Paul Kapustka's Blog

"We're still the leading national [VoIP] provider," said Citron Tuesday at Fall 2006 VON, in a well-attended industry perspective presentation. In a brief tongue-in-cheek opening to his talk, Citron provided a timeline of predictions of Vonage's demise or its assured destruction, ending with the company's recent announcement of its reaching the 2 million user mark.

Though Vonage's business model and performance have come under more focused attack lately -- sometimes reflected in the company's poor public-market stock-price performance -- Citron said that getting bigger is helping Vonage achieve economies of scale, and might allow profitable operations in the next couple years.

"It's extremely important to achieve scale," said Citron, noting that Vonage is now paying less per user in backbone fees because it can negotiate better deals. But there are growing pains as well, such as the company-declared breakdown in customer service earlier this year, something Citron said was caused in part by adding almost 800,000 new customers in less than six months.

Citron also said that Vonage no longer needs to spend inordinate amounts of its cash on marketing, because it has achieved its goal of establishing a national (or global) brand.

"You can walk into any room, do the 'Woo-Hoo' song and people know it's Vonage," Citron said.

To grow, the VoIP industry must continue to innovate its offerings, Citron said, doing more to make things like one phone number for multiple devices an easier nirvana to reach. "For the future of Vonage, you're going to see a lot more personalization and customization," he said.