In Latest Results, Vonage Appears On The Decline

As reported by the AP today, Vonage continues to lose cash (though less so in Q2 2007 than in periods prior) and has reported a steep drop in subscriber recruitment, and has for the first time lost its place as the largest provider of VoIP service to the American consumer market to Comcast, a cable television and Internet service provider.

Uh oh.

As unfortunate as it is to say, considering Vonage’s place as a “pioneer” in consumer- and small-business-oriented VoIP market in the US and its truly surprising steadfastness (dare I say resilience, too?) in the face of a high-profile court battle against the telecom giant Verizon, this news may portend the demise of the company. And rather than prolong its already agonizing decline, the company may make a quick exit from the market in the near future, though not as brazenly asinine as the one made by the (formerly) second-largest independent household VoIP provider in the country, SunRocket, several weeks ago.

Upon delivery of the negative statistics of Q2 to the public, Vonage appeared to pin at least some of the blame for the company’s poor recruitment performance on the fact that it had “scaled back marketing” in recent months. In the second quarter, Vonage claimed to have serviced 2.45 million lines (Comcast, for those interested, says it currently has 3 million subscribers signed up for its digital phone service), which put the overall gain for the quarter from the previous 90 days at a mere 57,000 new connections.

Since its establishment, Vonage has continually lost varying sums of money, and though it seems to have maintained a sort of solid existence throughout its life regardless of its financial straits as both a private and public company, there is only so much red ink it can deliver before it simply has to face facts and bid the market adieu.

I personally wish the numbers were different and that we could all call Vonage a screaming success. What with the clear domination of two towering monopolies on the American market (Verizon and AT&T), one tends often to consider independents the fresh flavors of whichever industry they may be a part. Those fresh flavors are naturally very necessary to maintain fairness and balance in the market. But a business model is a business model, and it needs to be sustainable to keep around for a long period of time. Clearly, Vonage has not been able to attract the critical mass of customers it would need to remain viable.

So, dear reader, when do you think it’s going to bite the dust?