Monday, December 1, 2008

The VoIP Princess Has Moved

The VoIP Princess blog has moved to TMC Net. I look forward to seeing you there:)

Thursday, October 9, 2008

More on Vonage Debt Buyback

Televolution founder and CEO David Beckemeyer sent me some comments on my post Is Third Time a Charm for Vonage Debt Buyback? . David points out that there have been contrarian opinions about Vonage right along, despite the general industry cheerleading:

"The funny (sad) thing is you could have said most of these same things (no business) back in 2003. Some of us did say it back then, but the capital markets were blinded at that time. What I said back then:
  • Minutes would be commoditized, cost approaches zero - at the time, Vonage was charging $40/mo and "experts" said it was cheap  
  •  Regulatory Issues would be a nightmare - check
  •  911 isn't going away (thus changing their cost advantage) - check
  •  ILECs will retaliate - turns out they haven't had to, Vonage isn't a big enough threat
I recognized right away (unlike Vonage investors) that Vonage had few, if any cost advantages over a regular telco. The only difference is they don't put the wires in the ground - but unlike Cable and ILEC, that's also a disadvantage because they don't own or control the pipe into the home. And Vonage also lacks the buying power of the telcos.

But the most important problem for Vonage has, and continues to be, and I think this is still the biggest elephant in the VoIP room: THE HOME PHONE IS NOT BROKEN. It is not high enough on the radar of problems to make switching to unreliable VoIP worth the trouble, for most people."

And while we're traveling down memory lane, in Nov. 2004 I also suggested that the emperor's financial pants didn't 'pencil out' in "Is Vonage Overvalued?" Turns out I was right. Maybe I can get a job running an investment bank.

Tuesday, September 30, 2008

Is Third Time a Charm for Vonage Debt Buyback?

In the face of viral bank failures and an imploding credit market, it's reasonable to ask whether pure-play VoIP leader Vonage can close its debt refinancing deal, given the company's bottom-line red ink and a stock price in a death spiral.

to repurchase the remainder of its in convertible notes, the Journal story said. Vonage needed to raise money for the repurchase by December 16 or risk bankruptcy

Last month Vonage extended its offer to buyback $253 million of debt for the third time, Reuters reported on September 30. The new expiration date is Oct. 15.  Vonage launched the offer last summer in conjunction with a $215 million debt refinancing deal with hedge fund Silver Point Finance.However, the Silverpoint deal has yet to close and the parties are "still in discussion," according to the Reuters report. If Vonage deosn't raise the money by December 16, the company may go under.

Although Vonage's Q2 revenue was up 11 percent from 2007 to $228 million, the company still lost $7 million — which is better than 2007's $23 million loss for the same quarter last year. Still, "losing less money than last year" isn't a confidence-inspiring message for a company that's been in business nearly eight years. 

Jon Fisher author of Strategic Entrepreneurism: Shattering the Start-Up Entrepreneurial Myths, doesn't mince words about Vonage's prospects in the current climate — or any other, for that matter. Fisher has led three startups in the past 15 years, through booms and busts, and his most recent venture, Internet security firm Bharosa, was acquired by Oracle in 2007. One of his truisms is, "If you don't have a P&L that makes sense, you're in trouble."

"Vonage loses money quarter after quarter and year after year, and therefore I don't consider Vonage to be a company — or at least a for-profit company," he wrote in an email.

"It's companies like these that will have the most trouble attracting or refinancing capital in the wake of an unprecedented credit and liquidity crunch and I say that's a good thing. The biggest problem we have in this country is using debt to keep companies in business that are not companies."

Tough words. Then again, these are tough times. 

Tuesday, September 23, 2008

More on Pollsters Making the Wrong Call

Back in July I speculated that the political pollsters are getting a skewed picture because:

a)  Many of Barack Obama's strongest supporters are  young voters who 
b)  increasingly don't have landlines and as a consequence 
c)   don't get called by pollsters. 

Tonight I had the opportunity to test my theory at an open house at Obama's Santa Clara County headquarters, where the majority of people were under 35. Here are the results of my informal poll of 25 politically active young adults:
  • 14 have no landline
  • 9 live in a house where there's a landline but don't use it
  • 2 use a landline as a primary phone -- the rest use a mobile phone as their primary phone number
We'll have to wait until election day to find out if the rest of my thesis is borne out. Your thoughts?

Monday, September 22, 2008

Palin and the Wireless Flat Earth

I'm not the only one who thinks that Pres. McCain-Palin would be a disaster for telecom policy. Jeffrey Silva at RCR Wireless has a story about Palin vetoing spending for wireless networks in schools. A cautionary tale about what happens when you elect public officials who think that science is a matter of theology -- not fact.

Wednesday, September 10, 2008

Communications technologists should be afraid of a McCain Palin government

It's been hard back into the swing of things, being distracted as I am by the Klondike Annie Oakley and her remake of the 1957 classic movie A Face in the Crowd.*

But as entertaining as the electoral circus is, those of us in Internet communications have serious reason to worry about a McCain Palin administration, given federal government's power over communications technology.

Look at the way these candidates use technology. Barack Obama has conducted a 21st century digital campaign. John McCain, on the other hand, has to have Cindy turn on the computer for him – something the average American two year-old can do.
Fact is, you can't possibly make intelligent policy about a subject you know nothing about. Think about George Bush and the Iraq war.

So let's look ahead to the communications policy of a McCain Palin administration.

Take Open Internet, an issue that means a lot to the VoIP universe. McCain: "Cindy, open the internet." Palin: "I told the government thanks, but no thanks. If we want to open internets we'll do it ourselves."

Or frequency auction policy. McCain will just get a prescription for Enablex. Palin will consult the Book of Revelation: "But in the days of the voice of the seventh angel, when he shall begin to sound, the mystery of God should be finished."

I'm not just being cynical or mean here. We're dealing with fundamental differences in worldview. Barack Obama and Joe Biden live in the modern world – the post-enlightenment world.

McCain, of course, is living in the Nixonian world of people who want to be President for Halloween – and the other 364 days of the year. All worldviews are equal, as long as he's Decider-in-Chief.  The campaign's intellectual magisterium, Sarah Palin subscribes to a pre-enlightenment worldview that has been trying to claw its way back to power ever since Galileo reported that the earth revolves around the sun.

The Inquisition didn't arrest the great astronomer because they thought he was wrong. That was secondary. They arrested him because he attacked the authority of their entire worldview: an intellectual context where facts were discernable through the prism of beliefs. Galileo said that facts were discerned by observing the evidence -- the scientific method.

If you think I'm over the top, you haven't spent time among the Assemblies of God. George Bush is Charles Darwin compared to these dead enders.

These are people who not only take the first chapter of Genesis literally, they also take literally the word "foolishness" in St. Paul's first letter to the Corinthians: "For the wisdom of this world is foolishness with God." (3:19 ). Paul was speaking specifically about the "foolishness" of a messiah who came, not as a king, but as a one of the world's poor and oppressed.

But extreme fundamentalists use this justification for willful ignorance on any and all subjects – biology, climatology, sex education, levees in New Orleans, you name it. Point out that carbon dating shows that fossils are millions of years old and they will tell you that carbon dating is a fraud. It isn’t mere irrationality. It's quite logical. Using their intellectual model, carbon dating has to be false – otherwise the 5,000-year-old-world model is wrong.

Like the Inquisition? You're gonna love the McCain Palin administration.

OK, I had my rant. Back to reality. I'll be at CTIA tomorrow and IT Expo next week. I'm moderating sessions on VoIP security and FMC. Come and say hi. I don't bite in person -- only in writing;)

*A Face in the Crowd tells the story of Lonesome Rhodes (Andy Griffith, pre-Mayberry) and his meteoric rise from a guitar-picking Ozark hustler cooling his heels in a rural jail to a demagogue, TV star and political king-maker. Rhodes' undoing comes when, off-camera, a live mic broadcasts him mocking his audience as "idiots," "morons" and "guinea pigs."

Sunday, August 3, 2008

Gone Fishing

When going to jail started sounding like a restful change of scenery I knew it was time to unplug. So I decided to turn off the computer and hang out the electronic "gone fishing" sign

I'm heading for Sedona, AZ tomorrow for a week of communing with the Cosmic Vortex, and adjusting my aura and balancing my chakras with plenty of margaritas. After that I'm going to play tourist in my home turf, the San Francisco Bay Area. And, no, I will not be checking email, answering the phone, or Twittering. You are still alive even if no one is Twittering you.

See you in September or thereabouts.