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February 2005
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Posts from March 2005

Om Calls Blocking VoIP a Major Issue..So Do I

Check out Om's post about more blocking of Vonage. I expect others to provide more coverage on this and only wish Vonage would name names not just hint about who. I actually asked Vonage PR stud Mitchell "Mad Dog" Slepian about this at VON and he was supposed to get back to me.

If you haven't guessed the VONAGE folks only tell what's good for them.

Texas To Sue Vonage

The state of Texas is about to sue Vonage. That's according to a report in the Dallas Morning News. One has to look at similar 911 incidents with cell phones and likely will find president.

While I'm very sensitive to the situation in Houston which occurred, this matter is a broader matter than that one instance, and the question becomes did Vonage do all they were supposed to do, promised to do and said they would do.

If my recollection is correct, Vonage offers users a 911 directing service tied to their address. My question here is did the family take advantage of that? If yes then the D.A. has reason to proceed. If no, then there may be some grounds for dismissal. I'm not a lawyer but at what point does not doing something or doing something that was made available determine fault or guilt.

AT&T VoIP In Japan

AT&T is keeping its game going on a global level with VoIP as they have announced a customer win in Japan. As I keep saying, AT&T's CallVantage is NOT simply a consumer customer play and their goal is farther reaching than Vonage or Packet8 which clearly are both starting in the home market and will be trying to get into the enterprise market.

AT&T is already there.

Cost Per Acquisition For Vonage. What Is It Really?

Recently Vonage founder Jeffrey Citron said something to the affect that "on average, between $150 and $200 per customer. It's a highly volatile number" when asked about acquisition costs.

Based on my calculations previously and that of others, we all fee that is way low.

But how does Vonage track those costs? Is it total sales - is it net sales - how do they factor in churn.? What expenses to they include in the acquisition expense line - ongoing residuals - equipment subsidies - marketing headcount - agency fees - fulfillment - etc.? Or do they simply include their pure marketing expense? The answers to these questions will drive a very different view of their actual financial performance

Cringely on VoIP Blocking

In the I, Cringely Column Robert X Cringely who has a real name that  I have always promised to keep private, explains some of the possible ways the ISP's can block ports.

I've been on the same side as Cringe on this issue and am super concerned he's not only right, but that carriers are doing subtle things to make VoIP sound not so good.

What The Numbers Mean for AT&T

AT&T had their numbers slip out last week in their filing with the SEC on the proposed merger in a story missed by many that ran in the Newark Star-Ledger. It did not slip by Halepern Capital's Keith Dalrymple however.

On the face Dalrymple says AT&T is behind on their subscribers, through December 31 of last year. In reality many more boxes were likely sold through to customers that were not yet activated, especially by people who received CallVantage as a holiday present and were awaiting the porting over of their pre-existing telephone number from their RBOC.  He also thinks AT&T's brand recognition should translate into sales. The fact is AT&T since the early fall has cut back all marketing of the service, yet the activations continue.

People forget that Packet8 with only 40,000 or so subscribers has been at this for a few years and Vonage, which really only ramped up last year was under a hundred thousand in subscribers for the first three years of their life, with a much more aggressive spend level to get activations.

Given how they keep selling new accounts, while their marketing spend is almost nil, it's apparent the shift in strategy from full out ads and promotion in the middle of 2004 changed to a more PR driven approach. Likely this has to do with their carefully planned entry into the enterprise market. This is where AT&T's business model of being disciplined, versus the drunken sailor approach of spending ad dollars towards a market that doesn't know what they may want.

When you look at what AT&T showed at the last three VoIP events that matter (Fall VON, Internet Telephony 2.0 and Spring VON) while CallVantage showed up, what was really being pushed was the business VoIP offerings that take advantage of the CV platform, but go further to deliver and offer what business customers want. I don't see any other carrier, i.e. MCI or Sprint even on the floors of those shows, nor is Level3 doing anything more than clowning around.

I tend to look at the revealing of numbers this way. The current base of customers is a good start and a great proof of the service being able to work. Those customers become ambassadors for the new customers to come.