Vonage Loses More Subscribers

Posted by: Olga Kharif on August 05, 2009

Web-calling service provider Vonage lost more subscribers in the second quarter, the company reported on Aug. 5. Vonage lost 89,000 customer lines, and ended the quarter with 2.5 million lines. Its user turnover rose both sequentially and year over year.

Why is Vonage losing subscribers? The company’s management blamed poor economy and wireless substitution. Personally, I don’t think the economy has anything to do with it: In tough economic times, consumers look to slash their expenses, including phone bills, and Web-calling providers, which offer a way to do just that, tend to flourish. Just look at Comcast: The company’s Web-calling subscriber base grew 33% in the first quarter year over year (results for the second quarter are yet to be released), to 6.8 million people. Vonage lost subscribers in the first quarter as well. Clearly, Comcast is doing a better job drawing in and retaining customers.

Wireless substitution, though, can have had a serious impact on Vonage’s business. More than 25% of the U.S. population has already axed home phone services, and uses cell phones for all calls. And that percentage is still growing. Instead of signing up for Vonage, or another Web-calling service, many users simply buy additional wireless minutes and go all-wireless.

Vonage is doing many of the right things to address this changing marketplace. It’s planning to release cell-phone apps, which could potentially dramatically expand the service’s user base. The company is also doing a fairly good job controlling costs. It just eeked out its first quarterly net income, of $2 million.

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Reader Comments

MacGuffin

August 5, 2009 07:23 PM

I think it is a customer service issue. Really bad reputation in the marketplace as a stand-alone VOIP provider. They may have made improvements over the years, but it's hard to live down a crappy rep.

AT&T CallVantage is being terminated and it's surprising that no one is going after these customers. I bet there are 1 million+ customers who need to find a new VOIP provider.

Feroz

August 6, 2009 04:04 AM

I just switched to Ooma from Vonage myself. Ooma has one time charge of $240 or so for the equipment and then there is no monthly charges at all! Whereas I was paying $30 a month for vonage.

deano

August 6, 2009 07:52 AM

Cell phones are portable and are with you wherever you go. Anyone who uses a land line probably still has an 8 track in their auto.........Sorry Grandma!!

CJ

August 6, 2009 09:15 AM

I disconnected my Vonage service when I found out that I could make unlimited calls from Skype for $2.99. I also have an unlimited cell phone plan. Vonage will be dead soon.

Jim Jackson

August 6, 2009 09:15 AM

$24.95 a month plus all the ridiculous taxes and fees?

PagePlus is coming out with unlimited talk and text for $39.95 a month some time this week or next using the native Verizon network (where do they roam these days?) and not only is there no taxes since its prepaid but available discounts could shave a few dollars from that price.

Who needs VOIP in the house?

Vince

August 6, 2009 09:20 AM

I had the worst experience with Vonage. I believe any company that will not take back there own equipment when terminating service does not give off the feeling of confidence. I would never give a recommendation for Vonage to any friends or family.

mike

August 6, 2009 10:24 AM

I think the real reason is that vonage's pricing is no longer a discount. I have 2 lines with them now (1 unlimited and the other cheaper line) and am paying $63 a month. Thats every bit as much as I was paying before I switched.

$25 a month and $15 a month should equal $40 a month. So I'm basically getting hit with $23 a month in fees/taxes from them. There's no real price savings in their prices anymore.

manny

August 6, 2009 10:58 AM

I was once a Vonage customer. I switched my service to Skype. It has very similar features and costs substantially less. I now have phone service for an entire year at the cost of what Vonaage was for 1 1/2 months.

Tim Flowers

August 6, 2009 12:56 PM

People like to bundle services and get as much as possible from trusted providers. I used to be a sales agent for a long distance reseller, and despite having much lower rates, when the big phone companies began bundling everything together on one bill, it seriously hurt my business. I found that many people would happily pay a few cents more per minute for the convenience of only writing one check.

Now that internet providers like Time Warner and Clearwire offer voip, it's not surprising to me that standalone companies such as Vonage are experiencing declines. Back in the day when the Vonage brand was a rising star, they should have licensed their technology to an internet provider so that they could be a part of the bundle.

Ragin

August 6, 2009 05:19 PM

You can't compare Comcast and Vonage with the way they obtain customers. Comcast already has the customer, all they are doing is looking to upsell them. It's much easier to reach your own customer base then try to reach out to people you don't know.

Former Vonage User

August 7, 2009 08:09 PM

Vonage advertises low prices but reams you with exorbitant taxes and surcharges. That's why I disconnected my service.

Bruce

August 10, 2009 03:05 PM

There are plenty of less expensive alternatives (e.g., MagicJack for $19.95 per year, Skype and Google Voice). Customer service is terrible at Vonage. Excessive fees/taxes etc. further erode any reason to go with Vonage.

Interested

August 14, 2009 01:33 PM

Until cell phones stop charging incoming calls along w/outgoing, I feel I need an alternative and Vonage sounds like a good deal to me, a Senior! Let's be cost effec. and none of this nonsense of insulting the elderly for trying to save $$$ and not a spend-thrift as the younger set does. That's why this county is in the financial mess it's in.

Michele

August 14, 2009 09:36 PM

DO NOT USE VONAGE unless you want to be locked into a 2 year contract! I chose vonage for one of my business lines. After using them for 6 months and determining that the service is not adequate, I called them to cancel. I knew they would try to charge me a disconnect fee ($39.99) HOWEVER they also wanted to charge me a $70 (plus tax) unit fee. They would not cancel the line without those charges. I can cancel in 6 more months (on my one year anniversary) to get back the $70, but they said it would be 2011 to avoid the disconnection fee. WHAT A RIPOFF!!!!!

Max

August 15, 2009 12:23 AM

Honestly, people rag on vonage because they feel the need to hate... fact is vonage is moving into working with isp's that currently dont offer phone service, if you read the news about them, they are working on working with cable providers...

fact is vonage still offers services that no one else even includes for free. you all complain abou the price of vonage and their fees, but you fail to do is price out all the addons they give you for FREE. those alone would be another 100 dollars a month with a regular land line provider, and still even cable providers still are doing more addon features for more money, and bilk you out the butt..

I have yet to see comcast or other phone providers offer a service like v-access... which btw is a great little feature for those that are out of their area calling home, they can dial a local number instead of long distance home, or its great for friends and family to save them long distance.

I will say this, I have used vonage since 2005, and have had very few problems with the service.

seriously you people that are haters need to get a grip.

Brian

August 17, 2009 03:35 PM

What Vonage needs to do is promote themselves to small business, especially small business with international clients. Our small company has virtual phone numbers in Europe which we can switch around with call forwarding to various U.S. phones whenever we want. It's like having a global phone system, but we are a company of 9 people, and we love it. For home, their offers may not be as exciting, but for small business needs they are spectacular, and need to start selling that.

Greg

August 17, 2009 08:23 PM

Vonage is horrible. I was with them for almost 2 years. I tried to cancel my account but they hound you over and over until you give in. After more than 4 months of trying to stop the service they finally did stop it. They never sent me a bill of all the fees, they just sent it right to a collection agency!!! They lied to me about not equipment fees and cancelation fees. I will never do business with them again!!! Even after all of that they keep sending me mailings and calling me to try and come back. They are SO pushy and over the top! Stay away at all cost which are high in the end.

ed naspinski

August 17, 2009 10:04 PM

how do you get hold of vonage

Jeremy

August 18, 2009 04:44 AM

$25 a month for a VoIP service isn't cheap. Anything more than $15/month is considered expensive already in VoIP world. I actually was able to save $10 to $15 a month just by switching from Vonage to Onesuite.com last year. Onesuite being prepaid doesn't have fixed plans or unlimited minutes that you don't need.

Bad customer service by Vonage added up to their already bad rep. No wonder people are now switching away from Vonage.

CLAIRE

August 20, 2009 05:23 PM

I JUST WASTED A WHOLE LOT OF MONEY ON VONAGE. IT IS USELESS, AND THEIR TECH SUPPORT DEPT. KEEPS YOU HOURS ON THE PHONE WITH NO RESOLUTION. THEN THEY CHARGE YOU TO DISCONTINUE THE SERVICE... $140 IN MY CASE!! WORTH IT TO GET THEM OUT OF MY LIFE.

rwizard

August 22, 2009 03:20 AM

I had Vonage for 2 years. When I built my own PBX and had to find a real VOIP provider, I decided to ax Vonage. Thing is, they attempted to make it impossible to cancel. It finally took a certified letter to the company's registered agent, cc'd to the NY State Attorney General to get them to cancel, and even then they tried to pull the retention crap. I don't know if they are still playing these games, but they took someone who might well have used them again, and turned me into someone who despises them to the core. Stay away from those folks, they are profoundly ethically challenged.

Heather in Philly

August 27, 2009 12:32 PM

I've had a similar experience to many that I've read on this threat. Vonage service wasn't great but I was fine with it and would have considered using the company again in the future. But NOT AFTER MY ATTEMPT TO CANCEL my service. They promote themselves as a no-contract service, as opposed to cell phone companies which tell you up front you're signing up for a contract. The thing is, people DO sign up for contracts with cell phone companies. We have no problem with it - just be straight with us up front, instead of burying the contract in the Terms of Service and fine print on the website. The the customer service rep had the nerve to tell me that the fine print on the website is in ALL CAPS. Well, yes, yes it is. Look at that. That's so completely not the point. I'll be calling them back tonight to cancel and have a nice conversation now that I know the context and know that I am not alone in my complaints.

Heather in Philly

August 27, 2009 01:41 PM

Corrections: That first sentence should read "I've had a similar experience to many that I've read on this THREAD." Not "on this threat." Also, I meant "THEN the customer service rep had the nerve," not "THE the customer service rep had the nerve...."

David

August 31, 2009 03:00 PM

I am the exception, I suppose.

I have been a Vonage customer for four years and my experience with their service and quality has been nothing but excellent.

When lightning struck my electrical service and blew out my Vonage router, Vonage service instructed me to buy a nwe one and send them the receipt, where they immediately credited my account for the price.

Recently, I made an international call under my original $24.99 plan which I thought was the more recent $24.99 World Plan, which allows free calls from the U.S. to Canada, India, Mexico, Puerto Rico and more than 60 countries overseas. In checking my billing online I saw I had been charged $9.80 for talking 140 minutes to a phone in the Northern Mariana Islands.

I called Vonage's Billing department where I was informed that my $24.99 plan was not the World plan. They asked if I wanted to switch plans and I said yes. Vonage switched me to the World Plan, credited me the $9.80 and did all this for no transfer fees or any charges whatsoever. They were polite, businesslike, and the changes were immediately observed in my account.

So, I don't know about the rest of you and why you have issues. Vonage has lived up to every claim they promised since I signed up with them, and the quality is excellent.

One last thing about the quality. VOiP is only as good as the broadband signal it rides on. I am fortunate to be using Roadrunner Turbo®, which performs commendably.

I am glad you found alternatives to Vonage which work well for you. Vonage works just great for me and I don't pay additional fees. Those extra fees may not be Vonage's doing. Instead, look at the tariffs and fees your state may be imposing on you.

Pat O

August 31, 2009 10:16 PM

I had Vonage back in 2003. Terrible customer service. I dropped VOIP altogether until last year when I bought Magic Jack. $20/year for unlimited calling. Can't beat that!

Lisa

August 31, 2009 10:37 PM

I left vonage because the phone kept cutting out. I was missing very important discussion during teleconferences. It was absolutely awful. Add to that the fact that their fees climbed so that they ended up being higher than AT&T. Then, when you give up because it doesn't work, they charge you a disconnect fee. This is an awful company.

mike altan

September 2, 2009 02:22 AM

Problem with OOMA is that you can't fax from it. They say they will send your fax on "best efforts" terms. What the hell is that?

And MagicJack, same thing. So, if you're a 15 yr. old talking to your girlfriend or boyfriend after school, you're set but if you need it for business, your screwed.

Vonage on the other hand allows you to function like a normal adult and send faxes if you need to and not on a "best efforts" case. So, for all the Vonage haters, maybe next time you should READ the contract before you sign it. I've had it for years with virtually no problem and every time I see a new service that appears cheaper, it never is.

Penelope

September 3, 2009 01:58 PM

what's the old saying you can't please all the people all the time? I love Vonage I've had it for years the customer care has always been awesome. Any changes in price have been because of taxes imposed by the state which Vonage would have no control over. Any good customer care rep would be sure you want to cancel since they would believe it would be a mistake for you and of course they want you to stay you all leave you can put a lot of people out of work! We have enough of that going around! AS for the girl that likes to critize errors don't bother with me that is so rude!

Jason

September 10, 2009 11:43 AM

"DO NOT USE VONAGE unless you want to be locked into a 2 year contract! I chose vonage for one of my business lines. After using them for 6 months and determining that the service is not adequate, I called them to cancel. I knew they would try to charge me a disconnect fee ($39.99) HOWEVER they also wanted to charge me a $70 (plus tax) unit fee. They would not cancel the line without those charges. I can cancel in 6 more months (on my one year anniversary) to get back the $70, but they said it would be 2011 to avoid the disconnection fee. WHAT A RIPOFF!!!!!"

Same happened to me. Calls were crappy too. Always a lag. Very difficult to carry on a conversation.

Brian J

September 13, 2009 12:20 AM

I don't get it. I have been using Vonage for about 4 years, I am not a "heavy" user but my wife calls the UK every weekend for over an hour at a time(which is included in the monthly rate) I also have a virtual UK number that the rest of the family use to call us. I have had no problems except for when the cable company (Comcast) has an outage. The calls are always clear. I do not work for Vonage and am surprised by all the negative comments, am I just lucky?

Vonagenewbie

September 21, 2009 05:33 PM

I've just signed up for Vonage service. So I can't comment on the call quality. I had to call them twice to resolve an issue with my previous phone company. The first rep did not have a clue what to do. But the second one was very polite and professional, called my previous phone company and conferenced me in and resolved the issue. It was clear that I am signing up for a year. I switched to Vonage mainly because of their plan free call plan to 60 countries.

Raj

September 26, 2009 11:34 PM

I had Vonage for two months now. I am pretty happy with it except that certain days I get dropped calls when calling India after a few mins. Right now vonage is the cheapest for those who need to make international calls and if you need to send faxes every now and then you can use your Vonage line for no extra charge.

Allen

October 2, 2009 01:17 PM

I too have been using Vonage for some number of years. I am completely wire line free. I have numbers in different geographic areas and everything works well. I have a small business, so having the ability to grab my device and operate out of another location without being attached to a computer (cordless phones) is absolutely great. I also work in the telecommunications industry (auditor) and having been exposed to a number of different service providers, so far Vonage has been the most reliable for me. The comment about the VoIP technology being only as good as the broadband service you are using is correct. If you have a broadband service that varies in available bandwidth, you will have problems with any VoIP provider regardless of who you are using or how you are interfacing. Oddly enough, I too am using RoadRunner (no turbo though). For people using DSL as their gateway to the internet, don't forget that distance form the central office serving your location will affect the quality of your broadband connection.... This especially if there are multiple applications using the internet sumultaneously.

Curtis

October 9, 2009 07:50 PM

I have used vonage and was told that I had a 1 year agreement when signing up. I had also called other companies such as comcast which also had a one year or two year contract at which time the prices would double or triple. I was told by comcast that if I had cancelled with in the contract I would have been hit with about $200.00 in fees. Vonage told me there was a disconnection fee of $39.99 and a rebate recovery fee of $79.99 and the agent explained this all to me very well. When I called to change plans to this new world plan they did it at no additional fees.I am more then happy now as I had used calling cards to call many places and now am saving even more like about $100.00 a month on calling cards. I am happy and hope soon they add more countries. Thanks vonage

Lou

October 20, 2009 12:36 PM

I think they like to change the service agreement around all the time. Every month my bill would be a different price. Very poor customer service. Good luck if you go to cancel your service with them, its not easy.

craig beach

October 23, 2009 12:35 PM

Max you are an ass.People don't rip on Vonage because they love to hate.Your intelligence level is sub par to make comments like that.I canceled and had to pay a 39.95 cancellation fee plus 6 months ago when there device quit working they sent me another one.Now that I want to cancel I can't ship back this device like I could with the old device.I have to pay another 89.00 dollars.I canceled and will let everyone know how they did business.Very unprofessional.

HEC

November 2, 2009 06:35 PM

I was using vonage mainly for international calls. What i got was lousy sound and lousy connection and when I complained about it, one of the many customer service persons told me: "next time fix it yourself". Their unit went into the recycling bin at a Center I WOULD RECOMMEND vonage to somebody I really hated.

Former Vonage Customer

November 11, 2009 05:42 PM

I used Vonage for two years, around 2004, before I switched. It was giving intermittent connection and quality problems. But, I liked the idea, even recommended to others. I was forgiving until I called their customer service on one occasion regarding call quality. He was of no help at all, and tried to blame everything on the internet connection. I was not happy and tried to cancel service. Only then I realized how BAD they were. They charged me even after I ported my number to another service provider, and did not take off the charge. For them providing service and canceling service are two different things. SHADY business practices. I HATE VONAGE. @david are you still looking at posts? I HATE VONAGE. It won't be long before they are taken over or pushed out of the market.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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