Troubled voice-over-IP service provider Vonage
is rolling out new products and services at the Consumer
Electronics Show in a bid to reverse its downward spiral.

Intellectual property lawsuits brought by Nortel,
Verizon, Sprint
and AT&T
have distracted Vonage for the past year. During that time, customer acquisition
slowed and defections grew to 3 percent in the third quarter last year.

But Vonage says it is ready to turn a corner. The suits were a weapon that
the phone companies used to defend their businesses in the face of competition
from Vonage, said Jeffrey Citron, chairman, chief strategist and interim CEO
at Vonage. "It was a successful strategy. It distracted us and slowed us
down," he said. "Instead of rolling out MyVonage six months ago, we
were dealing with workarounds." MyVonage is the name of a new campaign
at the company to introduce a host of services geared toward customer lifestyles.

While the lawsuits were ongoing, the company was developing workaround technology
that would allow its business to move forward without infringing on the relevant
patents. Vonage has now settled all four major lawsuits against it.

That has left Vonage free to spend more time focusing on its business, said
Citron. It hired new engineers who designed a router, the first time Vonage
will sell its own router rather than one from Cisco or Motorola.

The router has an unusual feature: a screen. It displays information about
problems that the modem might have in plain language. For instance, rather than
showing a flashing light like most routers, this one displays words telling
users that the Ethernet cable is unplugged.

New customers will be able to buy the V-Portal router online starting Wednesday
for US$9.99 after rebates.

In addition to the new router, Vonage is beginning to roll out many new features
that it is showcasing at alpha.vonage.com. For instance, customers can now use
voice-activated dialing, simply speaking a name to place a call. Customers can
also send a voice message to anyone via e-mail. The message arrives as an attached
audio file.

Call blast is a new feature that lets customers send out a voice mail simultaneously
to a group of people. Citron anticipates that will be useful when he's in charge
of calling 15 kids who go to school with his kids to tell them there is a snow
day.

"We expect to roll out a new capability every month or two," Citron
said.

Vonage also plans to offer another service that lets users access the voice
recognition system from any phone to make a call through Vonage. The company
is also testing software that would let customers make Vonage calls via software
on their laptops.

Many of these services are free to Vonage customers.

Citron said that the future for Vonage will be brighter. Despite continued
high churn, last quarter it had a gain of 77,000 customers, which he says isn't
as good as it should be. The company has worked to cut costs, and improvements
in customer service should help decrease customer losses, he said.

In the meantime, speculation continues to circle that the payouts Vonage made
to settle the lawsuits will cripple it. But Citron was confident that the company's
troubles are behind it.

IDG News Service

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