Is Vonage Nervous

Vonage, and all IP Telephony marketers going after the home user should have reason to worry. The same fear of port blocking that I’ve raised before that has the likes of Amazon and Microsoft nervous is starting to get the attention of VoIP executives.

“Technology now exists that enables network operators to recognize the data packets that move across their systems, and to prioritize them,” says the Washington Post

The problem rests largely with how the FCC interprets what the Internet is considered with regard to network neutrality. Is it a freeway or a tollway? Are the companies which supply the service to the home, mostly cable or local telephone companies going to charge the VoIP providers for access to their portion of the Internet?

A second problem which Vonage, VoicePulse, VoiceGlo, Packet8, SIPPhone and Viper will all experience, as pointed out by the Yankee Group, is that the incumbant providers all have the ability to provide a higher grade of service wth QoS assured or to bundle their packages at lower prices. Do you see now why Vonage lowered their prices?

With SLA’s in place, companies like Level3, SPRINT, MCI and AT&T already have contracts that enable their traffic to pass over the cable or DSL providers network with a set degree of priority and vice versa. Those SLAs (Service Level Agreements) likely have QoS levels already established. That means packets of either parties customers travel over the network a certain way.

But Vonage, which only sells to the end customer and has never admitted to having any SLA’s in place with carriers, nor using a softswitch in their network, could be left out in the cold unless it gets some deals in place with the cable companies and RBOC’sm because in theory, the last mile providers could begin impacting them.