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Bye, Bye Vonage, it's been swell

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Vonage Holdings Corp. (NYSE:VG) got nudged toward its eventual oblivion today when a federal jury ordered the struggling internet phone company to pay $58 million plus monthly royalties to Verizon Communications Inc. (NYSE:VZ) for infringing on three patents.

Verizon also asked for a court order banning Vonage from using the disputed technology, according to Bloomberg News. Such a ruling would effectively drive Vonage out of business because it would leave it only able to handle calls among its customers.

Vonage's stock nosedived on the news. Trading has been halted as investors prepare to watch the company go down the drain.

This case is far from over. Vonage will probably appeal the decision, delaying the axe from falling for a while. But fall it will. As Vonage's obnoxious commercials grew in intensity, so did the competition from much bigger companies including Verizon.

The unlucky investors still holding Vonage's stock may get at least some of their money back if the firm is bought out by a telecommunications company or a private equity player. But don't hold your breath waiting for that to happen.

Still, internet phone service is here to stay even if Vonage may not be.

My wife and I signed up for Comcast Corp. (NASDAQ:CMCSA)'s digital voice earlier this month and so far haven't seen any difference in service quality. Comcast's triple play of services is saving us about $70 a month. There's no way that I would even contemplate going with Vonage.

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Last updated: November 26, 2009: 02:46 AM

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