Trouble In VoIPville Spooking VCs

from the looking-out-for-number-2 dept

The patent dispute between Verizon and Vonage has always had more significance than just the effect on those two companies. Depending on how things play out, the whole VoIP industry could suffer, as patent-related lawsuits could impede many of the companies in the space. Along these lines, Om Malik reports that the #2 independent VoIP provider, SunRocket, is having trouble closing its latest round of financing, as VCs are worried that the company may run into the same legal issues as Vonage. Considering Vonage’s precarious legal situation, SunRocket investors have a pretty legitimate reason to be worried. Then again, you have to wonder whether the investors would actually be enthusiastic about SunRocket in the absence of these patent issues. Even before the lawsuit, Vonage was proving to be a disaster as a public company. It’s really hard to imagine that another company with the exact same business model could have successfully done an IPO, nor is it likely that a company like that would be an attractive acquisition candidate. While the patent issues are serious for both companies, the broader economics of the industry, which is pushing the cost of voice calling to zero, remains the real killer.

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