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FOLLOWING THE TELECOMMUNICATIONS INDUSTRY AND RELATED LEGAL TOPICS

Friday, May 05, 2006

VoIP Price War or Rhetorical Point?

Earlier this week, Verizon cut the price of its "VoiceWing" VoIP product to $24.95 in an ostensible effort to "compete" with Vonage and others.

In our personal view, however, Verizon's move is as much about creating uncertainty for Vonage's upcoming IPO as anything else.

Sounds petty? Are we just conspiracy theorists? Nah.

Take a look at Verizon's history. Remember back in the day when Verizon publicy accused MCI/WorldCom of being a vast criminal conspiracy to get favorable terms in the bankruptcy proceeding? That was before Verizon bought them. Remember when Verizon threatened to have the FCC Commissioners criminally prosecuted during NexTel's spectrum reallocation proceeding? That one cost NexTel $1 billion.

Verizon plays hardball, and no one should forget it. As for VoiceWing? Verizon has only about 50,000 customers and does basically nothing to market the service -- why cannibalize your own base? Moreover, the new price ain't all that. SunRocket, to name one competitor, offers a similar VoIP product for $17 per month.

Listen for the drumbeat of Verizon and others as the Vonage IPO approaches, and watch for planted articles.

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