An Open Letter to Vonage's CEO

An Open Letter to Mr. Michael F. Snyder, Director and CEO of Vonage Dear Mr. Snyder, Congratulations on your new position, though in the wake of the yesterday's catastrophe of an IPO I'm not sure anybody's going to be envious...

David Greenfield

May 26, 2006

5 Min Read
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An Open Letter to Mr. Michael F. Snyder, Director and CEO of Vonage Dear Mr. Snyder,Congratulations on your new position, though in the wake of the yesterday's catastrophe of an IPO I'm not sure anybody's going to be envious of the challenges ahead. I don't need to tell you that turning around Vonage, or at least readying it for a sale, won't be easy. Your friends over at Ebay will be sure to make your life difficult, offering value added services. Your buddies over at Verizon, Time Warner, Cox to name a few, will chase you for PSTN-paying customers.

You've got to fight off both by blending offerings from both. Use the cash raised in the most current IPO to bring value back to your PSTN-grade consumer services. Deliver a service with the simplicity of the telephone and capabilities of the Internet.

Here's how:

1. Offer a Phone Trade-in Program ??? Part of the limitation of Vonage's service is that plain old analog telephones are rotten platforms for delivering rich services. Soft-phones (more on those later) will help you leverage the PC better, but that hasn't been your market, has it? You wanted to give a service that even Mom and Dads would buy, right? But now you need teen as well. So why don't you offer a trade-in or upgrade program for customers to exchange their analog phones for a high-end phone. Whatever you offer, bundle in a value-add service, charge them an upgrade fee, and you'll transform the product delivery potential of your servcie. Heck, you could probably resell both of those components, or give them to a non-profit as a tax write-off and make a profit on its own.

2. Develop a "Vonage Certified" Service ??? It's been a wonder to those of us who've watched the rise of Vonage as to why the company hasn't taken advantage of its SIP-compatibility. Limiting customers to just telephones ignores the fundamental differentiator of Vonage. Open up your service to every telephone, soft-phone, video mixers, gizmo, and SIP software on the planet. Create a " Vonage Tested" program and use your formidable marketing engine and customer base to push those products out to the masses. Evangelize "rich communications" the way Vonage evangelized Internet telephony.3. Add Presence Capabilities to the Network ??? It's almost criminal that three years after launching, Vonage still hasn't leveraged the most exciting of possible services, presence. Knowing when someone is available for a call (think IM) is a huge time server. Yes, , presence will cut down on call minutes and voicemail, but it will also give your service a unique differentiator, one that will separate you from most other Internet-based telephone services.

4. Get Vonage to Spell "I-M" ??? Many of IP-savvy competitors get that IM, video, voice, and presence belong together. You can do one better. Open up Vonage as the first true, global commercial IM offering. Establish peering relationships with other IM vendors. The motivation? Financial. Offer them some fraction of a percentage of voice termination on your network. They're not getting anything today for voice termination so even a little will be an incentive. In return, you get the first IM service that can connect with AIM, Yahoo, MSN, Skype, and GoogleTalk/Jabber.

5. Add Video ??? You knew this was coming. You've got to move fast if you're going to play the video card and you'll need that card in the longterm. Your competitors are already aggressively pursuing the technology. So should you. Over time our living rooms will be changed into conference rooms, our bedrooms into, well, we won't go there. Any consumer-oriented, communication service though without a video play in that space is ultimately doomed.

6. Dish up Teen "Stuff" ??? Video, presence, IM all of it sounds like the teen-crowd play, a play that you could easily capture. Adding sound effects, ringtones, and voice effects would also go along way to grabbing this market. Pop in video and you've got the killer service.

7. Don't Ignore Small Business - There was and probably still is a great opportunity for Vonage to offer "the small business makeover kit." You could package your VoIP technologies to give small companies the appearance of large ones. You already have multipole area codes and 800 lines. What about centralized billing and reporting? Why not add a VonageClickToCall button so customers can turn their Web pages into contact center pages.8. Improve Your Voice Quality ??? None of this will work though if voice quality continues as bad as its been. I've been running a Vonage service from Israel for thee years now and never has my voice quality been so bad. Half the time I use the line just to receive a U.S. call and then call people back. Given that others have complained about the experience, I'm sure it's not just me. Heck, by offering to deploy new IP phones you could even roll them out with a G.722 codec and make them BETTER than a phone line.

It's a tall order, some would say an impossible one. But Vonage also pulled off the impossible once before. It dragged overcharging, customer-anxious telcos into the Internet age of inexpensive, customizable telephony. Here's to hoping you can pull off the impossible once again.

- Dave Greenfield, Editor+1 516-620-0622 IM: netmagdave (Yahoo, AIM, Skpe, MSN/Hotmail, and Jabber)

A version of this letter was sent to Mr. Snyder earlier today and appeared in CMP's VoIPLine newsletter

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