The disconnect widens at Vonage
Rumor has it that Vonage recently switched PR firms. If so, the new reps for the struggling VOIP company have already scored a coup in the form of an exceedingly friendly interview with Vonage chairman Jeff Citron in the New York Times yesterday. Citron, asked about the stock's post-IPO plunge from $17 to $7, proclaimed himself merely "confused," and he deflected questions about Vonage's struggling business -- like the high percentage of customers who drop the service every month. The interview wrapped up with a question about Citron's upcoming birthday. How nice!

Bloggers, however, were swift to debunk Citron's happy talk. Andy Abramson, CEO of marketing and advertising firm Comunicano, says that Vonage hasn't really invented anything new in Internet telephony. VOIP consultant Jon Arnold points out that Vonage's massive spending on marketing -- $1 million a day -- isn't typical in the industry, pointing to the example of Telio, a Norwegian VOIP firm which keeps marketing spending down to 15 percent of revenues. Vonage spends 63% of its revenues on marketing, in the hopes of signing up enough customers to turn profitable -- 5 million is the magic figure, according to one analyst quoted in the Times piece -- but that goal seems hard to reach when customers are increasingly dropping Vonage's service.

What do you think? Does Vonage stand a chance?
Posted by Owen Thomas 11:45 AM 37 Comments comment | Add a Comment

I think a of Vonage's spending on advertising has boosted the VOIP industry as a whole. But there is so much really good competition out there, and once somebody joins Vonage they often fall into two categories - 1) they determine that VOIP is not for them, and cancel their service.
2) they decide that they like VOIP phone service, and then they start looking around at other companies which boast better services and lower rates. Either way, Vonage is like the Guinea pig for customers.
Posted By Marc, Attleboro, MA : 1:07 PM  

I am wondering why everone is dropping Vonage? I have used it for over a year, with perfect 100% reliability, clear calls, and my phone bill has dropped over 60%, on average.
Posted By Tom, Minneapolis, MN : 1:12 PM  

I subscribed to Vonage service from approximately 6/04 to 12/05. Pros: extra local line, lots of neat features. Cons: extra local line - which you HAVE to have to connect to DSL that adds $20 the cost. They don't mention that when they advertise the cost. Lots of extra features - which you HAVE to have - you get them automatically, whether you use them or not. (I did love getting emails when a call came in at home.) Also, some poor connections and dropped calls. My partner, on the other hand, was pleased with it - that techie. I finally got rid of the service when he moved out. One last thing, if I had not had the service before, I would never consider getting it because of the incredibly IRRITATING, and yes, STUPID, commercials. It's about time they realize they have been driving potential customers AWAY. Changing ad agencies is a superb move.
Posted By Monica Bass, Santa Rosa, CA : 1:31 PM  

Vonage works. It can be a bit spotty at rare times, but in general, it just works. I have found it to be a solid, basic VOIP solution. The cable and telco companies do not offer the value of Vonage. I haven't tracked the financials of Vonage, but was a bit leary of the customer IPO share offer. Unfortunately, this looks like a case of the stock price hurts customer service and perceived value.
Posted By Gus, Seattle, WA : 1:38 PM  

I hope so.... Works great for me! And I hate to give Comcast another nickel.
Posted By Nick, Claymont Delaware : 1:40 PM  

Vonage service itselg is great! I've had it myself since February 2003 and will keep it.

Apparently they do not know hot to run a profitable business but on the customer side I myself could not be happier. I have saved about 1000 dollars per year or almost 4000 dollars since dropping PacBell and switching to Vonage. I do hope they get their act together.
Posted By Vernon Thiede, Bakersfield, Ca : 1:43 PM  

I tried Vonage once for about 3 months, and after dozens of dropped or misrouted calls, I terminated service and would never go back to them again... which is the same story I hear from more and more people.
Posted By Tom, NY : 1:54 PM  

Nope- just dropped them myself
Posted By Bob S. Cottage Grove MN : 2:09 PM  

I suspect a not-so-slow, ugly, apinful demise is in the future for Vonage. I certainly hope that the new marketing folks realize that the present commercials do not present a company that's serious about doing business. My reaction to the commercials is to run to the nearest competitor.
Posted By David Hinks Baltimore, MD : 2:13 PM  

Vontage made the biggest mistake companies can make and that is to offer startup customers a "bad" product. No company has ever been able to survive from this mistake. To be able to win a business you need to invest enough money in the product (even if your are losing money) to show consumers a great product. They will promote it to there friends, friend etc....
Now it is to late for Vontage....
Posted By eric becker, philadelphia, pa : 2:25 PM  

Not a chance!

AT&T and Time Warner can squash them at a moments notice.
Posted By Mike, Frisco, TX : 2:27 PM  

I used be a Vonage customer. The call quality was unreliable, so I switched back to Verizon. Another friend did the same, and yet another, who is a new customer, has been having horrible service so far. That being said, two other friends have done very well by Vonage. But if only half the people you sign up stick with your service, you're in trouble. I think Vonage is a bad player in a business with a good future.
Posted By Jonathan,Venice CA USA : 2:27 PM  

Vonage has no chance! They will feel the sting of the Wu-Tang, $1M a day in advertising or not!
Posted By RZA, Staten Island New York : 2:55 PM  

Yes, I think Vonage has a Chance! It just need to restructure their ideas. After all its a Company that stands to Participate a new dimension of Communication for the betterment of our Lives all over the World.
Posted By Moez, Houston Tx : 2:58 PM  

With competition from cable companies (with their better rates, simple and straightforward setup and service, one bill), Vonage doesn't stand a chance.
Posted By C.Alano, NY : 2:59 PM  

I'm using Vonage right now and I can tell you that I've wanted to drop them almost right away. Between receiving a bad phone and then getting double charged for a new one and then asking me to pay the shipping to send the bad one back. To top that all off the support is all foreign and very hard to understand.
Posted By Craig, Long Island , NY : 3:11 PM  

Vonage may have business model problems/issues but for me the service has been a "best buy". The reason is that my service is about 95-100% of the quality of the land line service I had with Verizon and about 200% cheaper for me each month! My local Verizon bill alone was about $45 per month for unlimited local calling - with no long distance, no caller ID included. My Vonage service is less than $30 per month and includes caller ID, internet voice mail access, and the big one - unlimited long distance to the US and Canada which I use about 1500-2000 minutes per month. Comcast offers a like service for about 30% more in my area and that price is only good for the first 12 months, $33 per month for the first 12 months then it would likely go to $50 plus which is about double of the cost of Vonage. I rate this company as the #1 customer option from a cost and performance/feature perspective.
Posted By Greg K Midlothian, VA. : 3:40 PM  

As a former user of Vonage, I can honestly say they had the worst customer service ever! Every call got routed to India call centre. Set up took all day. Taking my number to a new service didn't help much, Vonage kept charging me.
Posted By scott cady, minneapolis mn : 3:48 PM  

Not really, because although we'll all be using VOIP technology in the near future, most people will wait until their local cable or telecoms providers offer this service.

What people don't realize is once they switch over law enforcement will have a free reign on warrantless wire tapping.

The way the law regards internet communications is this.

First all such communications are regarded as data - and personal data has none of the privacy protections that telephone communications entitle you to. All that's required for an internet provider to hand over your communications data is a subpoena. And if one of the recent bills circulating Congress makes it into law, eventually that data could include several years of stored VOIP telephone calls (as well as email, instant messaging, chat site entries and browsing history). Imagine, two or three years of telephone calls accessible to authorities with nothing more required than a letter of demand to your internet provider. Why? Because obviously all Americans are child molesting terrorists who�ve been getting away with hiding their chat room deviancy for too long now.

Secondly because you allow many third parties to assist in the distribution and retrieval of your internet data, you've effectively given up any reasonable expectation of privacy. For example you don't send and receive email directly � it�s stored on, and passed through, the network hardware of service providers (servers, network storage appliances, etc) at both ends of your communication, as well as possibly many others on its ponderous route to its destination.

Just because you hear VOIP communications rather than read them doesn't change the fact you're forced to allow many other parties access to that data prior to delivery.

It�s not right, it should be changed, but unless a similar case to the one that brought today�s telephone communications under the umbrella of your right to be free from unreasonable search and seizures is won on behalf of the people, this is how the law views internet communications. Don�t hold your breath � your congressional representatives don�t exactly do much representing of the people these days, at least not unless you�re a healthy donor to their campaign contributions.
Posted By Andy, Anchorage, AK : 3:57 PM  

I have been a long time Vonage customer, and there are two areas in desparate need of improvement : first Vonage customer service is non-existant. I have several open issues and have never received a response other than the customary "Thanks for contacting...."; The second is VOIP itsself. I had Comcast broadband, but it proved to be spastic with frequent short (10 seconds or so) service dropouts. This caused my phone service to be just as spastic. I have since switched to a DSL circuit and the connectivity is rock solid but the slower speed causes voice quality issues when simultaneously accessing the net. I keep Vonage because of price and the call forwarding features, but I'm looking seriously at Packet 8 and possibly Skype. This is the way of the future, unfortunately, VOIP seems to be the omelette and the internet the eggs.
Posted By charlesp, Grand Rapids, MI : 4:14 PM  

No they don't because of their surreptitious marketing tactics. They make the critical error of not informing potential customers that in order to use their service a broadband connection is required which can be an additional $29 dollars per month
Posted By Richard Hosein, Orlando FL : 4:30 PM  

Vonage will not survived. The best scenario is that it will be bought by a giant company, like Yahoo or Microsoft.
Vonage also depends on the quality of the DSL/Cable providers. I have 2 lines and am disappointed with the quality. My fax machine can barely take one page fax and quite often I can barely hear the incoming phone.

Jim Cramer at Mad Money has already labeled this company as a Dog, meaning Don't buy the share.
Posted By MG, Los Angeles, CA : 5:13 PM  

Any company that has TV commercials as stupid as Vonage's deserves to struggle.
Posted By Kent Crombie, Chicago, IL : 5:37 PM  

Vonage has no chance. There service is spotty at best. A once friendly customer service oriented company is now the same as dealing with Qwest. I give them a few years tops before they bankrupt.
Posted By R. Boise, ID : 5:49 PM  

The basic problem with Vonage is that to get Vonage service a customer already must have broadband Internet services. Which means he has a phone line or cable services (cable that probably offers telephone services). In Arkansas SBC offers unlimited LD with the phone line for an additional $25 per month. So for the same price I get better quality calls and no hassle.

Vonage has one thing right though: sometimes people really do dumb things (like buying Vonage services).
Posted By Creigh Shank, Little Rock, AR : 6:03 PM  

We recently were lured to Vonage by the promise of reliable service at an affordable rate, today after spending 80 minutes trying to have our numbers moved over to them and other issues, we decided to cancel it all. We NEVER got past the customer service, I can imagine what the future would hold and decided to stick with Bellsouth, and their shockingly hi rates.
Posted By Michael McMahon, Key West, Florida : 6:21 PM  

The service is catchy if you do not have reliable IP service. If we had reliable IP service, then we might consider it
Posted By Eric, Nashville TN : 6:33 PM  

Vonage is a horrible company that are scam artists. People are dropping them ,like myself and then like AOL at one point they try to make it impossible for you to do so. Making your hold time 25 minutes to cancel, or berating you for dropping there service over the phone. I cancelled service 14 days after signing up (they have a 30 day money back guarentee) and they refused to cancel it. Then 1 month later are now charging a $40 fee since they didn't cancel it during the 30 day period. I was told by 5 poeple including 2 supervisors that I would just have to fight the charges with my bank. They still charged them. Also calling their Corporate number has the auto-attendant hang up on you reguardless of what option you choose, including individual peoples extensions...for weeks!!!!!
Posted By Rob Morrow, Lawrence, MA : 8:14 PM  

Half the burden I would say is on the ISPs to deliver a constant, speedy service. If the ISP cant deliver, why have the Internet phone. The sad thing is there is nothing Vontage can do about it, as most ISPs only offer a "maximum" speed.
Posted By Kyle, Ontario : 8:39 PM  

I had the Vonage service and found that turning the service off was harder than growing a money tree. When you sign up there is always somebody available to take your call and assist in any way possible. whenyou go to cancel your service you may sit on hold for upwards of 1 hour. I would never again have the service and would not recommend it to anyone else. My Opinion ...
Posted By Bobby Waldorf M.D. : 6:57 AM  

I have used Vonage for several years now and never really experienced a problem. We had to change a single default setting shortly after installing (bumped quality level from the default highest setting to the next level down) and never had a problem after that. I would be curious as to the problems driving customers away. Perhaps Vonage's marketing needs to focus on "Success" stories and educating the end user about having a "Battery Backup" on their modem and vonage adapter, etc.
Posted By Ira Keener Naperville, Il. : 12:01 PM  

I have used Vonage for about 2 years - Great service once it's going, although drops more calls then a real phone line. I never moved my number and use it only as a second line for all outgoing calls, so my experience is different from people trying to replace their phone.

The customer "service" is just pathetic. I ended up finding someone in Jersey to talk to and it took 5 minutes to solve the issue - somebody in India would not deviate from the script - It was funny and sad at the same time.

I would not touch the IPO because it's only a matter of time before the ISP's block them anyway and wipe them all out IMO. The call centre will turn off customers at a great rate.
Posted By Rob, Boston : 4:01 PM  

Stand a chance? Have you tried vonage? If you have, you would know why people are dropping it. Consumers are not going to tolerate a telephone device that impedes the basic communication process. The service sucks! The exclamation point comes when you cancel the service and you discover all of these hidden backend service fees that you are charged.
Posted By Lee Chalupa, Omaha Nebraska : 4:03 AM  


Have been using this for more than a year and have been super happy, I had to figure out a few setup problems and am going great guns , I have a teeny weeny 128K DSL and its awesome.

Posted By David Edwin , Santa Clara, CA : 10:22 AM  

I initially subscribed to Vonage when it first started, about three or four years ago. The quality then was exceptional, and the price was great. My service was bundled with Earthlink Cable Internet, and Earthlink really did a good job with the customer service side.

Since then, I've moved to a couple of different cities. In both markets (Fairfax County VA and Charlotte NC) I've had problems originating from spotty cable Internet service. In both markets, my cable Internet speed would throttle down to next to nothing, then my phone would go out. Once the Internet service came back up to speed, I would have to unplug my cable modem, Vonage router and home router in order to restore service. I suspect that the cable providers, Cox and Time Warner, have set up their hardware so that it doesn't communicate well with other network equipment.

As for the Vonage commercials, well, they're a bit annoying, but very catchy. (I've also got Geico insurance on my car, so I guess maybe I just enjoy a good joke!)

As for the customer service, I've always managed to get answers to my questions, but I tend to use the online chat feature they have. The three times I can recall having called them, I got good service.
Posted By Andy Hendin Charlotte NC : 8:55 PM  

Well I tried vonage and I was not a happy camper. Their customer service is worse I have ever seen. If you want a great VOIP provider with excellent customer service please take a look at this company.
Posted By Anonymous : 10:33 PM  

In order to use Vonage, you must be technically savvy. You need prior experience with routers to comprehend those East Indian techs at all!
Posted By Frank Chicago, IL : 5:21 PM  

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.