| On March 8th, a federal jury found that Vonage Holdings infringed on three Verizon patents, fueling speculation that the company could have to shut down its VoIP service. This report analyzes the impact that this case will have on Vonage as well as otherindependent VoIP providers, and explains why the jury verdict will generate increased adoption of cable phone service.
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OVERVIEW
IMPACT ANALYSIS
- RBOCs Not Focused on VoIP
- Threat of More litigation
- PacketCable
- Cable 'Triple-Play'
CONCLUSIONS IN BRIEF
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Patent Litigation to Crush Independent Broadband Phone Services, Report Predicts
SILVER SPRING, MD—The ongoing patent dispute between Verizon and Vonage signals the looming end of independent Internet phone providers as a major force in the residential voice business, market research provider Pike & Fischer concludes in a new report.
The two companies have been locked in a lawsuit over the use of technology that connects Internet phone calls to traditional phone lines, and Vonage faces similar complaints from other companies—including Sprint. Publicity over the patent disputes will leave many customers skeptical about the future of Vonage, a company already suffering from slowing subscriber growth and ongoing financial problems, Pike & Fischer says in its analysis.
The litigation also raises concerns about intellectual property suits being filed against other independent broadband phone providers, such as Skype and SunRocket, says Scott Sleek, director of P&F’s Broadband Advisory Services and author of the report. Those concerns will prove to be a boon to the cable industry, Sleek said.
“These lawsuits will prompt more and more consumers to migrate to cable digital phone services, which have not been subject to the same type of patent disputes that have plagued services like Vonage,” he said. “Cable operators will pick up the vast majority of the customer base and eventually force most of the independent providers out of the market.”
Verizon says it has lost hundreds of thousands of customers to Vonage, which pioneered the delivery of low-cost phone service using technology known as Voice over Internet Protocol (VoIP). But despite crippling Vonage as a competitor, Verizon won’t become a major force in the VoIP business, P&F says. The company has had tepid success with its own Internet phone service, VoiceWing, and now focuses on selling its traditional phone service in discount bundles, the report concludes.
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Scott Sleek
Scott Sleek, Director of Pike & Fischer's Broadband Advisory Services, oversees the day-to-day operations of our market research services and leads the development of analytical publications and briefings. As part of his duties, Scott serves as Managing Editor of our online newsletter Broadband Daily. Scott also oversees the development of all Research Reports & Briefs and manages the Trackers & Projections database. He regularly tracks subscriber growth, market penetration and revenue growth in the markets for high-speed Internet, packet-switched telephony, interactive TV, wireless data and other forms of broadband communications and entertainment. Scott also fields all requests for customized research and works closely with customers to fulfill their market data and analysis needs. Scott has more than 20 years of experience as a writer, editor and researcher. Contact Scott at 301-562-1530, x291 / ssleek@pf.com.
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