Vonage Attempts an IPO

An Article in The New York Times details Vonage’s attempt to launch an IPO. What does this mean for WiMax?

Vonage is attempting a first. The first Initial Public Offering (IPO) by a Voice over Internet Protocol (VoIP) company that I know of and that the Times staff know of too apparently. It is groundbreaking. Interestingly it could also turn out to be backbreaking. Why? Vonage has grown and move at unprecedented speed for a Telecommunications launch. Founded just in 2000 to be prepared to launch an IPO within six years by old switch telecom standards would be miraculous. Still, it may almost be a victim of the speed of the technology. Vonage faces significant hurdles. The sheer speed of the technology adoption has not only been noticed but co-opted by others. Cable companies like Charter, Cablevision, and Time Warner have VoIP offerings. America Online does. As does EarthLink and AT&T. In short just about everybody. The technology may almost be a commodity now. This has resulted in increasing losses for Vonage per this article of almost $190 million all on sales of $174 million. Partly this is because Vonage is selling cheap and spending a lot to get customers to the tune of $215 per customer. Because of this the response to this IPO has been a bit lukewarm, which seems unfair. Well, business as life often isn’t “fair”. Vonage may be the victim of too broad a consumer strategy with too few “niche” approaches. So what does all of this mean for WiMax? Well, most wireless ISPs I know are fielding such a service—more for self-defense than anything else maybe. Many wireless ISPs report to me that voice is a pain to deliver. Still, if they don’t pick up those customers someone else will use their bandwidth to do so. So the upshot for WiMax is that VoIP is essential but still hard to do. So the coming enhancements in quality of service (QOS) capability coupled with enhanced support for VoIP delivery will be big. The trade off between larger data packets and smaller voice packets which have differing sensitivity to packet loss is a tough one on a blended network. WiMax could be a technology that allows even smaller players to be successful with this service. Also, some creative “niche” plays going after higher margin VoIP business are cropping up (I promised not to tell). And some of these players are garnering customers much cheaper than $100 each. Tim Sanders, tim@thefinalmile.net www.TheFinalMile.net www.WiMaxGlobalNews.com