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Vonage Update - More Woes

Watching the soccer match yesterday between England and Ecuador, sponsored by Vonage, brought to mind the continuous struggle that Vonage is having. For a company that was spunky, innovative and well financed, a combination of foul-ups and bad luck may have put this otherwise well-managed company on the road to ruin. The most recent issue of TPP covered this in a feature article.

Lastest Bad News:

1. Now Verizon has filed a patent infringement suit against Vonage. I am not sure if this is a valid action or not, but the legal costs, and the protracted cloud of uncertainty this will cast over Vonage cannot help it at all. This in addition to the other patent infringement suit against Vonage by Sprint. This is the "we invented VoIP, but not really" patent, covered in a previous blog,
   
2. The stock has lost almost half of its IPO value of $17, closing at $8.75 on Friday, June 23. In addition, the SEC has confirmed that it is investigating some suspecious short selling of the stock.
3. The FCC has ruled that VoIP carriers, like Vonage, must pay access fees.
   

If the lessons of history on companies with this kind of woe just post-IPO, Vonage could end up on the scrap heap of telecom history. It would be a real shame if the first serious national competitor to telecom and cable companies were to crash and burn.

Can we COPE with this?

Well, the House of Representatives has passed a version of a bill that purports to protect the Internet. If you want to see the definition of "spin," just google "net neutrality" and you will see more articles, blogs, and rants than any single issue on the Internet. It is hard to summarize what the argument is, but suffice it to say that there are those who think that Congress must begin regulating the Internet to protect it from backbone providers, like AT&T and Verizon (MCI).

What is remarkable is that this bill is a solution to a problem that has not yet arisen, although the signs are clear. Even more remarkable, that it pits telecom giants like AT&T and Verizon against Google and Microsoft. Then there are people like me who say, "Can't we all just get along?" and leave the cotton-pickin' Internet alone and let competition regulate itself?

See the article in the upcoming TPP to see what super-smart Jonathan Marashlian has to say, even if I don' t completely agree.

-gene

Some Heartening News on Patents

With all the bad news on patents, there was a glimmer of good news yesterday. You may recall that Ebay was sued by a "patent troll," a company whose only business is to acquire patents and enforce them. It can be a highly profitable business, especially for a law firm who has the assets to vigorously enforce them.

One of the most powerful tools a troll has is the "automatic" issuance of a restraining order once a jury verdict is issued, effectively stopping the alleged infringer from using the "purloined" technology. (By the way, so as not to complicate this too much, just insert the word "alleged" about every other word.) This puts the defendant out of business, and is a strong reason not to appeal decisions. Because these patent cases are not often appealed, they have not had higher court review.

Well, Ebay was sued, and lost, a patent case over using a fixed price in an auction. Yes, Virginia, there was a patent covering fixed price auctions. It held on, and yesterday, the Supreme Court ruled that the restraining orders need not be automatic. The actual ruling is a lot more complex than this, but this is the essence.

A small victory, but at least the door to a more reasoned approach to Intellectual Property has been opened. It is time for Congress and the courts to address where we have come since the first patent law in 1789. The march of technology has significantly increased its pace, and software driven systems have blurred the line between abstract idea and patentable technology.

-gene

KMOX's Paul Harris Features AT&T/Iraq Story

KMOX, the leading AM talk station in St. Louis, has caught on to the story of AT&T ripping off soldiers in Iraq and Afghanistan. I was invited to be on the Paul Harris show today, March 13. Paul had read the details and was vary familiar with the issues. You can listen to the show on their website here .

St. Louis is close to Ft. Leonard Wood, and has thousands of military families in the area. A lively discussion ensued, so we expect to here more about the story from Paul.

-gene

I'm Mad as Hell, and I am not going to take this anymore

Remember this line from one of the best movies of all time, "Network"? This sentiment is descriptive of the response we are getting on our most recent update on the AT&T ripoff of our military serving in Iraq and Afghanistan. in the February 15, 2006 issue of The Prepaid Press. We heard from some old friends on this. Well, not that old, but we have known Tom & Mary Evslin for a long time, over ten years. The Evslins started ITXC, which merged with Teleglobe, the Canadian telco, which was recently bought by VSNL, the Indian telephone company.

Tom is so incensed by at&t and its handling of this, that he says in his blog, "If I sound foaming-at-the-mouth mad it’s because I am." And, although I have never seen Tom angry, I somehow feel I don't want to, he is a very intense person. His blog site, Fractals of Change, has the slogan, "Nothing great has ever been accomplished without irrational exuberance."

If I were Ed Whitacre, CEO of at&t, I would be concerned about irrational exuberance coming at me, foaming-at-the-mouth mad.

-gene

(by the way, the AT&T and at&t is not a typo. The new AT&T, which is really SBC, now calls itself at&t)

New Life for Story on AT&T Overcharging in Iraq

If you have been reading The Prepaid Press, you realize that we broke a story in January, 2005, detailing how AT&T is overcharging GIs for calls back from Iraq and Afghanistan. If you haven't seen this story, go read it now. The story received a lot of attention, including the New Jersey Star Ledger, who used it in an article in May, 2005.

As soldiers started to come back from Iraq, they began telling horror stories of AT&T overcharging. Cards with 200 minutes only getting 30 minutes, or less. This unconscionable situation has finally caught the eye of an organization big and politically powerful enough to do do something about it, the American Legion.

A resolution is headed for the National Convention in June, and you can read the exclusive story here .

Please let us hear from you, and make your comments below.

-gene

The 05 Gift Card Season - A New Record

The final numbers are not all in, and we have to let the analysts mull, vet and massage the data, but the impression of those close to the scene say 2005 was a record year for prepaid gift cards. Lori Breitzke, VP of RBSLynk, was very enthusiastic about the growth, as was Kristi Turner, Sr. VP of PRE Solutions. RBSLynk offers prepaid VISA and MasterCards, while PRE offers prepaid malls. I trust what they say, because they are close to the business and very knowledgeable about its intricacies.

Here is the take away, if you are a distributor, retailer, or offer a prepaid product, you owe it to yourself to learn as much about prepaid malls as you can. We, at the Prepaid Press, are here to help. Lori and Kristi will both be featured in the February issue of TPP. And, email me at editor@prepaid-press.com, if you want me to let you know about the webinar we are planning in late February/early March.

-gene

MVNO is Flying High in the Sunshine State

You can guage what is hot in the industry by the number of conferences about a particular subject. Using this as a measurement, prepaid wireless is HOT HOT HOT. The week of December 5, there were two separate conferences in Florida dealing with this hot subject. Both received good reviews, with 300 people in attendance at one or the other.

I was scheduled as a moderator and host at the Pay As You Go Mobile Executive Summit in Orlando, but my flight was cancelled supposedly due to weather, and I could not make it to Orlando. Our intrepid analyst, Matthew Schulman, attended the MVNO Summit in Miami. (Ironic that both conferences were "summits" in a state where the highest elevation is 342 feet!)

In the December issue of The Prepaid Press are comments from both conferences. Check them out, then come back here and voice your opinion.

Merry Christmas!

-gene

NACS is unbelievable!

Prepaid gang-

If you missed NACS, you have missed out on a major show. Prepaid is the buzz here, exceeding even beef jerky, beer and the Oakland Raiders cheerleaders. PaySpot, iPrepay. PRE, IDT Blackstone, Coinstar, Radiant, and many others are here and their booths are jammed. C store owners are seeing the benefits and profits that come from prepaid, and with little or no investment.

See the next issue of The Prepaid Press, coming out in December. I will give you the details.

-gene

(By the way, I suspect that Robin suggested I go to NACS because she is jealous of my recent success in dieting. With all the beer and snack food here, that is a thing of the past.)

November Issue Out - Wait 'Til You See This One!

The November Issue of The Prepaid Press is out, should be shipped in the next couple days, so empty your mailbox, chill some good brewsky, brew some strong coffee and get ready for the best issue ever. This issue completes three full years of TPP, a milestone for us. We are bigger and better than ever.

Great articles, hot news, and the funniest cartoon on prepaid you have ever, EVER seen! Guaranteed. Take a look at it. Let me know what you think, and if you can honestly say that it is NOT the funniest prepaid cartoon you have ever seen, We'll. Why, We'll just have to better the next time. But this one is funny.

New Applications - New Opportunities

After the Excel users' conference, and preparing the November issue of The Prepaid Press, I began thinking about everything I have been seeing, talking about and writing about the last couple of weeks. This is an exciting time! Things are really happening in the prepaid world. Again.

As I have been saying for, well, forever, frankly, applications drive the revenue. The whole MVNO scenario is a re-do of the long distance resell opportunity we blew a decade ago. At the Excel conference, I gave the audience my best coach-like advice. . . . Don't screw up!

We did with long distance. Don't do it this time. What did we do wrong? We had the wrong strategy. Build up a quick customer base by cutting prices to negative profit levels and then try to sell the behemoth before it all collapses.

We have another telecom opportunity, probably even bigger than the last one, certainly in terms of dollars. And, right now the entrenched guys are in control, circa 1976-1983 Long Distance. There are technical and legal issues in getting access to the handsets, 1983-1995, circa Long Distance. Now, if you go out there, bet it all and try to cash in quick, you will end up like the many failed LD resellers, 1995-2002.

How to avoid the trend? Look at Virgin. They are building a brand, making money and offering value added features. Right now the value added is primarily packaging because that is all they can offer. But, once things start to open up, as they will, and guys like Virgin are able to get some control over the technology, via applications servers, media servers, softswitches or partitioning, they will offer new and innovative features to get a sustainable base of customers.

How do I know this? Because Virgin understands the market they target. Do you?

Some Gems of Wisdom from the Excel User's Conference

OK, gang, the 2005 Excel User's conference is in full swing here in
Boston. Lots of great information and good ideas going around from the
people who make applications work. There are people here from Korea,
Guam, Singapore, China, Switzerland, Australia and New Zealand. I seem
to be the only one from South Carolina.
I will post more, but here a couple of the quotes so far:

"SMS was the accidental killer app." -Marc Zionts, CEO, Excel

"Think globally, but partner locally." -JC Murphy, President, Excel

"Video messaging is the sizzle around media servers, voice messaging is
the steak." -Andrew O'Brien, VP, BrookTrout

"If you want to be a telco, you shouldn't have to be a software
company." -Cork Vanderford, PDS Guam

"Politicians are beginning to see a lot of money leaving their pockets because of VoIP. The question is, what are they going to do about it?" -Rich Tehrani, Publisher, Internet Telephony Magazine

More later!

Boston Bound

I am on my way to Boston to speak to the participants at the Excel User's Conference. Can't wait to hear what they are saying about the MVNO opportunity and how they can profit from it. Also looking forward to some great seafood with my friends from Excel! Will give you an update from the conference on Wednesday. What are your plans? Please comment here.

The Hyenas Have Struck Again

In case you haven't seen it, there is yet another patent infringement lawsuit filed against startup telecom companies. In this latest chapter, Sprint is claiming that it has seven patents covering critical parts of VoIP, and is demanding that Vonage, Voiceglo and TheGlobe.com, pay up for their use of the technology.

I was most intrigued by a quote from a Sprint spokesperson as reported by Reuters.

"We are not claiming to have invented voice over packet technology but we do have patents that have facilitated the use of this technology and we will take appropriate action to protect the use of these patents."

So, let's see if we understand what Sprint is saying. They did not invent VoIP, but have filed patents covering some of its use. That is their claim? They invented nothing, but filed patents?

There was a special on Animal Planet last week about the animals of the African desert. I was particularly intrigued by the spotted hyena. This carnivorous mammal lives off the efforts of other predators. Literally, this dog doesn't hunt. Neither does it kill anything on its own. It waits for a more capable animal to make the kill, then gathers a crowd of sycophants who use their loud, raucous laughs and threatening demeanor to intimidate the real hunter into giving up part, or all, of its kill.

Sprint is the hyena of the VoIP world, but nobody is laughing except the hyenas.

Welcome to The Prepaid Press Blog

To all you readers of The Prepaid Press, welcome to our blog. As Editor, I am going to keep a blog of the things that we are doing and the issues that impact anyone involved in the prepaid industry. Please bookmark and check back often for the latest view from our vantagepoint.

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-Gene Retske

Can post from TREO

I can now post from my mobile, so watch out.

-gene

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Sent from my Treo