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Vonage Holdings Corp.
Traded as NYSEVG
Industry Communications services
Founded January 2001 (2001-01) in Edison, New Jersey
Founders Carlos Bhola
Jeff Pulver
Jeffrey Citron
Headquarters Holmdel, New Jersey, United States
Coordinates 40°20′52″N 74°11′17″W / 40.347887°N 74.188123°W / 40.347887; -74.188123Coordinates: 40°20′52″N 74°11′17″W / 40.347887°N 74.188123°W / 40.347887; -74.188123
Area served
Key people
  • Alan Masarek (CEO)
  • David Pearson (CFO)
  • Joe Redling (COO
Products Phone over Internet (VOIP) adapter and service subscription
Revenue Increase$221.8 million (2015)
Decrease$16.58 million (2015)
Profit Decrease$8.34 million (2015)
Total assets Increase$691.15 million (2015)
Members 2.5 million subscribers (2014)
Number of employees
1,400 (2014)
Slogan The business of doing better.
Website www.vonage.com

Vonage /ˈvɑːnɪ/ is a publicly held Internet telephony service provider, providing commercial telecommunication services based on voice over Internet Protocol (VoIP). The company was founded in 2001 and maintains headquarters in Holmdel Township, New Jersey.[1]

The company first offered subscription service in the United States, then Canada in 2004 and the United Kingdom in 2005. As of 2014, Vonage claims approximately 2.5 million subscriber lines,[2] in conjunction with their services provided through mobile applications.

The company name is said to be a play on their motto "Voice-Over-Net-AGE".[citation needed] The company previously used the trademark "The Broadband Phone Company",[3] and changed the slogan later it to "Sounds Good".[4] Currently,[when?] it is using the slogan "Crazy Generous".


Jeff Pulver, VoIP proponent and owner of the VON conferences (today co-founder of Zula) incubated the then-called Min-X.com in Melville, New York between December 1999 and December 2000. Based on experience at Cantor Fitzgerald, Pulver developed a market in which IP telephony capacity could be traded in spot and futures contracts. By summer 2000, Min-X.com employed six technologists, former bond- or stock traders.[citation needed]

Jeffrey Citron, former CEO and majority shareholder at Datek Online, was the first major investor in the early development stages. In October 2000, Citron invested $1 million as seed capital.[5]

In December 2000, Citron and Carlos Bhola, an investment banker, coined the business's new name, borrowing from Pulver's acronym VON for Voice on the Net, and age, meaning time, to form Vonage.[citation needed] In January 2001, Vonage incorporated and moved to Edison, New Jersey.[6]

Initial public offering[edit]

Vonage -The Broadband Phone Company logo until 2006, orange block font over white
Vonage logo until 2006

In operation since 2001, Vonage went public on May 24, 2006 at a price of $17.00 per share, and dropped 23.5% to close at $13.00 the next day.[7]

In the period before the initial public offering (IPO), Vonage solicited its existing customer base with an offer to buy shares of the IPO.[8] Usually only large institutional investors such as banks are able to buy shares of an IPO.[9] The price fell 12.7% in one day to close at $14.85 on the New York Stock Exchange, the worst trading day for any IPO in 2006 up to that point.

As a result, "by the time customers learned that they had gotten shares, Vonage's share price had fallen" and they "were required to pay the higher $17 per share IPO price, and suffered losses when they later sold the shares."[10]

The IPO raised $531 million for the company, but Vonage's post-IPO handling of individual pre-IPO investors resulted in a class-action lawsuit.[11] The IPO and its immediate aftermath also earned Vonage a Business 2.0 Magazine award as 14th of 101 Dumbest Moments in Business for 2006.[12]

As of 2009, Vonage announced that an agreement had been reached to settle with IPO investors. The settlement included a release and dismissal of all stockholder claims against Vonage and its individual directors and officers who were named as defendants. As a result, the company did not incur additional litigation settlement costs other than nominal administrative fees and expenses.[13]

The firms underwriting the IPO, Citigroup, UBS, and Deutsche Bank, were fined and ordered to reimburse customers for "failure to adequately supervise communications" with investors.[13][14] NYSE regulators went so far as to investigate possible short-selling.[15]

According to Reuters, "Citigroup was fined $175,000 and ordered to pay up to $250,000 in restitution to 284 potentially eligible customers. UBS was fined $150,000 and ordered to pay up to $118,000 to 126 potential customers. Deutsche Bank was fined $100,000 and ordered to pay up to $52,000 to 59 potential customers."[10]

In the second quarter of 2010, with a change in management and improved sales, the company’s stock price increased,[16] and on June 15, 2010, Vonage rose 17.06 percent, $0.36 to $2.47, the "Biggest Percentage Price Gainer" of stocks on the NYSE.[17][18] In 2011, Vonage announced record high net income of $22 million, among other positive financial reports.[19]

Restructuring efforts[edit]

In 2006, in preparation for Vonage's IPO, Michael Snyder, former president of ADT Security Services replaced Vonage co-founder Jeffrey A. Citron as CEO.[20][21] In 2007, in a restructuring effort to reduce ongoing net losses in the face of double-digit stock price slips and patent infringement issues, Snyder resigned, and Citron returned as Interim CEO.[22] The company announced plans for 10% (180) layoffs, as it secured $215 million in financing.[23]

As part of its restructuring effort in 2010, Vonage paid off $41 million of its debt at par, negotiated the release of more than $40 million in cash from vendors and announced a comprehensive refinancing. This resulted in a $200 million, pre-payable term loan with interest rates at 9.75%. Vonage planned to get better terms by paying down debt ahead of schedule, and by achieving sustained financial performance. Between March and June 2011, Vonage prepaid $70 million, reducing the balance to $130 million, the year-end 2011 target.[24]

Recent Acquisitions[edit]

Since 2013, Vonage has acquired the following companies: Vocalocity, Telesphere, SimpleSignal, iCore Networks and gUnify.[25][26][27][28][29][30]

Patent infringement law suits[edit]

On June 19, 2006, Verizon filed a lawsuit charging that Vonage infringed on five of Verizon's patents related to its VoIP service.[31] The patents describe technology for completing phone calls between VoIP users and people using phones on the traditional public switched network, authenticating VoIP callers, validating VoIP callers' accounts, fraud protection, providing enhanced features, using Wi-Fi handsets with VoIP services, and monitoring VoIP caller usage.

In 2007, Vonage launched a viral marketing campaign and website freetocompete.com, which garnered press coverage about Vonage, its campaign, the lawsuits, and issues of competition with established telecom corporations.[32][33][34][35]

On March 8, 2007 a jury found Vonage guilty of infringing three patents held by Verizon, and not guilty of infringing two other patents. The jury ordered Vonage to pay US$58 million, and a royalty rate of 5.5% of every sale to a Vonage customer, back to Verizon. Subsequent to this jury award, there were a series of appeals and intermediate stays on payment. Vonage was punitively ordered by the court to stop signing up new customers;[36] this was reversed on appeal three weeks later.[37] On November 19, 2007 Vonage agreed to pay ~$120 million in damages[38] to Verizon.

In other patent lawsuits, by December 2007, Vonage was ordered to pay $80 million to Sprint Nextel[39] and $39 million to AT&T Inc.[40] Another lawsuit with Nortel resulted in no monetary damages.[41]

2009 customer service settlement[edit]

In November 2009, Vonage agreed to an Assurance of voluntary compliance (AVC) with 32 states.[42] The settlement followed an investigation into complaints about the marketing of Vonage services, including confusion about availability and cost, along with advertisements involving "free" services, money back guarantees and trial periods. The consumer protection agreement also addressed complaints that some consumers were prevented from canceling the Vonage service. In the settlement, Vonage agreed to pay the seven investigating states $3 million for costs, issue refunds to complainants dating back to January 2004, and change several business practices in regards to advertising and customer retention.


Vonage offers a variety of calling plans—domestic, international and small business plans—with more than 25 features, including voicemail retrievable by VOIP/web/email, 411 calling, caller ID, call waiting, do not disturb, call forwarding (including in case of broadband outage), and others.[43]

In 2009, Vonage introduced its most popular plan, Vonage World calling plan, with "unlimited international calling to more than 60 countries" for a flat monthly rate.[44][45] Vonage began offering smartphone applications in October 2009. The Vonage Mobile (later Classic) app provided international calling via Wi-Fi and cellular networks, and Vonage promoted the app as offering "50% savings" over competitive rates. The free app worked on devices running Android, BlackBerry, and iOS (iPad, iPhone, iPod Touch).[46][47] A month later, the Vonage World Mobile plan was introduced, with Vonage World unlimited calling features for a fixed monthly charge, and included a discount to home service users.[44][48] Superseded by Vonage Mobile (2012)).

Introduced in August 2010, the free Vonage Mobile application for Facebook provided "free one-touch mobile-to-mobile calls to Facebook friends who also have the application" for iPhone/iPad, iPod touch and Android devices, operating over Wi-Fi (free) and 3G/4G networks (uses data minutes).[49][50] Superseded by Vonage Mobile (2012).

In April 2011, Vonage introduced World Premium Unlimited plan, expanding on its popular World calling plan from 60 to 80 countries, including unlimited calling to mobiles in 42 countries.[51]

Vonage announced Vonage Extensions in July 2011, allowing customers to extend Vonage service to an "extension" phone line, mobile or landline, included with standard service. A second "extension" is available for a monthly fee.[52] In 2011, Vonage entered the mobile VOIP market with a free Vonage Extensions mobile app for iPhone and Android devices.[53] Soon afterwards, Vonage released a free Time to Call mobile app, offering 15-minute calls to more than 190 countries starting at a fixed fee per call, for iOS devices.[54] Superseded by Vonage Mobile (2012).

In February 2012, Vonage launched the Vonage Mobile free iPhone/Android app that allows talk and text worldwide for free with anyone else using the app.[55] When calling those without the app, users can add prepaid calling credits in fixed increments with their existing iTunes/Android Market account. Vonage promoted the app as offering rates "on average 70 percent less than major mobile carriers and 30 percent less than Skype." The Vonage Mobile app superseded the Time to Call app, the Vonage Mobile app for Facebook and Vonage Mobile Classic.

Service requirements[edit]

Vonage customers must have a broadband Internet connection, such as cable Internet service or DSL, through an Internet service provider (ISP). To initiate subscription a customer must provide a billing and shipping address in the country of service. Vonage supplies an analog telephone adapter which connects a customer supplied standard analog telephone to the Internet and the Vonage service.[56]

Residents of the U.S., Canada, and the UK may subscribe to Vonage by credit card from their respective country, but the Vonage adapter can be connected to the Internet anywhere.

Usage is generally referred to as "unlimited", though Vonage has different national "fair use" policies limiting Vonage-to-phone calls to a few thousand minutes per month in the UK,[57] Canada,[58] and U.S.[59] Evidence suggests that calls are limited to a length of 3 hours and 56 minutes.

Telephone number availability[edit]

Subscribers may choose a number in the country of the service they subscribe to for their primary line, in an area code of their choice. Subscribers can obtain additional "virtual numbers" for a monthly fee. Vonage also offers virtual numbers in Mexico, Canada and Europe. While the company supports porting a U.S. telephone number via the FCC's local number portability (LNP), not every phone number is available in every area code. Additionally, customers can transfer an existing number to Vonage, which can take up to 7 to 10 business days from the time the customer completes the Number Transfer Authorization (NTA).[60]

Emergency calls[edit]

Vonage offered 911 service on a VoIP platform for the first time in 2003.[61] For 911 location services to work, subscribers must activate the 911 calling feature by registering their full address with the company. Customers are responsible for maintaining their 911 location information at all times.[62]

If a customer dials 911 before the 911 verification is completed, the call will usually be routed to a national 911 call center where basic information must be given (name, location, nature of emergency, etc.), after which the call is transferred to a local public service answering point, like a local Police Department.[63][64]

Service cancellation[edit]

See section Customer Service settlement

To cancel service, Vonage requires that customers call a toll-free number, as service cancellation is not available on-line. Customer complaints about difficulties with the cancellation process were noted in 2006[65] and subsequently, and were addressed in the 2009 voluntary settlement with 32 U.S. states.

Quality of service and equipment compatibility[edit]

VoIP service relies upon consistent broadband-ISP uptime and VoIP-equipment compatibility with the ISP's modem. Although VoIP was initially optimized for voice, some fax equipment can be operated over VoIP,[66][67][68] but compatibility of monitored alarm systems and other devices is less certain.[69] Vonage offers "specially commissioned" Fax Line service.[70] Vonage recommends customers keep a basic traditional landline dedicated to their home alarm system and use Vonage for the rest of their calling needs.[71]

Vonage implements Voice over IP sending audio via RTP and signaling via SIP.[72]


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External links[edit]