Verizon Not Stopping To Beat Vonage

A few days ago, Verizon trimmed $5 off the price of VoiceWing to just $24.95 per month, the same amount as Vonage, which is hoping to raise as much as $531 million in its forthcoming initial public offering.

Verizon recently posted a 7.1% drop in net income to $1.63 billion from $1.75 billion in the first quarter of 2005. Sales meanwhile rose 25.1% to $22.74 billion from $18.17 billion.

US carriers have faced years of decline in fixed-line revenues as the move to mobile phones, email, and VoIP services offered by the new VoIP pioneers such as Vonage and Skype.

On top of this, US carriers are also exposed to the threats posed by cable operators. During the last quarter Verizon said that its total access lines declined 6.9% to 48 million.

Vonage recently said it had more than 1.6 million subscribers in total, having more than tripled its subscriber lines last year. It also reported an increased loss for the first quarter to $72.8 million from about $60 million a year ago. First-quarter revenue almost tripled to $118.9 million from $40.7 million.

Skype recently announced that it had reached 100 million registered users worldwide. In 2004 Skype had revenue of only $7 million, but in 2005 it brought in approximately $60 million, with more than $200 million expected in 2006. Like Vonage, it is still not making a profit. Skype offers unlimited free calls to other Skype users, while Vonage charges a flat fee of $24.99 per month for free calls to any number.

It is reported that VoiceWing already has a customer base of roughly 27,000 customers.


Despite Verizon’s attempt to compete with Vonage, VoIP providers seem to be scraping at the bottom of the barrell.

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