Profile: Vonage Holdings Corp (VG)

Vonage Holdings Corp. (Vonage), incorporated in May 2000, is a provider of broadband telephone services to residential and small office and home office customers with over 2.6 million subscriber lines as of December 31, 2008. The Company’s transmits calls using voice over Internet protocol (VoIP), technology, which converts voice, signals into digital data packets for transmission over the Internet. Vonage provides service by using its customers’ existing broadband Internet connections, eliminating the need for it to build or lease networks. In addition, Vonage's network is based on internally developed software and industry standard servers, rather than circuit switches used by traditional telephone service providers. The Company offers an array of devices as well. Vonage's plug-and-play Vonage-enabled devices permit customers to take their equipment to different locations where broadband service is available, as well as switch to different Internet service providers and continue to make and receive calls on their Vonage phone numbers. The Company offers its customers a range of equipment alternatives for their Vonage-enabled devices based upon Vonage's relationships with technology companies.

The Vonage V-Portal can connect up to two Vonage lines through a high- speed Internet connection and includes a networking router. It has a liquid crystal display (LCD display) with caller identification (ID) and call timer, call logs, language selection, and built-in upstream bandwidth tester. The Vonage V-Portal allows customers to use the Internet connection for the computer and the phones at the same time. Vonage's analog telephone adapters, which convert analog audio signals into digital data packets for transmission over the Internet, are plugged in between the customer’s touch-tone telephone and existing broadband Internet connection. The Company's integrated adapters and routers simplify installation by combining a standard adapter and a broadband router in one device. Vonage's integrated adapters and wireless routers further simplify installation by combining a standard adapter, a broadband router and a wireless (WiFi) access point in one device.

The Company's cordless multi-phone system offers customers further integration of customer equipment by integrating a standard cordless phone system, its adapter and a router into one device. These cordless multi-phone systems are designed to appeal to mainstream consumers. The Vonage V-Phone is a universal serial bus (USB) compatible device designed for use with the Company's service. Vonage software comes pre-loaded on the V-Phone and updates itself on the device’s 256 megabyte flash drive without installing any software on the host laptop or Personal Computer (PC). The V-Phone comes with a standard 2.5 millimeter stereo earpiece microphone and customers can make and receive calls by plugging the device into virtually any Windows-based laptop or PC with a high speed broadband Internet connection.

Vonage offers its broadband telephone services to customers through a variety of service plans with different pricing structures. All of the service plans include an array of both basic and enhanced features, and customers have the opportunity to purchase a number of features at an additional fee. In order to access the Company's service, a customer need only connect a standard touch-tone telephone to a broadband Internet connection through a small Vonage-enabled device. After connecting the device, customers can use their touch-tone telephone to make and receive calls.

Plans

Within the United States, the Company offers three residential calling plans and two calling plans that cater to small offices or home offices. Each plan offers calling within the United States and to Puerto Rico and Canada, plus a package of services and features, for a fixed monthly or annual fee. It also includes free calls to five select European countries. The Company also offers other plans, including Residential Fax Service, Business Fax and SoftPhone. The Company offers similar plans in Canada and the United Kingdom. As of December 31, 2008, approximately 92% of its United States subscriber lines were for residential service, and approximately 76% of those residential subscriber lines were under the Residential Premium Unlimited Plan.

Basic and Enhanced Features

Each of the Company's calling plans provides a number of basic features including call waiting, caller ID with name, call forwarding and voicemail. All of its calling plans include a range of features at no additional charge to its customers, such as: Area Code Selection, where customers can select from approximately 259 United States area codes for their telephone number for use with its service, regardless of physical location; Service and Number Portability, where customers can use their Vonage phone numbers to make and receive calls almost anywhere in the world that a broadband Internet connection is available by taking their Vonage-enabled device with them; Online Account Management, where Customers can view and manage their accounts online. The Company's service provides capabilities such as real-time feature management, call forwarding options and a lifetime call activity log; and Personalized Web-Enabled Voicemail, where customers are allowed to receive e-mail notification of a voicemail with the voice message attached to the e-mail message as an audio file. They can also check and retrieve voicemails online or from any touch-tone phone.

Premium Services

Vonage also offers a number of premium services for additional costs. These services include Vonage Visual Voicemail, which allows a customer to have their voicemail messages transcribed to text and sent to their e-mail address or mobile phone; Virtual Phone Number, where a customer can have additional inbound telephone numbers that ring on a primary subscriber line, each for an additional fee. Each of these inbound telephone numbers can have a different area code; Toll Free Plus, where customer can have toll free numbers that ring on an existing subscriber line; Vonage SoftPhone, which is a software application that can be downloaded, and installed on computers, laptops and WiFi-enabled personal digital assistant devices. It enables a user to use a computer as a full-functioning telephone, with its own phone number, through a screen-based interface that works just like a telephone keypad; Residential Fax Service, and Business Fax Service. Vonage offers 500 minutes of outgoing fax service within the United States, Puerto Rico and Canada on a dedicated fax line plus unlimited incoming faxes.

Vonage competes with AT&T, Qwest Communications, Verizon Communications and Frontier Communications.