More Trouble For The Vonage IPO

More trouble for the Vonage IPO: It's being undercut on prices by so many competitors that it's hard to believe many people think the company has a long-term future, much less be willing to buy the stock. There's so much bad news for Vonage, it's hard to know where to begin. So start of with Skpye, which just announced that it is offering free SkypeOut calls to the U.S. and Canada for the rest of the year. More likely, the calls will be free for the rest of forever.

Then there's AIM Phoneline, which gives AIM users a free phone number for receiving free unlimited incoming calls and free voicemail, and will charge from $10 to $15 a month for unlimited outgoing calls.

Skype and AIM Phoneline are merely PC services, you say, while Vonage lets you use a real telephone? OK, then consider this: Verizon just said that it is lowering the cost of its VoiceWing VoIP service from to $24.95 a month, essentially the same price as Vonage's $24.99 plan. Vonage charges an activation fee, though, while VoiceWing doesn't.

And yes, there's even more. Cablevision just announced a new VoIP plan that offers 500 minutes of calls anywhere in the world for $19.95.

All this is only the beginning. The cost of voice calls will ultimately drop to essentially zero, thanks to VoIP. Cable and telco companies will give away voice services for free, as loss leaders to get you to sign up for expensive video and broadband services. Skype will offer even more international calls for free.In such a world, why is there a need for a Vonage? And if that's the case, why is there a need for a Vonage IPO?