Vonage Hangs On and Telephony Competition Grows

Out of the frying pan, into the fire?  According to The Week magazine:

Internet phone company Vonage settled a patent dispute with Verizon, agreeing to pay $80 million or $117.5 million, depending on an appellate court ruling. Vonage’s shares jumped 72 percent on the news, to $2.62, in after-hours trading last night. (The Wall Street Journal) Vonage settled a patent lawsuit with Sprint earlier this month, while AT&T files suit last week. But analysts warned that Vonage now faces a greater threat from cable-company competition. “Getting this litigation behind it gives Vonage a new lease on life,” said Sanford C. Bernstein analyst Craig Moffett, “but it does not change the dynamic of the industry.” (The New York Times, free registration required)

Vonage is the hosted VOIP provider that almost single-handedly popularized voice-over- IP for consumers and small businesses. 

Disruption in the telecommunications industryHowever, it’s not just Vonage that has to worry about the cable companies.  The Verizons, Sprints and AT&Ts of the world must be feeling the heat of the cable companies nipping at their heels, too.  Landlines, voice-over-IP, wireless — today all are competing with each other to provide phone connectivity to consumers and businesses.

And on top of that you have some big technology players staking claims in the telephony industry.  Each of them is coming at it from a different angle.  There is the almost-free Skype, owned by eBay.  Google recently acquired GrandCentral, a voicemail services provider.  Even Microsoft is in the telephony business with its ResponsePoint.  

Not to mention that there are dozens of independent service providers, such as GotVMail.com, offering virtual switchboard, voicemail, fax to email, and similar services to enhance and extend basic phone service.

What does this mean for your business? You have more choices and more services, which should help keep prices in check. However, all those choices make the buying process more complicated and more time-consuming.

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.