Vonage Rolls Out Annual Plan

By Greg Scoblete On Mar 12 2007 - 6:00am

Vonage is offering its residential subscribers the option of signing up for an annual calling plan for a $60 savings.

The company quietly rolled the new service, offering unlimited calling in the United States, Canada, Puerto Rico and certain European countries. It has been offered only to existing residential customers, according to a company spokesman. It will cost $239 a year, about $60 a year savings, vs. paying $24.99 a month for the company's unlimited residential service.

The spokesman described the plan as in "beta" with Vonage testing the response from its customers before deciding whether to roll it out to new subscribers.

Two of Vonage's competitors currently offer all-you-can-dial annual plans. SunRocket and 8x8's plan both cost $199 a year.

Vonage also released full-year financial and subscriber data for 2006. The company added a net 955,000 subscribers last year vs. 878,472 in 2005, bringing the company to roughly 2.2 million subscribers for the year.

Customer churn was up slightly, from 2 percent in 2005 to 2.5 percent in 2006. Vonage spent $365 million in marketing in 2006, up 50 percent from 2005's $243 million. It cost Vonage an average of $248 per subscriber added versus $221 in 2005.

For the year, Vonage reported a net loss of $286 million vs. $261 million in 2005. The company increased its revenue by 126 percent, from $269 million in 2005 to $607 million in 2006.

For the fourth quarter, Vonage posted a $65 million net loss vs. $72 million in the year-ago quarter. Revenue increased 91 percent in the year-over-year quarter, from $95 million, to $181 million.

Lastly, the VoIP company fired back at unnamed "media outlets" for speculating that the company's patent imbroglio with Verizon will spell the end of the start-up. In a statement, company CEO Mike Snyder called the patent suit "frivolous" and an attempt by Verizon "to stifle one of its most successful competitors."

Verizon is alleging that Vonage infringed on five patents and is reportedly seeking close to $200 million in damages. The case is currently being heard at a district court in Virginia.