Vonage Gears Up To Go Wireless
For years, Vonage has built its business around one service: inexpensive Internet phone calls. Well, all that’s about to change. This year, Vonage could remake itself into a wireless service provider and start selling broadband access and content services nationwide.
Vonage says it will start offering wireless services to subscribers during the second half of 2007. The company also expects to announce new agreements to resell other carriers’ broadband Internet access services, as well as new content deals later this year, according to a spokesperson.
This Way to Wireless
Analysts anticipate Vonage will start providing wireless services under its own brand, as a mobile virtual network operator, reselling another carrier’s service but with its own content. The company could even name itself Vonage Wireless, to reflect a new range of services, analysts say. While Vonage won’t divulge any details, it did confirm after its Feb. 15, fourth-quarter earnings call with analysts, that it will start selling dual-mode phones offering cellular as well as Wi-Fi access, in the second half of the year.
The move is not unprecedented: Norway’s VoIP (voice-over-Internet protocol) provider Telio began offering a mobile service in December. Another rival, Skype, which is owned by eBay, has been striking deals to put its software onto wireless phones as well.
As a wireless service provider, Vonage might have a better shot at profitability. Rival MVNOs that already use other carriers’ networks to market wireless services under their own brands, including Virgin Mobile USA and Helio, have been steadily making gains selling to youth and young professionals. Vonage, in effect, caters to the same market: Many of its subscribers are young, early adopters of the latest technology.
Slowing Growth
Why does Vonage want to move into new areas? This last holiday season, its growth slowed thanks to packages of services offered by rivals — cable companies such…
