Cable and Vonage, and Net2Phone and Cable ..
VONAGE:
As of December 9, 2004 Vonage said it had 300,000+ lines in service.
Homes that can be marketed to vis-à-vis cable – 135,000, and have been since 2003.
Homes that can be marketed to vis-à-vis Earthlink, 780,000, and have been since 2003.
Homes passed vis-à-vis the utility district, 10,000, and have been since 2003.
Vonage didn’t cite its other partner names in its December 2004 discussion of the company, when it noted the Galaxy Broadband agreement (below).
Vonage’s rep is built up on being first to market.
As I pulled up Vonage articles off their website, I noticed something interesting. On its website, Vonage often does not list the year agreements are signed – even though it duplicates the whole published news announcement, including day and month. Years agreements are signed are being excised in the website news article yet show in the first news release to the public.
December 20, 2004: Vonage signed an agreement with Galaxy Broadband, which provides satellite-based Internet access to remote locations in Canada such as logging camps, oil rigs, and hunting and fishing lodges. This is not voIP over satellite. (No numbers cited.)
Then – nothing else for Vonage for 2004, save agreements to sell Vonage equipment in retail stores in the U.S. Vonage is now sold directly and through retail partners such as SAM's Club, Amazon.com, RadioShack, Best Buy, Circuit City, Staples, Fry's Electronics and Office Depot. (These retail partners sell packages from the other retail voIP providers, a recent voip blogger went into several of the stores, and asked sales people about Vonage. He was told, “It’s over there on the shelf.”) Vonage is spending $75 million on marketing on 2005, and spends approx. $750 to get each customer (per a voIP blog analysis). Vonage needs to IPO.
Early in 2004 Citron said cable msos better do deals with him or else.
December 22, 2003: Vonage today announced that it has signed an agreement with Associated Network Partners, Inc., a consortium of 275 independent telcos, which will allow ANPI’s members to offer Vonage’s voice-over-broadband service. (No specific independent telco agreements were subsequently announced that I could track.)
December 8, 2003: – Vonage, a leading provider of digital telephone service, today announced a co-branded partnership with Mid-Hudson Cablevision to deploy broadband telephony service to Mid Hudson’s cable television passings in the following New York State counties: Columbia, and Greene. (No numbers listed.)
December 4, 2003: Vonage has a co-branded agreements with Cable NuVision in New York City to market local and long distance phone service. (No subscriber numbers listed.)
December 2, 2003: Vonage, a leading provider of broadband phone service, today announced a co-branded agreement with CableAmerica to deploy broadband telephony service. The revenue sharing agreement will makeVonage’s unlimited local and domestic long-distance telephony service available to Cable America’s 65,000 cable customers in Arizona, Missouri, California and Michigan.
September 2003: Vonage announced private-label reseller agreements with two cable operators, Armstrong Cable, serving mid-western states, and Advanced Cable Communications, serving cities in Florida. The two agreements market Vonage to about 70,000 high-speed data customers served by the two cable companies.
September 4, 2003: Vonage announced a co-branded partnership with the Coldwater Board of Public Utilities to deploy broadband telephony service to Coldwater’s several thousand cable television passings in Coldwater, Michigan. The city is trying to create competition for Verizon Communications, the lone telephone provider in this town of about 10,000 residents and also hoping to get a competitive advantage over Charter Communications.
March 17, 2003: EarthLink and Vonage inked a reseller agreement. EarthLink has more than 780,000 broadband subscribers. The company is hoping value-added services like the Unlimited Voice offering will help lure broadband customers.
NET2PHONE:
Net2Phone has voIP deals with the following, passing 2 million plus homes; that number doesn’t include the following (below): Cebridge, TSTT, Cable of St. Kitts, or Altice’s expanded footprint (on December 22, 2004, Altice announced it, along with Cinven (an investment house, has purchased France Telecom and Vivendi’s joint cable activities. The deal is to be completed in the first half of 2005; it creates a new separate footprint with 1.7 million customers and a cable network linking up 17 of France's 20 biggest cities).
December 6, 2004: Millennium Digital Media signs multi-year contract with Net2Phone to deliver full-featured telephony solutions throughout Millenium’s footprint, covering 255,000 homes, including Seattle and Baltimore; early 2005 rollout.
November 15, 2004: Signed a multi-year production agreement with Bresnan Communications, the 13th largest US cable operator with more than 500,000 homes in its franchise. Bresnan expects to begin offering cable VoIP phone service to their subscribers in the first quarter of 2005.
November 4, 2004: Net2Phone announced contracts to provided outsourced cable VoIP services for Coditel Belgium, Coditel Luxembourg and Est Videocommunication in France, all members of the Altice One group, representing franchises passing 520,000 homes. These cable franchises will begin offering Net2Phone's cable VoIP solution to their subscribers in the fourth quarter of 2004. [Altice is expanding its footprint significantly; no comment yet re using Ntop there)
October 21, 2004: The National Cable Television Cooperative (NCTC) named Net2Phone as its first "Platinum Vendor" for IP telephony services. NCTC is a purchasing cooperative that represents more than 1,000 US cable system operators, who serve more than 14 million subscribers. Specific member agreements include: -- Rural West (4,000 subscribers), a US cable operator serving numerous military bases. Rural West plans to roll out telephony with Net2Phone before the end of the year in cable systems across Colorado, Arizona, California, Hawaii and selected military bases overseas.
October 6, 2004: Net2Phone, a leading Voice over IP (VoIP) enabler for service providers, today announced that it has been selected by TV Cidade, the third largest cable operator in Brazil, to provide a suite of broadband telephony solutions to be offered in the Brazilian corporate market. (120,000 homes passed)
August 5, 2004: Net2Phone selected by Primeira Escolha, a Brazil licensed telecommunications operator, to provide a suite of Voice over IP (VoIP) solutions to be offered in the Brazilian market. (homes passed – not worked out)
June 17, 2004--Net2Phone and Cable & Wireless Cayman, Ltd., the preeminent telecommunications provider in Cayman, today announced that they have signed an agreement whereby they will offer retail VoIP services powered by Net2Phone in Cayman. (homes passed – not worked out)
May 3, 2004: Net2Phone to provide cable voice services to Northland Cable Television, passing more than 315,000 homes in the United States. Net2Phone’s hosted telephony platform empowers Northland to offer their customers phone service bundled with its current cable TV and high-speed Internet products. Northland is the 18th largest US cable operator.
May 24, 2004 – Liberty Cablevision of Puerto Rico, and Net2Phone launched residential telephone service. “Liberty VoiceLinks” – available to nearly 300,000 homes passed in Liberty’s franchise footprint. [What did Liberty Cablevision anticipate re subscribers: "Ntop got Liberty Cablevision up and running in 60 days in Puerto Rico. Liberty Cablevision is introducing broadband data and primary-line telephony service at the same time. Liberty Cablevision said at that time it was shooting to have 4,000 PacketCable telephony customers by the end of the year – we know they have more than 7,000 (10,000 global, including VoiceLine) – so they doubled the amount anticipated. Why are they embarrassed about it – Vonage, Cablevision, etc., are all in active deployment and several hundred thousand subscribers. And NTOP investors expected more, unaware of Liberty’s anticipated year-end total.]
March 8, 2004 - Net2Phone and The Cable of St. Kitts today announced a memorandum of understanding to deploy a suite of Net2Phone’s VoIP services, including Net2Phone VoiceLine, throughout the Federation of St. Kitts and Nevis. The Cable has offered Cable Television Services on the island of St. Kitts for more than twenty years with its cable TV network passing more than 98% of homes and businesses on the island.
February 09, 2004: Net2Phone Global Services and Telecommunications Services of Trinidad and Tobago announce an agreement to market a suite of co-branded retail services in Trinidad and Tobago using Net2Phone's hosted VoIP platform. Under the two-year exclusive agreement, Net2Phone will work in conjunction with TSTT to deliver VoIP calling cards, including prefix dialing services, and Internet telephony call shop services.
*November 19, 2003: Cebridge Connections, a St. Louis-based cable operator managed by Cequel III, LLC, and Net2Phone Cable Telephony, LLC, (NCT), a wholly owned subsidiary of Net2Phone, today announced their entry into a memorandum of understanding, subject to negotiation and execution of a definitive agreement, under which Net2Phone would provide cable voice services for Cebridge. Cebridge Connections expects to begin the process of deploying cable telephony services by the first quarter of 2004, starting with selected markets in Texas and Missouri that represent about 150,000 high-speed-data homes passed. No full production agreement signed and announced.
LATE 2004/2005 Issues -- (those cable msos are now rolling out voIP):
1) WAIT TILL NEXT YEAR
MONDAY, AUGUST 30, 2004
Wait Till Next Year
Barron’s Online
August 20, 2004: “Vonage: Within the consumer sector, this clearly is a company worth keeping an eye on. Vonage offers inexpensive phone service through voice-over-Internet-protocol technology, or VOIP. The company . . . is forcing conventional telecoms and cable operators to play catch-up. Including its latest round of fund-raising, completed last week, Vonage to date has attracted more than $200 million in venture backing from firms including New Enterprise Associates and 3i.
– Still, as a long-term investment, Vonage's chances of success are less certain. Unlike local phone companies and cable providers, it can't bundle its VOIP service with TV or other offerings. There are drawbacks to the service, as well, most notably that it doesn't work during a power outage and doesn't immediately tell 911 operators where a call originated.”
2) NETWORK PLAYERS (this should probably also include Sprint)
August 12, 2004:
Moving Into Battle: Bells vs. Cable plus AT&T
atlantic-acm.com
“What does all this mean for smaller VoIP players such as Vonage, which has struck its own agreements with small cable operators?
It is important to keep in mind that as soon as VoIP emerged as a legitimate business model for the telecom industry, Vonage’s days as a market leader were numbered. When major players jump into a growth niche, they tend to become leaders by virtue of size, reach and brand identity.
At the same time, smaller players can benefit from the activities of industry giants because it takes deep pockets to drive adoption in the mass market (such as the U.S. prepaid experience), at least until competition drives pricing downward to the point at which insufficient margin exists to generate profits without significant scale. Accordingly, an argument can be made that Vonage and similar players will benefit from AT&T’s activities in the near term, if not longer. Debates about the future of such players beyond the near-term window are moot as any such providers that demonstrate success are highly likely to become acquisition targets.”
3) NETWORK NEUTRALITY
Blog comment: “More evidence that VoIP systems aren't quite as reliable as your traditional phone service. It turns out that AT&T CallVantage customers can't call VoIP users on certain other cable VoIP systems from companies like Adelphia and Frontier. AT&T insists it's a glitch that they're fixing, but it certainly brings up questions of network neutrality. The fear has been that cable providers would harm calls on other VoIP systems in order to make their own VoIP look better -- though, everyone insists that's not the case here. Still, it seems suspicious that the blocked calls involve competing cable companies. Meanwhile, Broadband Reports notes that Vonage is down again, which seems to be happening a lot lately.
4) COMPETITION ON PRICE
Last week of December, 2004: AT&T quietly announced that it is going to compete on features, and raise rates. The large cable msos always said they were going to compete on features, and not lower price. The issue is how successful AT&T has actually been (no announced subscriber numbers for AT&T, while Cablevision has in excess of 250,000).
Vonage can compete on price; it can’t compete on quality of service – at least it can’t provide better quality of service than anyone else, and can’t match the quality of service of the PacketCable voIP rollouts. If AT&T can’t make it on price – how can Vonage? Look at what they are spending per subscriber.
5) CABLE LINE SHARING: Absolutely important --
Cable line sharing – depends on “Band X” case outcome.
What if cable didn’t have to share the line with Vonage? The FCC has decided that the Bells don’t have to keep wholesale rates low to subside carriers like AT&T, Sprint, and MCI – which don’t have local networks but were dependent on the Bells for wholesale rates that were low and frozen. AT&T was forced to exit the local loop business. AT&T has stopped looking for new local telephony customers.
a) “The Supreme Court has announced it will hear the "brand X" lawsuit, which could impact your choice in cable broadband providers. By ruling Cable broadband an information service instead of a telecom service, the FCC freed cable providers from significant regulation, including the need to share their lines with rivals. If those rivals win, you could see companies like Earthlink allowed to provide service over cable company lines.”
biz.yahoo.com
*****
blog.cabledatacomnews.com
“Supreme Court Will Review Brand X Case
Posted by Alan Breznick
Posted on Dec 06 2004
Cable industry lawyers are exchanging high-fives today after the U.S. Supreme Court agreed to take a hotly disputed case involving the regulatory classification of cable-modem service.
In a widely awaited announcement Friday, the high court said it will review a controversial lower court decision that could lead to open-access mandates for cable operators.
The earlier ruling in the Brand X case, handed down by the the U.S. Court of Appeals for the Ninth Circuit in California, classified cable high-speed data as partly a telecom service. That would leave it open to traditional phone regulations, which mandate line-sharing. So cable operators could find themselves facing open-access obligations if the Ninth Circuit's ruling stands.
With backing from both the cable and phone industries, the FCC has sought to treat cable data as solely an unregulated information service. But the Ninth Circuit, standing by its earlier decision, turned down the agency's appeal.
Now, the Supreme Court will apparently decide the issue sometime in the spring. Cable lawyers are hopeful that the high court will rule in the industry's favor because the justices, if they agreed with the Ninth Circuit, could have just rejected the case. But consumer advocates and ISPs, while disappointed by the review decision, said they're also confident of winning.
*******
”What’s at State in Brand X
December 17, 2004
research.yale.edu
“What's at stake here? A bunch of things, but high on the list is local regulation. Cable and telecommunications services are primarily regulated by the FCC, but there is also some room for cities to regulate their local companies. Information services, on the other hand, don't just get a free pass from the FCC, but also don't cross the thresholds that would let local franchising boards get into the action. Those boards like to do things like require "open access" -- make cable operators, for example, open up their fiber to competing ISPs. Unsurprisingly, cable companies trying to roll out cable modem services hate open access requirements. Especially if the local phone company's DSL offerings have to live with various telecommunications service regulatory hobbles, it's awfully nice to just be a comparatively unregulated information service.
Thus, in the Brand X case, all sorts of companies, governments, and public interest groups sued to try to get a favorable legal decision on how the Telecommunications Act applies to cable modems. Cities want them to be "cable services." Consumer groups and ISPs want them to be "telecommunications services." The cable companies, of course, want them to be neither: just plain old "information services." And Verizon, seeking to level the playing field in another way, wants to have DSL classified as an "information service," too. “
2003, 2004, 2005:
It’s made a difference in looking at Vonage and Net2Phone head on. You can see where they diverge -- new marketing that has picked up cable msos finally for Net2Phone, and that's not done. Vonage isn’t getting cable deals. Big cable companies and big telecom companies are natural players. Net2Phone has marked up a volume of new roll-outs to cable providers in 2004, who can’t afford to and don’t have to the resources to commit to voIP. These will be deployed. And per the conference call, there are more out there and more being sought.
Vonage is aggressive in marketing; it’s the predominate independent voIP player in the market because it was there able to sell to individuals, and has forced cable and telecom to compete with voIP offerings of their own. It does great PR.
Vonage is income dependent on voIP.
Cable, and even telecom, are income dependent on the bundle of services rolled out (telecom attempting to roll out cable services). Vonage is spending a heck of a lot of money, to get here. And an IPO would be successful based on what it has done, and its rep. and aggressive PR posture.
But:
a) Is Vonage Overvalued?
voxilla.com
Good question, and still looking for an answer.
Vonage isn't exactly everywhere though it is made to appear that way -- it's 'moving into other markets.' It's moving into Canada, on a second try. It is moving into Mexico, but those services are sold in the U.S. (voIP not quite legal in Mexico). It is moving into Britain, but British Telecom is the predominate player and market controller, even though their voip-like BT Communicator service apparently sucks pretty big ducks. (Murdoch/News. Corp. partners with British Telecom on joint ventures.)
VoIP companies like Vonage are not carriers, so they sign wholesale agreements with IXCs to carry their traffic to the destination ILEC, where the conversion is made from the IP network to the public network to terminate the call. Companies like Vonage have no agreements with the cable companies they piggy-back over when they sell telephony that has to run over broadband services to individuals, and the cable mso is not part of the income loop. An adverse Brand X decision could displace them from the market.
Net2Phone partners only with cable msos to provide cable telephony service. Net2Phone isn’t competing with cable msos it doesn’t haven’t agreements with, because it isn’t selling voIP independently to their subscribers. Net2Phone routes traffic through IDT Corporation, which has agreements with other carriers globally, including the Bells. Net2Phone has a separate carriage agreement of its own with Level 3. It has network access at both ends.
b) Jason Talley gets in MSO's crosshairs
December 29, 2004
ispcon.blogs.com
"Talley, who is CEO of Nuvio, a private-label VoIP firm (out of my home town of KC) is mixing it up with Cable providers over the Title I and II authority distinction of services that ride on cable pipes.
So Vonage, AT&T, Nuvio and any other indie-VSP out there is going to battle with Cable to try and avoid intentional QoS degradation while the Brand X case is played out the first part of next year to determine just what kind of service it really is. Going to get very interesting on the residential end here, my friends.
Powell's love affair with VoIP may well come to an immediate end here real soon. Once the MSOs wake up and start to offer a competitive service to the thousands of lines running over their pipes, they won't let him think or act as if facilities-free VoIP is such a neat-o business. Talley's move is preemptive and its probably good to start making noise about it before it gets really bad. He's got to dig up some evidence to support the claims sooner than later. MSOs are already frustrated to realize that the extra $19.95/mo isn't going into their pockets, once they figure out how easy it would have been (relative to Vonage or others), its not going to put them at ease. The battleground for residential services is clearly in Cable for the next 6-9 months." |
