Vonage's High-Spending, Low-Return Ways Make It Ideal For The MVNO Market
from the misguided-strategy dept
Things have been a little bit quiet on the Vonage front since the company's shambolic IPO last year, but it's been more of the same: slowing growth and poor financial performance. Apparently, though, the company has a new plan -- BusinessWeek swears that Vonage is going to become an MVNO and start selling wireless service. The article says that with such a move, "Vonage might have a better shot at profitability." But that's really not clear at all, since the virtual operator market has been one largely characterized by heavy losses and high customer-acquisition costs, with very few hits to balance all the misses. The article further surmises that Vonage needs to get into selling multi-service bundles to survive and succeed, but this, too, doesn't make a lot of sense. It's rather unlikely that Vonage will be able to undercut the cable operators that are beating it at VoIP by reselling their broadband and TV services under its own brand. It already offers one commodity product, VoIP, where it really only competes on price, so trying to bundle together a few others and take on some formidable rivals (like cable and telephone operators), again, competing just on price, doesn't seem like the wisest idea. The company says it will introduce new products like dual-mode cellular-WiFi handsets, but again, all these really aim to do is offer cheap calls -- and that's a strategy that isn't currently working for Vonage, and one that isn't sustainable once its rivals also drop their rates and remove any differentiation.
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I like Vonage
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Don't know WTF you're talkin' about...
WTF are you idiots saying? Are you sure you're not confusing your services with Vonage?
I have TWO lines with them and it only costs me about $50 a month AFTER tax.
Fuckin' idiots. Check your figures.
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Another Vote for Vonage
Our ISP offers VoIP for $29.95, which is double what we're paying and $5/month more than Vonage's unlimited plan. I can't figure why any sane person would go with the ISP plan when Vonage is cheaper, and, based on our moron neighbor's constant complaints, Vonage is also much more reliable than the ISP's version of VoIP.
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No More Vonage
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Vonage is good!
My ISP charged me $40 for VOIP service...and the quality sucked. My hope is that Vonage figures out a way to keep its nose above the water and survive somehow.
I don't know where people are getting figures that ISP's are cheaper than Vonage...
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Re: No More Vonage
What was Vonage charging you extra for? AFAIK, everything is included with Vonage and there are no extras to buy.
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wow
Vonage seems to stilll be cheaper in the outer suburbs in places that people dont have smaller startups. I hate comcast and there's no way I'd pay $39.99 for phone service, I just dont use it. I bought unlimited calling in the us and canada for a year with Skype for $14.95 and I have my cell phone with more minutes than I ever use.
I dunno how people can pay so much for phone service.
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I understand your skepticism, but do you really believe dual-modes or multi-carrier bundles would differentiate Vonage only on price?
How many people yearn to unstrap themselves from their carriers? With Vonage diving in, it will be easy to get solid, consistent cell service from any tower they do a deal with -- Vonage would even route the call through the cheapest carrier they have a deal with.
This starts to sound an awful lot like turning the carriers into bitpipes -- something you advocate. Maybe you're right -- Vonage's free wheeling ways may not allow it to come out on top, but what it could do is FINALLY open up the mobile market and start to bridge the carriers -- that's the story worth writing about!
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OK, not to be rude, but isn't the MVNO model that has shown heavy losses and high customer acquisition costs right up Vonage's alley? Hell, that is already their business model, so this should be right in their sweet spot.
Throw in a PA 911 call that gets routed to Canada and Vonage is having a pretty good week.
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Business Lines
PS, I agree with Dean above that the FMC play is interesting, even if only because it is disruptive. With T-Mo as our only USA FMC player, we won't see much desire to shake up the mobile telecom industry. Vonage might push harder.
Also, most of the failed MVNOs were high-cost, data-service-heavy plays. They wanted to sell $500 cell phones and $100/mo service plans. Surprise! That didn't work. Vonage would not invest in such an expensive platform. Also, marketing and acquisition costs have been the bane of MVNOs, but Vonage can target it's existing 2M subscribers to start out. That's a big head-start.
Vonage, for all its troubles, does have a huge lead in the customer acquisition department. At some point, they will have to leverage this. An FMC MVNO gives them the opportunity.
Now it all depends on how good a wholesale deal they can get from Sprint (or whoever).
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Vonage is one of the most expensive VOIP companies in Canada... that's what I am talking about. Primus Canada unlimited calling= $29.99CAD a month, Vonage= $39.99 a month. There are other options where you get unlimited North America calling for $24.99 CAD. By any standards, Vonage is wayyyy to expensive up in the north.
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Vonage was first
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Vonage works
When I found out it worked seamlessly from my international location, I added a second line for the wife. So now, people can call a "local" (read: 7digit) number and get ahold of either of us, even though we are on an island in the caribbean. Can't beat that!
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