As has been widely reported the Texas attorney general has filed suit against Vonage, claiming that Vonage has failed to inform people about potential limitations in calling 911 services from a Vonage phone. This suit stems out of a case in Houston where a person was unable to reach 911 during an emergency and had to use a neighbors phone.
One of my co-workers who recently cancelled his Vonage account noted that Vonage was extremely clear and upfront about the need to activate 911 service and that service activation could take several days (however long I suppose it takes for the phone number location information to be populated into PS-ALI databases).
Of course not everyone fully reads the materials that are shipped to them, and the 911 service is useless if the customer relocates the phone without informing Vonage.
You might have noted that in the paragraph above I noted that my co-worker was a "former" Vonage customer. In talking to Vonage users that I know I'm hearing an increasing number of complaints about both call quality and customer service. In several cases, attempts to call Vonage's customer support were fruitless, resulting in either constant-busy signals, or long waits on hold followed by spontaneous disconnects. E-mails generate canned "the problem is on your end" responses. One person even resorted to faxing Vonage, which generated a quick call back to let him know that their call centers were overloaded but that they were rapidly adding agents.
All this harkens back the trouble that AOL had in the mid-90's when an incredibly aggressive marketing campaign actually succeeded, with the end result being a surge of customers which overloaded the system. If memory serves me right, at one point AOL even had to limit the number of connections in order to stabilize service performance (meanwhile the free coasters kept coming).
AOL succeeded despite these issues because they provided an incredibly easy to use service with little substitution opportunities (other than of course a generic Internet account). Vonage isn't as fortunate.
Not only do they face increased competition from services such as Skype & Teleo for the homeworker/2nd line market, they also face the prospect of cable companies bringing their own VoIP services to market, which may be cost-competitive with Vonage but will offer guaranteed network performance (since the cable companies control the access line), as well as professional installation and connection into existing house wiring. If the cable companies achieve success, the RBOCs will likely follow suit with similar offerings. (Yes, Verizon offers a VoIP service today, but it isn't cost competitive).
Once these new services become established, customers won't be buying "VoIP" or "broadband phone services" rather they will be buying low-cost phone service that looks, acts, and performs exactly like the phone they have today, with some added features such as web-based call control. At this point VoIP as a technology will have disappeared from the customer perspective. And that is when we will know that it has succeeded.
Our Networks & Telecom Strategies service director Michael Disabato tags his e-mail messages with the quote:
"The most profound technologies are those that disappear. They weave themselves into the fabric of everyday life until they are indistinguishable from it." - Mark Weiser".
I couldn't agree more