Vonage Users: Drop or Hold?

Is it just the products that I choose, or is every high tech product involved in patent infringement suits? About a year ago I bit my nails as I awaited the fate of my BlackBerry. RIM, maker of the BlackBerry, was sued for patent infringement and paid $612.5 million to the plaintiffs in order to continue operating. (I have no doubt that I've absorbed some of these costs, but I still have my Blackberry so I'm a happy camper.)

Now, it's Vonage's turn. And I'm right there in the hot seat again (along with 2.2 million other subscribers whose service may be threatened if Vonage loses its latest court appeal).

The Story Thus Far

Last month a jury found Vonage guilty of patent violation for three patents held by Verizon. The suggested remedy? Vonage would pay Verizon $58 million plus ongoing royalties for violating the patents. (I've always had my doubts about whether juries are qualified to understand patent suits, but hey, that's what's made America great.)

The judge later ruled that Vonage should refrain from signing up any new customers to keep the company from continued infringements. That decision was appealed and there's been a stay, pending appeal. If Vonage loses these appeals or doesn't reach a settlement, then service could be interrupted.

Today on the company web site, a brief message informs you that it's business as usual. They're still signing up new customers. If you're a believer in the Patron Saint of Lost Causes, then by all means, go sign yourself up.

Meanwhile, over at Ars Technica, they report that Vonage stands ready with a work-around solution to avoid the patent infringements.

Whatever else you say about Vonage, I think everyone can agree that the feisty company planted the flag in the VoIP space, making VoIP an alien-sounding, but nonetheless household word. Vonage's colorful past includes:

• Silly and outrageously expensive TV commercials and campaigns;
• Absurd marketing costs (the financial report says it spent $275 per customer on acquisition);
• A disastrous attempt at becoming a public company; and
  
• A patent-infringement law suit.

Plus, my Vonage service lately has woefully degraded to the point where I start conversations saying, "I'm a VoIP user, so you may have trouble understanding me."

The question for Vonage users: Do we stay or do we go?

My guess is that Vonage is going down for the count. In all likelihood there will be an untenable financial burden placed upon the company when this legal ruckus is over. My second guess is that other small VoIP players like SunRocket and Packet8 will begin to tumble as strong-arms like Verizon entice us with all-in-one solutions offering us VoIP, data, and TV services for a single low price.

Still, the eternal optimist, I'm going to hang on to my Vonage service until the death knell and see how it plays out. After all, I'm still using my BlackBerry. What about you? Are you going to fight or switch?