Vonage () is a publicly-held Internet telephony service provider, providing business and residential telecommunication services based on voice over Internet Protocol (VoIP). The company was founded in 2001 and is headquartered in Holmdel Township, New Jersey.
As of 2014, Vonage reported approximately 2.5 million subscriber lines, in conjunction with mobile application services. Through a series of recent acquisitions, Vonage, previously a consumer-focused service provider, has expanded its presence in the business-to-business marketplace.
History
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Vonage was originally called Min-X.com and was based in Melville, New York. Jeffrey Citron, former CEO and majority shareholder at DatekOnline, was the first major investor during the early development stages. In October 2000, Citron invested $1 million as seed capital.
The name was changed to Vonage in December 2000, and in January 2001, Vonage was incorporated and moved to Edison, New Jersey. In 2005, it relocated its headquarters to Holmdel, New Jersey.
The company first offered subscription service in the United States, then expanded to Canada in 2004 and the United Kingdom in 2005. Vonage went public on May 24, 2006.
Restructuring efforts
In 2006, in preparation for an initial public stock offering (IPO), Michael Snyder, former president of ADT Security Services replaced Vonage co-founder Jeffrey A. Citron as CEO. Citron could not preside over the IPO, because he was permanently barred from associating with any securities brokers or dealers. In 2007, in an apparent restructuring effort to reduce ongoing net losses in the face of double-digit stock price slips and patent infringement issues, Snyder resigned, and Citron returned as Interim CEO. The company announced plans for 10% (180) layoffs, as it secured $215 million in financing.
In the second quarter of 2010, with a change in management and improved sales, the company’s stock price increased, and on June 15, 2010, Vonage rose 17.06 percent, $0.36 to $2.47.
As part of its restructuring effort in 2010, Vonage paid off $41 million of its debt at par, negotiated the release of more than $40 million in cash from vendors and announced a comprehensive refinancing. This resulted in a $200 million, pre-payable term loan with interest rates at 9.75%. Vonage planned to get better terms by paying down debt ahead of schedule, and by achieving sustained financial performance. Between March and June 2011, Vonage prepaid $70 million, reducing the balance to $130 million, the year-end 2011 target.
Initial public offering
Vonage offered shares of its stock to its existing customer base in the period before the initial public offering (IPO). Typically, only large institutional investors such as banks are able to buy shares of an IPO. Vonage’s initial public offering occurred on the New York Stock Exchange on May 24, 2006, opening at $17.00 per share. The price closed at $14.85, a decrease of 12.7 percent, the worst trading day for any IPO in 2006 up to that point. The IPO raised $531 million for the company. However, the existing customers who lost money filed a class-action lawsuit. The IPO and its immediate aftermath also earned Vonage a “Business 2.0 Magazine†award as 14th of 101 “Dumbest Moments in Business for 2006â€. In 2009, Vonage reached an agreement with IPO investors. All shareholder claims against Vonage and its individual directors and officers who were named as defendants were dismissed. The amount of the settlement, $3.6 million, was paid by an insurance policy covering the directors and officers of the company.
The firms underwriting the IPO, Citigroup, UBS, and Deutsche Bank, were fined a total of $845,000 and ordered to reimburse customers for "failure to adequately supervise communications" with investors. NYSE regulators went so far as to investigate possible short-selling.
Recent acquisitions
Beginning in 2013, Vonage acquired several companies, including:
- Vocalocity, a Software as a Service (SaaS) provider of cloud-based communications services, for $130 million;
- Telesphere, a Unified Communications as a Service (UCaaS) provider to large companies, for $114 million;
- iCore Networks, also a UCSaaS provider to large companies, for $92 million;
- SimpleSignal, another UCSaaS service provider to small and medium-sized businesses, for $25 million;
- gUnify, also a cloud-based communications service provider to businesses (price not disclosed).
- Nexmo, the 2nd largest CPaaS company, for $230 million;
Patent infringement law suits
On June 19, 2006, Verizon filed a lawsuit charging that Vonage infringed on five of Verizon's patents related to its VoIP service. The patents describe technology for completing phone calls between VoIP users and people using phones on the traditional public switched network, authenticating VoIP callers, validating VoIP callers' accounts, fraud protection, providing enhanced features, using Wi-Fi handsets with VoIP services, and monitoring VoIP caller usage.
In 2007, Vonage launched a viral marketing campaign and website freetocompete.com, which garnered press coverage about Vonage, its campaign, the lawsuits, and issues of competition with established telecom corporations.
On March 8, 2007 a jury found Vonage guilty of infringing three patents held by Verizon, and not guilty of infringing two other patents. The jury ordered Vonage to pay US$58 million, and a royalty rate of 5.5% of every sale to a Vonage customer, back to Verizon. Subsequent to this jury award, there were a series of appeals and intermediate stays on payment. Vonage was punitively ordered by the court to stop signing up new customers; this was reversed on appeal three weeks later. On November 19, 2007 Vonage agreed to pay ~$120 million in damages to Verizon.
In other patent lawsuits, by December 2007, Vonage was ordered to pay $80 million to Sprint Nextel and $39 million to AT&T Inc. Another lawsuit with Nortel resulted in no monetary damages.
2009 customer service settlement
In November 2009, Vonage agreed to an assurance of voluntary compliance (AVC) with 32 states. The settlement followed an investigation into complaints about the marketing of Vonage services, including confusion about availability and cost, along with advertisements involving "free" services, money back guarantees and trial periods. The consumer protection agreement also addressed complaints that some consumers were prevented from canceling the Vonage service. In the settlement, Vonage agreed to pay the seven investigating states $3 million for costs, issue refunds to complainants dating back to January 2004, and change several business practices in regard to advertising and customer retention.
Services
Vonage offers cloud communications and calling plans for residential customers and businesses, including small and medium-sized businesses, mid-market companies, and enterprises.
Business Services
Vonage offers two unified communications platforms for businesses that integrate communications services, such as video conferencing, voicemail transcription, and desktop sharing, using voice as a platform. Cloud communications services allow business customers to connect with various business applications and customer relationship management (CRM) tools through a middleware technology.For business customers that rely on high quantities of voice, video and data communications in their day-to-day operations, Vonage provides Quality of Service over its own private Multiprotocol Label Switching (MPLS) network and via a Software Defined Area Network (SD-WAN) product.
Residential Services
Residential services provide home phone plans using VoIP (voice over internet protocol) over a broadband internet connection, such as cable internet service or DSL. Features for Vonage home phone residential service includes voicemail transcription; 411 calling; caller ID; call waiting; do not disturb; and a network availability feature which forwards all calls to a mobile phone if Internet connectivity is lost. Many of Vonage’s residential products offer international calling plans.
Service requirements
Vonage customers must have a broadband Internet connection, such as cable Internet service or DSL, through an Internet service provider (ISP). To initiate subscription a customer must provide a billing and shipping address in the country of service. Vonage supplies an analog telephone adapter which connects a customer supplied standard analog telephone to the Internet and the Vonage service.
Residents of the U.S., Canada, and the UK may subscribe to Vonage by credit card from their respective country, but the Vonage adapter can be connected to the Internet anywhere.
Usage is generally referred to as "unlimited", though Vonage has different national "fair use" policies limiting Vonage-to-phone calls to a few thousand minutes per month in the UK, Canada, and U.S. Evidence suggests that calls are limited to a length of 3 hours and 56 minutes.
Telephone number availability
Subscribers may choose a number in the country of the service they subscribe to for their primary line, in an area code of their choice. Subscribers can obtain additional "virtual numbers" for a monthly fee. Vonage also offers virtual numbers in Mexico, Canada and Europe. While the company supports porting a U.S. telephone number via the FCC's local number portability (LNP), not every phone number is available in every area code. Additionally, customers can transfer an existing number to Vonage, which can take up to 7 to 10 business days from the time the customer completes the Number Transfer Authorization (NTA).
Emergency calls
Vonage offered 911 service on a VoIP platform for the first time in 2003. For 911 location services to work, subscribers must activate the 911 calling feature by registering their full address with the company. Customers are responsible for maintaining their 911 location information at all times.
If a customer dials 911 before the 911 verification is completed, the call will usually be routed to a national 911 call center where basic information must be given (name, location, nature of emergency, etc.), after which the call is transferred to a local public service answering point, like a local Police Department.
Quality of service and equipment compatibility
VoIP service relies upon consistent broadband-ISP uptime and VoIP-equipment compatibility with the ISP's modem. Although VoIP was initially optimized for voice, some fax equipment can be operated over VoIP, but compatibility of monitored alarm systems and other devices is less certain. Vonage offers "specially commissioned" Fax Line service. Vonage recommends customers keep a basic traditional landline dedicated to their home alarm system and use Vonage for the rest of their calling needs.
Vonage implements Voice over IP sending audio via RTP and signaling via SIP.
See also
- Kleffman v. Vonage Holdings Corp.
- List of VOIP companies
References
External links
- Official website
