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. 

But Will They Come?

In an thoughtful post this week, Phoneboy Dameon Welch-Abernathy poses the question: Is there Money in Voice APIs? In his exploration of this question, Welch-Abernathy looks at Jaduka, IfByPhone, and Ribbit.

He writes: "But is simply providing an API to your telephony infrastructure enough to prompt the world to beat a path to your door? Don’t count on it." The bottom line is that those mashups have to be useful answers to real business problems.

FCC VoIP Ruling Good -- But Why Not Apply Them to Everyone?

In a post last week, Jeff Pulver rallies the troops around the FCC's policy of exclusive federal jurisdiction for VoIP. The provocation for this decisions was a Nebraska case where standard telephone service regulation rules to Internet based voice communication in contradiction to FCC policy."

All well and good. But let's look at this beyond simply what's good for the VoIP industry.

In the early days, no one would confuse a VoIP communication with a "phone call" - you made the call differently, you used a different device. VoIP operated in a different context in our lives. So the regulations applying to phone service didn't apply -- it wasn't phone service.

But when Vonage "consumerized" VoIP by marketing it as broadband phone service, the duck rule applied. If it walks, talks, and acts like a phone call it's a phone call -- as several 2005 lawsuits against Vonage over emergency 911 calling made abundantly clear.

So here's the bottom line: If current telecom regulations are counter-productive or have outlived their usefulness -- for example the Universal Service Fee underwriting rural phone service -- then let's abolish them for all service providers. But if these regulations have merit, they should -- pardon my heresy -- apply to all providers, including VoIP.

After all, what's sauce for the goose is sauce for the gander.

8x8 - Incipient VoIP Patent Troll or 21st Century Tom Edison?

Tom Keating, among others, speculates about the implications of 8x8's most recent VoIP patent. (Full disclosure: I'm a Packet8 customer).

But speculation about whether 8x8 is preparing to open a new VoIP patent trolling profit center misses a more interesting point -- not to mention the fact that there is nothing in 8x8's history to indicate an interest in trolling for patent infringements. If they were so inclined, it's unlikely they'd need another patent.

What's important about the new patent is the fact of it, what it says about 8x8 as a company -- namely, that they invent things themselves. Now, I know that inventing and building your own "mousetrap" -- or VoIP gateway -- has been out of style for the last decade. But some of us remember when "virtualization" was called "time-sharing."

Doug Mohney's Requiem for VoIP

Doug Mohney's editorial in today's FierceVoIP is a trenchant comment -- maybe eulogy is a better word - on the failure of the VoIP industry, after more than 10 years, to deliver any more than hype and cheap long distance. Doug writes:

"[Jeff] Pulver wanted purple minutes, minutes of IP traffic part of an enhanced application that might include voice, data and video content. Six years later, Jeff is still looking for his honest purple minutes and innovative applications. Voice 2.0 is here, but there's been no big killer application, it's all just variations of a theme for call forwarding and voice mail and some APIs to slap voice into a web service."

Amen, brother.

Skype-Killer from Telcos? Can Elephants Fly?

When I read Om Malik's "Global Telcos Plotting a Skype Rival" post this morning, one word flashed in my brain: PL/1 -- IBM's 1960s Cobol-like programming language. I learned it many moons ago, working in the IT department of a public utility. If you never heard of PL/1, there's a good reason. 

It had all the earmarks of something that was designed by committee. It was big and unwieldy, and it did everything -- almost. That was the problem. It almost did what you wanted, but not quite. 

That's the picture I get from a dozen or so telecos trying to build a VoIP client to compete with an established, easy-to-use tool that's compact, efficient and honed for its intended purpose. It's likely to be as successful as PL/1. I doubt Skype has anything to worry about from that quarter. 

HelloSoft Converges on Nokia E-Series

Given that all I really care about is making a phone call, I like HelloSoft because they're greasing the skids for making phone calls without worrying about where the call actually happens. So even though I don't have a smartphone running Symbian -- at least, not yet -- I was excited by the company's news tonight about its HelloMobileCommunicator-FMC for Nokia’s E-Series handsets. HelloSoft's technology delivers seamless handoff between any access network -- Wi-Fi, WiMAX, WCDMA, EVDO and HSDPA/HSUPA. I know because I've used it.

With Nokia owning the largest single market share -- about 40 percent - of the mobile handest market, this promises a huge advance for end users. "We've leveraged Nokia's E-series to give the market more choices for Fixed Mobile Convergence," says Ron Victor, HelloSoft Vice President and General Manager for Business Development.

Expect to hear more from HelloSoft in coming months.

Reflections in VON's VoIP Eye

By now everyone has heard the buzz about VoIP's pioneering conference may be joining Webvan and Pets.com in the dustbin of tech history. If you missed it, here are the reports from Marc Robbins and Om Malik. 

However, as of this writing PulverMedia still appears to be in business and the buzz looks more like the same two stories repeated hundreds of times across the VoIP blogosphere. But then, think of all those links pushing them to the top of the Google list. It's profitable as well as easy for facts to become casualties.

In the meantime I've been reflecting on Spring VON. Yes, it was very much a VoIP trade show – I think it was the "bottle blondes" in hot pants that set the Shriners Convention tone.

But as exciting at the early VON conferences were, most of us wouldn't settle for the VoIP call quality of ten -- or even five--years ago. There's something to be said for a business that's solved the basic problem. Good sound quality on phone calls isn't a bad thing.

Driven by my compulsive need to find narrative – as well as avoid honest work – I picked up on several everything-in-a-box products designed with the very small office in mind.

First up is British Columbia-based Sutus' office-in-a-black-box, Business Central. According to the company, the 12 x 12 x 3 box replaces your PBX, firewall, router, file server, wired and wireless LAN, email Server, VPN remote access support, PSTN and VoIP gateways, automated backup and even office collaboration tools. Quite a mouthful.

In a quick demo, I was able to set up a company very quickly with the GUI and make a phone call. However, some people I spoke with are skeptical that you can really put all that in a box and have it all perform at business-class levels. However, if you're operating a small office with a phone system from the 1980s and a consumer-grade Internet connection, it seems like this would have to be an improvement and a quick way to transition to VoIP.

A Business Central box costs $4,000 for 1 to 9 users and $5,500 for 10+ users, with no annual subscription fee. It runs on Windows and Mac and supports any standard Polycom IP phone.

Linksys continues to evolve their VoIP devices, packing more and more functionality into what's, literally, at hand. The $115 WRP400 broadband wireless router includes a high performance processor to handle data, voice and video; builds in the ATAs and security; and lets you run two networks. All in a package not much larger or heavier than my four year-old Palm Treo.

In the cute department, the SPA 962 includes a photo album display, which, when you're not looking at pictures of the grandkids, can be used for RSS feeds, IM chat and SIP text messages -- handy for those of us who find ourselves cooking dinner with the laptop at hand to IM our kids when dinner's ready.

For the more serious, the $160 WIP310 wireless phone comes with Linux and the SIP stack built in, and operates seamlessly with all Linksys routers.

Communigate has been busy as a clan of beavers erasing the distinction between the desktop and the Internet with the new release of its Pronto unified communications dashboard. Pronto is based on Adobe technologies and the new release adds Adobe AIR for unified multimedia and highly interactive – Web 2.0 -- applications.

Last but not least, I finally found a reason for a Skype phone to exist. IPEVO's $170 SOLO Skype desk phone is ideal for your grandparents. It comes with the Skype VoIP client built in – no computer required – and plugs directly into a broadband Internet connection. IPEVO also offers a $30 Skype USB handset.

Open Source VoIP Hitting Mainstream?

Small biz newsletter bMighty has a story today about open source VoIP -- a clear indication that the idea has percolated into the mainstream. But small businesses, which typically don't have extensive in-house technical resources, need to look carefully at open source solutions.

Asterisk, the first and best-known open source IP-PBX, is notoriously difficult to use and manage -- sending users looking for an interface to ease the pain. But too often the interface turns Asterisk PBX into another closed system with all the drawbacks of a proprietary PBX -- high cost and limited choice. In this scenario, the only party that benefits from the open source is the vendor who is able to jump start his development with free source code.