Can Anybody Tell Me Why Vonage Isn't Toast?

Rob Hof

My colleague Olga Kharif raises questions about whether Skype's new plan for free calling to U.S. landlines means growth in the States isn't up to snuff. Well, maybe, but I have a feeling there's more at work here. (And for the analysts in the story who can't figure out eBay's strategy for Skype, check out coverage of eBay's analyst day, when the company provided some pretty tantalizing if still speculative possibilities.)

Andy Kessler suggests it's a timely shot at Vonage and its IPO. Sounds about right to me. Skype still isn't a snap to use for the average person, even with the new phones coming out that let you use a regular-looking phone to make both Skype and landline calls. Even so, I tried one out over the weekend, and when I called my dad--a former GTE (now Verizon) exec who knows a little about voice quality--asked me where I was calling from. I expected to hear that the sound wasn't very good, but no--he said it was the best sound quality he had gotten on a call from me in weeks--better than landline!

Meanwhile, out of the blue last week, I also got a box in the mail with a Vonage CD in it. Shades of AOL's glory days. That can't be cheap, and smacks of a little desperation. Even if I made $25 worth of long-distance calls per month, which is rare, I just can't see why I would pay $25 for it when I can call for free. Anyone?

Before it's here, it's on the Bloomberg Terminal.