Vonage Loses Appeal To Verizon; Future As An Indie Provider Looks Grim

If you weren’t convinced by our last piece on Vonage that the VoIP company is headed down, down, down, maybe this next bit of news will bring you around and help you see the truth. Just hours (okay, days) after Vonage was told to pay Sprint for stepping on the latter party’s patents, the press revealed that the small-fry pariah of the US telecom industry had also managed to lose out its appeal of the judgment concerning its very public spat – also concerning patents – with Verizon.

Yes, it’s true. As was reported by Bloomberg News yesterday, the ruling Vonage made an attempt to reverse remained in place Wednesday, upheld by the US Court of Appeals for the Federal Circuit. The court “also upheld an order barring Vonage’s use of Verizon’s inventions, including a way of connecting Internet calls to standard lines.” During the appeal process, Vonage was allowed to continue using the said method. It clearly cannot do so anymore. Vonage claims the appellate court decision “would not affect its 2.4 million customers because it had deployed workarounds for the two patents at issue.”

Curious to know the basic premise of the two patents that Vonage is said to have infringed upon? In short, they “cover a way of connecting Internet calls to standard phone lines.”

Now, I’m sure the patents are a bit more complex and carry the weight of a whole lot of ridiculous technological jargon, but come on folks. Clearly Verizon hasn’t been on a tear only to protect its intellectual property and whatnot. It’s been giving Vonage a hard time because it can give Vonage a hard time. Kicking down it’s largest (relatively speaking) independent VoIP competitor is in its best interested, because 1) it shows others in the same field what it’s capable of doing in the courtroom, and 2) it might very well see the ailing telephone service provider as a much easier, and much less costly acquisition now.

Vonage is obviously not doing well, financially speaking, and it’s been all but flat the past few months in terms of grow (due, of course, to all the legal complications). It’s stock is slowly headed toward junk status. Lots of investors are bailing on the effort. In all, it’s either headed for the dumps, literally, or a buyout is in the works. I think the latter is the more likely outcome of the two.

Now, whether Verizon is looking to snatch the bruised and battered Vonage up for itself is hardly a firm prediction. Lots of variables are at play at the moment. But I wouldn’t think it an impossible result of this fight.

How do you see this chain of events?