Is Vonage VoIP Headed for Dead Air?

Embroiled in IP patent infringement battles reminiscent of the troubles which plagued Blackberry not long ago, Vonage tries to reassure its 2 million customers. Unfortunately for Vonage, it does not yet have the sizeable customer base nor cash reserves which Blackberry had behind it when it faced similar woes. For Blackberry, there was nothing that money couldn’t cure. But it’s doubtful that Vonage will be able to pony up the same way.

For those familiar with Voice Over Internet Protocol telephony, Vonage is somewhat synonymous with the rise of this new technology, as it was one of the leaders in the fledgling industry. At first, quality and uncertainty issues plagued the new technology. But as bandwidth has improved, so has quality. And as with so many new technologies, those who adopt a “wait and see” position have become more comfortable with the passage of time. VoIP has seen a serious upsurge in the last year as a result.

At issue in this lawsuit are technologies which involve the way Vonage moves calls to and from the Internet from the conventional telephone system, methods for giving customers calling features like call waiting, and means for providing Internet calling through wireless networks.

Following a jury decision this month that found against Vonage and awarded Verizon $58 million and monthly royalties, a federal judge said on March 23rd that he would postpone the effective date of an injunction for two weeks while he considers a request by Vonage for a stay pending what could be a lengthy appeal. The injunction will order Vonage to permanently cease using technologies patented by Verizon Communications, which could force Vonage to close or to install new systems.

The decision forced a temporary halt in the trading of Vonage shares and eventually sent the company’s stock down $1.05, or 26 percent, to close at $3. Vonage began trading last May at $17 a share.

Even if Vonage somehow overcomes this obstacle, it faces a separate patent lawsuit from Sprint Nextel that has yet to go to trial.

Other VoIP providers include
ITP (Internet Telephone Provider)
VoIP Your Life

Want to know more about Voice over Internet Protocol? Here are some resources to check out:

Federal Communications Commission
How Stuff Works
VoIP Wiki


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