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TMCNet: Vonage to offer unlimited international calls

[August 20, 2009]

Vonage to offer unlimited international calls

Aug 19, 2009 (Asbury Park Press - McClatchy-Tribune Information Services via COMTEX) -- Internet telephone company Vonage Holdings Corp. will now offer unlimited international calling to more than 60 countries as part of its standard package of services.

The international features unveiled today, called Vonage World, includes unlimited calls to countries, such as Mexico, China, India and Russia. It becomes part of Vonage's $24.99 rate for unlimited calls throughout the U.S., Canada and Puerto Rico.

The countries in Vonage World's coverage area, which also includes calls to mobile phones in some countries, represents about 65 percent of the world's population, Vonage said.

The company also will now offer visual voice mail, which sends transcribed voice mail messages to users via e-mail or text message, for free. Previously, it charged 25 cents per voice mail.

Marc Lefar, Vonage's chief executive officer, said the two services "dramatically changes and improves the value of Vonage's core offering." Previously, besides calls to the U.S. and Canada, Vonage service included calls in Italy, Spain, France, the United Kingdom and Ireland as part of its $24.99 plan. It also sold packages featuring unlimited calling to other countries for an extra charge.

It will still have plans for countries not covered by Vonage World, but the rates will be lowered, Lefar said.

The changes come as overall U.S. long distance calling has dropped about 6 percent a year since 2000, Lefar said, citing U.S. Federal Communications Commission figures. Meanwhile, minutes from the U.S. to international destinations has risen by 15 percent a year.

"The U.S. consumer is becoming increasingly connected internationally," Lefar said. "The value proposition for international customers has not improved nearly as quickly as what traditional local phone service has been." Lefar said the company wanted to "create the same kind of break-through change in pricing" as it did for long distance service when Vonage was founded in 2001.

Vonage faces intense competition from cable companies, such as Comcast Cable and Cablevision, that bundle telephone service with high-speed Internet access and cable TV service. Both companies also offer international calling plans as extras.

Lefar hopes the new services will boost customer growth. In the second quarter, Vonage lost 89,000 customers, coming in at 2.5 million customers as of June 30.

"No one else is providing value like this. We expect that's something in this economic time (that) is going to attract a meaningful number of new customers," Lefar said. For existing customers, who must call to activate the feature, it "gives us a tremendous opportunity to keep them happy over a longer period of time by giving them that value." This is the first year in which Vonage reported a net income and follows challenges that have hit the company over the years. Now Vonage World and visual voice mail is just the start of a series of new products and services, Lefar said.

"We had plenty of work to do to get our financial shop in order," he said. "Now that we've done that and we are operationally more sound, we have fired back up the product management and product development engine of the company." Telecommunications analyst Jeff Kagan said Vonage needs to attract customers as its cable competitors have increased marketshare. "It's the kind of offer that Vonage needs to continue to grow," he said of Vonage World.

But he said he will "wait and see" whether it is a major change for the company and will allow for rapid growth. "The other competitors are still out there marketing like crazy," he said. "They are not throttling back." To see more of the Asbury Park Press or to subscribe to the newspaper, go to http://www.app.com/. Copyright (c) 2009, Asbury Park Press, N.J. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

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