting for the IPO!
In my opinion, the biggest challenge facing VoIP at the moment is call quality. Despite having more than ample bandwidth and forcing G711u/a, about 2 in 5 calls sound as though they're under water. Still, Vonage deserves credit for getting where they are: 2 million customers is no small feat in an already crowded telecommunications industry.
Interactive Voice Response (IVR) systems allows callers to interact with your communications system over the telephone. IVR is used to enable the caller to retrieve information from a database, enter information into a database, or both. IVR systems allow you to efficiently exchange information, reducing clerical processing.
For free Demo Please visit: www.tctecno.com
Interactive Voice Response (IVR) systems allows callers to interact with your communications system over the telephone. IVR is used to enable the caller to retrieve information from a database, enter information into a database, or both. IVR systems allow you to efficiently exchange information, reducing clerical processing.
For free Demo Please visit: www.tctecno.com