Vonage Loses Appeal; Verizon Owed $120 Million

Billosaur writes "Things do not look good for Vonage. Yesterday, they lost their request for reconsideration of their settlement with Verizon. This means Vonage owes Verizon $120 million to end the patent lawsuit filed against them. The costs associated with defending the case have cut into Vonage's bottom line, and despite attempts to cut costs by laying off 10% of their workforce, they may be unable to make a payment against their debt come December. According to the settlement, Vonage will pay $117.5 million to Verizon and another $2.5 million dollars to charity. Vonage's shares have dropped 87% since their IPO, now hovering around $1.50 per share."

Comments

Not *this* December

[HunterD]

Read the article, Vonage may default in 13 months (December 2008) not in 1 month (December). Do the editors even *read* what they post?

Re:not good

[GreyPoopon]

f you just need to save money, you can get POTS and an alternate LD carrier.

the combined costs should be within a few dollars a month of vonage.

I seriously hope you're joking. The cost for unlimited local-only POTS service (with Verizon, ha ha) is $5 more than what Vonage charges for their premium residential plan, which includes unlimited calling to anywhere in the US and Canada. If I had to tack on a cheap long distance service, my costs would be an additional $30 per month (all my family lives out of state). Add to that Verizon's nutty ideas of what constitutes a local call, and there'll be an addition $10 per month in "regional toll" charges. That means I'd be paying $45 per month more if I went that route. I'd be better off getting their freedom unlimited plan. Oh, and I spend a couple hours a week on the phone with people in Germany. Vonage is only $.04/minute. How much would that be with Verizon?

Sorry, but there's no way shape or form that one of the local monopoly POTS services is going to be within a few dollars of what Vonage customers are paying now. Nobody would have ever switched from their regional incumbent monopoly unless they had significant reason to do so. There was an element of risk involved in trying out VoIP that required sufficient financial incentive to overcome.

Re:Vonage Stockholders?

[That's Unpossible!]

Vonage sold its service to tons of DSL customers. DSL customers who were using the ILEC wires. This pretty much means the ILEC was supplying their competitor so the competitor could beat them over the head.

ILECs that were given monopolies in areas in exchange for precisely the scenario you describe -- opening up their copper to competitors.