Vonage Gets It's Bell Rung by Verizon

The Verizon lawsuit against Vonage resulted in an initial $58 million dollar award in Verizon's favor.

I suspect this matter is not going to be hung up here..but some heavy doses of Advil are needed at Vonage today.

First off their stock took a hit, and while not down for the count, Verizon sure has won the first round or if this was wrestling, the first fall.

Second Verizon can go the distance. In one month they spew off more cash than Vonage has in the bank. Lawyers fees in patent litigation cases are costly. This money has to come from somewhere. This likely means Vonage's freewheeling marketing spend will likely be running out of gas early. $58 million is about what they have spent in the past in a few months. But the real low blow is to Vonage's investors, who now will find that the customer profit margins being hit with a right cross, smack in the chin because the costs don't stop. They keep coming in the form of some kind of royalty.

This is not a knock-out punch by any stretch, but it sure is a sign that the old line, well heeled Verizon has Vonage on the ropes. Vonage can't use a "Hurricane" Carter defense here, as they weren't falsely accused. Like "Iron" Mike Tyson, they were found guilty, as charged. As as the first son of telco 1.0 to get into the ring in a big way, Vonage days aren't looking up....and as Mark Knopfler sang in the "Song for Sonny Liston,"Sonny's going down"... the question is, how soon and will they stay down.

Comments

[JonnyB]

This is truly disruptive. What do you think the implications are for other mVoIP providers like Rebtel?