Businessweek Archives

Vonage: More Bad News


? Google Gobbles JotSpot |

Main

| Jeff Bezos' New New Thing ?

October 31, 2006

Vonage: More Bad News

Olga Kharif

After a while, criticizing Vonage feels like kicking a defenseless dog. Alas, Vonage just reported its third-quarter numbers, and while the Street louded a narrower-than-expected loss, I see plenty to worry about in the results.

The company suffered from higher churn and lower-than-expected subscriber growth. I bet that Vonage's decision to make its subscribers-IPO investors pay up didn't help the company make any friends (And, by the way, the stock is 60% off its IPO highs.) Vonage's execs also admitted faults with the company's ad campaign.

What I found most worrisome, however, was that the Web-calling company's customers acquisition costs, already high, have creeped up. In the second quarter, Vonage spent $239 to acquire a new user. In the third quarter, that number shot up by $15. At the same time, the number of months a customer stays with Vonage has declined due to increased competition in the Web-calling market, bringing its total lifetime value per customer down by $10, to $324 as compared to $334 in the second quarter, per UBS estimates.

If these trends continue, I don't see how Vonage is ever going to make money. I'd say, Vonage needs to take radical steps, now.

06:32 PM

VOIP

TrackBack URL for this entry:

http://blogs.businessweek.com/mt/mt-tb.cgi/

It maybe because of the very bad service and customer service reps. who can't speak ENGLISH!!!!

We tried to cancel the service after only 10 days of no service, because they didn't tell us that it dosen't work with Hughes sat. Then they are giving us the run around about the 30 day money back GUARANTEE!!!

We cancel the service and it took Vonage will over 2 weeks to switch our number to AT&T, and now they are saying that it's our problem that the number wasn't switched in time. So now Vonage charged me an activation fee, first month service, and a $99.95 disconnect fee. So what planet is Vonage on?

Posted by: Lucille Spencer at December 12, 2006 10:00 PM

Vonage is terrible. I was hung up on. I never used the service because I did not have DSL and on top on never using the service they are charging $39.00 to disconnect the service.

Posted by: monica driver at December 20, 2006 03:38 PM

I've been w/Vonage for over 4 years now.

I called India with a problem, one night at about 9:30 Eastern time, and the girl took my hardware complaint and said they'd get right on it. When I got to work at 8am the next morning, a new piece of gear was already sitting on my desk. Not too shabby.

Let me explain something to the misinformed and self-important: Doing zero research (say, ordering a service that won't work with the crappy latency involved in satellite internet hook-ups), and then calling Tech Support with a bad attitude and a bit of racism thrown in, is a prescription for disappointment, and well-deserved poor results.

Boo hoo hoo. Garbage attitude IN, garbage attitude OUT. Next.

Posted by: Brian Stegner at December 23, 2006 07:51 AM

I have to agree -- I'm stunned the first two commenters didn't understand that you need a cable or DSL system to use the service and apparently aren't embarrassed enough not to post their mistake on a tech site.

Regardless, Vonage has been here and there for us. We've had it for about a year and a half now, and for the first year or so, we had zero problems. It was just excellent. Then after the botched IPO and super-saturated marketing campaign, our service issues started cropping up.

As far as customer service, I do agree that it is frustrating to call with a problem and then have to ask the CS Rep to repeat themselves multiple times because of a thick accent. But if you can get past that, they DO speak English well and do seem to generally be able to help.

Overall, I think if you want VoIP, Vonage is a good choice. I also think that if you are not basically tech-savvy, you should skip the VoIP altogether (like, say, if you don't know enough to realize a high-speed connection is needed for the service.) But for people who are able to troubleshoot minor problems and understand when it's a problem with a equipment, connection, or network rather than the service itself, you should be happy with Vonage.

Posted by: Alyson at January 7, 2007 09:41 PM

I disagree with much of what you said. I have had vonage for about a year and will get rid of it after the penality phase ends after one year. That is provided that I can actually get them to cancel the account and they do not keep charging me even after I have disconnected.

1. The price is very expensive when your home business calls do not connect and you lose customers.

2. Call quality has been poor. Calls get dropped. Static and echos on the line. Voice mail does not work. People can hear me but I cannot hear them....Problems many times a week. And oh please, do not blame it on my VoIP provider, which is fine.

3. Vonage took 3 months to port my number. I had them port my fax number because it was widely known by my customers. It took Vonage so long that AT&T closed my account and Vonage said the number could not be ported because it was not an active account. I had to reopen the account with all new Account fees with ATT just so Vonage could port it. Then half my clients could not fax me. Vonage IS the problem, not all of our fax machines. All of these machines cannot all fail and then work with other VoIP's carriers on the same day.

4. Vonage has NO tech support. You wait on the line for 30-60 minutes, the guy in India that cannot speak english, cannot or will not help you. You wait another 30 minutes for a supervisor and then they hang up on you. You e-mail Vonage and the e-mail bounces because their system is overloaded.

5. Vonage now sells your name and e-mail to spammers when they said that they would not do this when you signed up.

I still cannot figure out why I was such a fool to go with Vonage. Now I crusade against the company. I HATE VONAGE. People do stupid things.. they sign up for Vonage.

Posted by: no vonage at March 22, 2007 02:45 AM

We've been using Vonage for nearly 4 years here in Mexico. If you have good broadband service and if you configure the system correctly, it works great! We even have a second phone number in London, for my mother-in-law linked to our phone. For me, Vonage is the BEST phone service I've ever had. I was a Verizon customer for years in the NY/NJ metro area and paid and paid and paid for their junk. Long live Vonage!

Posted by: Mike Harris Stone at March 26, 2007 11:23 AM

I have Vonage. I have good ISP and know how to configure the hardware and software. VONAGE SUCKS! The service is out serveral times a month. The outgoing greeting often does not work or comes on late. The voice mail will not retrive messages or gets them to you 24 hours later. Customer service is worthless. I have a second line for a fax. Many people cannot send faxes to me even with ECM off and Baud 9600-- VONAGE SUCKS !

Posted by: vonage--no way at April 2, 2007 02:22 AM

vonage has been nothing but trouble for me. i completly lost all phone service for 2 weeks and in the meantime of trying to get it repaired still having to pay the full bill. nobody there was able to understand what was happening. probably cause they couldn't speak or understand english. once i was able to make calls again... my calls (doesn't matter if it was local or long distance) was static and kept getting cut off. My phone adapter went faulty and had to send it back, when it was lost in the mail they saw the tracking information and still charged me the full price of the device. HUGE inconvenience. VONAGE HAS THE WORST SERVICE I EVER HAD.

Posted by: go away vonage at April 9, 2007 04:42 PM

Vonage is the worst service I have purchased in years. The technical service and customer service is poor. They will not cancel your account. They keep charging your credit card months after your service has been disconnected. It is criminal and these people belong in jail

Posted by: Anonymous at April 15, 2007 08:44 PM

Poor quality service, dropped calls, echoing...line noise...withdrew after the obligatory 1 year. Will not go back.

Posted by: Gary at April 17, 2007 04:00 PM

Any bets on the date Vonage goes bankrupt or is merged out of existence? Can we throw the CEO in the blue hole?

Posted by: Anonymous at April 19, 2007 06:17 PM

Voicemail retrieval from the web has been unavailable for over a week. Callers are told to enter a mailbox instead of being given my voicemail answering message. Have to reboot the box fairly frequently because we lose the communication in one direction.

I believe they should offer me a refund for unavailable service.

Holding my breath to see if TS can resolve my case.

Posted by: Gary at April 25, 2007 04:02 PM

For all you Vonage apologists, check out the user reviews on Cnet and Amazon.

The average user rating on Cnet for Vonage service is 3.4 out of 10 - unbelievably bad!

My own experience is like many others - poor connection, unspeakably bad tech support, and billing for the service after I cancelled. I have almost $200 in charges on my VISA for a "Risk Free" trial (per their web site) I used for about three hours and cancelled six days after I ordered it.

And yes, I have a cable modem, with what should be more than adequate speed for VOIP.

I don't know how such a high profile company is allowed to operate in such a fashion without class action lawsuits from dissatisfied customers. I'll be out celebrating when Vonage goes out of business.

Posted by: Hoodeetch at April 26, 2007 03:37 PM

Writing all this hifalutin financial analysis about Vonage is analogous to writing a doctoral paper on the Three Stooges.

Vonage is such an abysmally bad company with a lousy product and worse customer service that anyone familiar with their modus operandi would agree in an instant that they deserve extinction.

Posted by: YabemptiBoozha at April 26, 2007 04:06 PM

I do not have Vonage or any VoIP currently. But I was considering Vonage until I read the reviews. I want to thank everyone for their honesty. I will never select Vonage based on these comments (and I also checked out Amazon and Cnet reviews). Thanks, I'll stick with my landline until a better solution is in place.

Posted by: Mark at May 8, 2007 10:08 AM


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus