October 4th, 2005
Sprint shouldn't sue Vonage: they should buy them
On Tuesday, SprintNextel Corp. said that its Sprint Nextel subsidiary has filed a patent infringement against VoIP providers Vonage and Voiceglo Holdings.
Vonage currently claims more than one million subscribers, while Voiceglo offers a software-based system that allows calls between PCs and from PCs to traditional telephone lines.
According to an initial read, it seems as though Sprint feels the two companies it is suing have infringed on seven voice over data packet technology patents developed by Sprint.
"We are not claiming to have invented voice over packet technology," Sprint spokesperson Debra Peterson tells Reuters, "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."
Peterson also said that Sprint had been trying to reach an agreement with both companies for a year- apparently for naught.
While Vonage has not yet commented, some of their more opinionated users are. Case in point, there’s already some chatter about the issue on the 17,000-plus member Vonage VoIP Forum - a place where Vonage fans and critics post in abundance.
"Uh, are they trying to say the Sprint invented SIP?," member mwmcclure writes sarcastically. " I have read three articles on this topic now and none of them explain what Sprint is alleging in their complaint. Vonage doesn’t use anything that they invented, do they? From what I have seen, they are pretty much using off-the-shelf technology from Cisco, Linksys (also Cisco) and other hardware providers."
"Sprint can go fart peas at the moon," KDWycha writes.
My perspective is superficially informed by the fact that as a consumer, I have two dogs in this hunt. I get my BlackBerry/cell service from SprintNextel, and I have a Vonage account.
Beyond this confluence, and the invective, I haven’t seen enough of the patent suit to make a sound comment on the merits of the suit. But that said, I do have to wonder: if Sprint cares so much about VoIP, why aren’t they major players in the consumer VoIP space?
And as I have said, over and over again, why don’t they just buy Vonage?
I said this six months ago, and repeat it today:
Sprint is the sole national telco without a major consumer VoIP initiative. As the consumer VoIP market mushrooms, Sprint is going to feel pressure on several fronts:
- From the giants: SBC-AT&T and, presumably, Verizon-MCI;
- From the cable giants, such as Comcast;
- From the well-capitalized, VoIP pure plays such as Vonage and Packet 8;
- From the VOIP deep discounters;
- From the softphone folks.
Five reasons so far, and counting…
At the same time, a trend line between cheap VoIP and Wi-Fi is going to put intense price pressure on:
- Sprint’s long-distance network;
- Sprint’s PCS cellular network, and Nextel’s offerings.
Vonage, and Vonage alone, has the availability and the market recognition to arm Sprint with the competitive strength it will need to compete in VoIP.
We’re not talking low-hanging fruit here. Would Vonage cost a bundle? Oh, yea. But nowhere near Sprint’s current $35 billion market cap.
Russell Shaw is an enterprise computing journalist, analyst and author based in Portland, Oregon. See his full profile and disclosure of his industry affiliations.
