Vonage inks deal with VoIP Inc bypassing Verizon patent claim

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Tom Keating
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Vonage inks deal with VoIP Inc bypassing Verizon patent claim

Update 5pm 4/3/2007 - please see the update at the bottom of this post - Vonage has performed an end-around the Verizon patent by inking a deal with VoIP, Inc., a company that claims to hold several VoIP patents. I actually thought that Vonage could approach VoIP, Inc. since I knew they owned several VoIP patents, however, I second guessed myself when I thought "VoIP, Inc. is a direct competitor to Vonage. Although VoIP, Inc. is classified as a CLEC and Interexchange Carrier (IXC), they offer nation-wide termination and origination. Why would they want to do a deal with Vonage?" It didn't occur to me that Vonage would be stuck between a rock and a hard place and would have to negotiate with a pseudo-competitor in order to stay in business. I did know Vonage has something up their sleeve, when I wrote in this article, "I was just thinking about this some more and it occurred to me that Vonage must have contingency plans in place to work around the Verizon patents." Well, it appears the ace up Vonage's sleeve was to do a deal with the devil (figuratively speaking). According to Arc Technica, "By signing the agreement with VoIP, Inc., Vonage has provided itself with a measure of protection against the injunction. VoIP, Inc. owns its own network, describing VOICEONE as the "first, seamless nationwide IP network." Perhaps most crucially from Vonage's standpoint, VoIP, Inc. claims to own the intellectual property around its network and services. After the two-year agreement has run its course, the companies have the option of continuing it on a month-to-month basis."

I know several of TMC's reporters and staff know VoIP, Inc. very well, including Shawn Lewis the COO + CTO (the "brains" of the operation I'm told) and Steve Bratton the National Sales Director, as well as the CEO. I'll see if I can dig up more information on the deal between Vonage and VoIP, Inc. Though my guess this deal is under non-disclosure. Well, at least Vonage customers can rest easy that their service isn't going to be shut off. Wonder if Verizon is happy about this. They may have caused Vonage to pay more money to VoIP, Inc. but their "end game" was probably to shut Vonage down entirely. I'm guessing VoIP, Inc.'s stock (currently $0.23/share) will skyrocket (maybe Vonage's too) when the market opens at 10am. You're welcome for the stock tip! ;)

Update 5pm 4/3/2007 - I received this from Kristy Heintz at Weber Shandwick - a PR firm representing Vonage stating that the deal with VoIP, Inc has nothing to do with the Verizon vs. Vonage lawsuit. This is a bit surprising since Arc Technica is usually a very reliable source.
I saw your blog this morning about Vonage and VoIP Inc. and wanted to clarify the inaccuracies mentioned.

The VoIP Inc. 8-K filing has caused much confusion in the marketplace. Vonage’s deal with the company is a termination deal, and is completely unrelated to the development of workarounds. Basically, VoIP Inc. is no different from any of the carrier partners Vonage utilizes to get inbound calls from the PSTN to customers, or vice versa, IP calls to the PSTN. Again, this deal is completely unrelated to the pending litigation between Vonage and Verizon.

Could you please change your blog to reflect the correct information? Please don’t hesitate to contact me if you have any questions.

Here is a link to Eric Bangeman’s updated blog post on Ars Technica: http://arstechnica.com/news.ars/post/20070402-vonage-hangs-up-on-verizon-patent-infringement-with-new-agreement.html.

After the story ran, Ars was contacted by a Vonage spokesperson that claimed that the agreement with VoIP, Inc. has "nothing to do with the patent situation." She described the deal as another termination deal similar to those Vonage has signed with other carriers, reiterating that the agreement was unrelated to the Verizon agreement. However, an unnamed source at VoIP, Inc. suggested to TelecomWeb that Vonage would indeed be using its network to carry its calls, while refusing to speculate about the patent dustup.


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