Vonage tentatively settles AT&T patent lawsuit, reports loss

Vonage reaches a tenative agreement to settle a patent infringement lawsuit by AT&T.

VOIP provider Vonage has tentatively agreed to settle a patent infringement lawsuit filed by rival AT&T, with the smaller company paying about US$39 million, Vonage announced.

Vonage's tentative agreement with AT&T follows patent settlements last month with Verizon Communications for US$80 million to US$120 million, depending on the results of its appeal of a court ruling on two patents, and with Sprint Nextel for US$80 million.

"With most of the litigation behind us, let me say we're excited to refocus on running our business," Jeffrey Citron, Vonage chairman and interim CEO, said during a conference call on the company's quarterly financial results.

The AT&T patent infringement lawsuit was over technology called "packet telephone system" that allows VOIP (voice over Internet Protocol) to work. The two companies will "work diligently" to finalize the settlement, Vonage said in a news release. "If negotiations of a definitive settlement agreement fail, then Vonage intends to vigorously defend itself in this matter," the company said.

For the third quarter, ended September 30, Vonage reported a net loss of US$161.8 million, compared to a loss of US$62.2 million for the third quarter of 2006. Excluding legal charges, such as the payments to Verizon and Sprint Nextel, the company's net loss was US$16.2 million.

Vonage's revenue for the quarter was US$210.5 million, up from US$161.8 million, in the third quarter of 2006. Vonage added 78,000 subscriber lines during the quarter, compared to 57,000 in the second quarter of this year. Vonage now has 2.5 million lines in service, the company said.

The company is working to improve its marketing efforts and customer experience, Citron said. Vonage's customer turnover, or churn, rate of 3 percent was "simply unacceptable," he said.

Customers calling Vonage to report problems often have long hold times and sometimes have to call several times to get their problems resolved, he said. Those situations are also "unacceptable," Citron said.

Vonage is launching a comprehensive plan to improve customer service, including simplifying the installation of the Vonage service, implementing new call-answering technology, and adding new customer relationship management software, Citron said.

"While churn remains a problem, we know from our survey data that this issue is poor execution on our part, and therefore, we believe, a fixable one," Citron said. But the company doesn't expect a turnaround in the customer service area for "a quarter or two," he added.

Join the PC World newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service
Show Comments

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?