Don't Take My Vonage Away

I'm pretty happy with my VOIP phone service, even though I don't really use it all that much, and I'd probably switch over fully to a cell phone-only lifestyle if I didn't consider paying my monthly Vonage bill something of an in-kind donation to new technologies (and a thumb in the eye of telecom monopolies, no doubt). Vonage and Skype and other services like them are offering better service for less money. If I didn't have them, I'd be giving Verizon $35/month for pretty much nothing more than local calls. Via the iPac blog, it appears that Verizon is fighting back - not by offering better service, but by trying to sue Vonage out of existence:

Verizon would love to extort companies large and small for access to their DSL subscribers, but they really care about shutting down VOIP. VOIP fundamentally alters Verizon's bread and butter business model of selling over priced telephony because of their copper monopoly. If Verizon gets their way in Congress you can bet that Vonage, Skype, Gizmo, and every other VOIP application and company out there will be all but locked from Verizon's DSL subscribers. Just look at what's going on in Canada for a precedent.

What's going on in Canada is that Shaw, a broadband provider, is basically charging its customers who use Vonage $10 as a "quality of service" fee so they can make calls effectively. It's extortion, pure and simple, and it's exactly what you can expect if the US doesn't pass Net Neutrality provisions. What Verizon is doing is hedging their bets. If Congress lets them down by disallowing them to become online gatekeepers and charge businesses and the public for good service, then they'll take their chances with the courts:

Verizon Communications Inc. has charged that Internet phone carrier Vonage Holdings Corp. violated patent rights that Verizon has on technology for making phone calls over the Internet [...]

Holmdel-based Vonage, which said Monday it had been sued, contested the claim. "Vonage believes that its services have been developed with its own proprietary technology and technology licensed from third parties and intends to vigorously defend the lawsuit," the company said in a statement.

Verizon charged that Vonage is infringing on at least seven of its patents regarding Internet phone service, a technology known as voice over Internet protocol, or VoIP. The patents include inventions related to gateway interfaces between a packet-switched and circuit-switched network, billing and fraud detection, call services such as call forwarding and voicemail and methods related to Wi-Fi handset use in a VoIP network, the lawsuit said.

The complaint, filed June 12, also claimed that "Vonage is aggressively marketing and advertising services made with Verizon's appropriated intellectual property."

Shorter Verizon: Our customers should not be given the burden of choice.

Despite adding a million customers (including me) in the last 15 months, Vonage is hurting because investors see how the telecom companies are planning on all sides to squeeze them out of the market. The fruit of this strategy is revealed in the article...

Vonage stock dropped 12 percent in trading Monday on the New York Stock Exchange, the latest blow to shares that have lost about half their value since the company went public in late May.

Shares of Vonage tumbled $1.12 to close at $8.48 on the NYSE. The stock has been trading in a 52-week range between $9.60 and $17.25. Verizon shares fell 37 cents, or 1.1 percent, to finish at $32.17 on the NYSE.

The Ipac blog makes the options for Vonage very clear, and it's not pretty:

There are three possible outcomes that Verizon would like to see.

1) Verizon wins the case on all counts and now owns voice. The AT&T Ma Bell monopoly would have nothing on Verizon.

2) Verizon loses, but forces upstart Vonage to spend themselves out of business. Simply put, Verizon can fight this case as long as they need to. Vonage, on the other hand, has come off a bad IPO and may not be able to fight this all the way.

3) Verizon and Vonage settle. This way Verizon gets a cut of every call someone makes on Vonage's system. It's free money for Verizon and will chill innovation.

Verizon can't compete in the marketplace so they decided to take the marketplace out of the equation.

This is phase two of the Net Neutrality debate. And it's important to monitor and fight. The best way is to sign up for Vonage and give Verizon the finger.

But first we need to make sure we head off phase one. There's a vote tomorrow in the Senate Commerce Committee on the bill. The Senate has always been the best opportunity to get real Net Neutrality legislation to preserve Internet freedom. A bipartisan amendment to the House-backed COPA bill has been put forth by Byron Dorgan and Olympia Snowe. You need to call your Senator and ask them to support the amendment, especially if they're one of the members of the committee:

Chairman Ted Stevens (AK), (202) 224-3004
John McCain (AZ), (202) 224-2235
Conrad Burns (MT), Main: 202-224-2644
Trent Lott (MS), (202) 224-6253
Kay Bailey Hutchison (TX), 202-224-5922
Gordon H. Smith (OR), 202.224.3753
John Ensign (NV), (202) 224-6244
George Allen (VA), (202) 224-4024
John E. Sununu (NH), (202) 224-2841
Jim DeMint (SC), 202-224-6121
David Vitter (LA),(202) 224-4623
Co-Chairman Daniel K. Inouye (HI), 202-224-3934
John D. Rockefeller (WV), (202) 224-6472
John F. Kerry (MA), (202) 224-2742
Barbara Boxer (CA), (202) 224-3553
Bill Nelson (FL), 202-224-5274
Maria Cantwell (WA), 202-224-3441
Frank R. Lautenberg (NJ), (202) 224-3224
E. Benjamin Nelson (NE), (202) 224-6551
Mark Pryor (AR), (202) 224-2353

We need a free and open Internet. No two-tiered structure. And no companies like Verizon who think that they own the telephone and every manifestation thereof.