I saw this article called Vonage to Sell Wi-Fi Internet In Earthlink Deal in Monday's WSJ and all I kept thinking was, when will someone offer them 10 cents on the dollar to put this company out of its misery. This announcement is somehow supposed to boost the shares? My friends, Superman could not boost this company. So now they can offer DSL by reselling Earthlink's DSL and bundling it with Vonage. Wow. I'm sure this will be another losing proposition for share holders as well as customers.
According to the article Earthlink resells their DSL usually for around $10 and Vonage sells their service for $24.99 per month. As someone that personally designed home calling and internet bundles back in the mid to late 90s for AT&T, I'm sure this bundle will either be $44.99 per month or if they are really crazy and can pull the wool over their CFO's eyes, maybe $39.99 per month. The problem with this bundle is that it is going to be way too complicated for a non-techie person to understand and install without significant help and that means customer calls which will eat into profit (if they even built any in to begin with). This bundle needs new equipment, a tech to come out to the house for the install, and a software install. I'm guessing it won't be their tech which means increased costs. I'm pretty techie and it took me many long nights on the phone with Sprint (now Embarq, the worst brand name ever) to get my DSL installed properly. Bundle care and billing is quite difficult to pull off and depending on the bundled price point they offer, this deal will probably lose money from them with every new ad.
The other comment which I found funny is this quote from Vonage's Chairman Jeffrey Citron regarding AT&T's stand alone DSL forced by the FCC when they tried to extract net-neutrality language from AT&T/Bell South merger (which they did not do) "The phone giant agreed to offer stand-alone DSL Internet service -- one form of broadband -- for $20 or less per month, rather than requiring consumers to buy phone and Internet service in a package. "That opens up the market for us dramatically," said Jeffrey Citron, Vonage's chairman and chief strategist."
You know why that is funny (sad kind of funny)? Because it opens up another small market of people that don't realize they are getting ripped off by that slow DSL offer and who might be convinced with some slick advertising what a great deal Vonage is. I'm sure this will (not) help their 2.6% monthly churn problem, but what they really need are price conscious techie people, but they are not going to be on slow DSL and won't be swayed by funny advertising.