RealTime IT News

Vonage Slaps Suit on AT&T over VoIP

In a move that underscores the rising stakes in the VoIP sector, broadband telephony upstart Vonage is suing AT&T , charging that a competing service launched by Ma Bell infringes on its own brand.

Filed last week in U.S. District Court in Trenton, N.J., the suit claims that AT&T's new "CallVantage" offering, and some of the Web sites registered to support it, sound too similar to Vonage's corporate name and could confuse consumers.

"[The lawsuit] is about protecting the Vonage name," Brooke Schulz, a Vonage spokeswoman, told internetnews.com. "We've spent three years building the brand, so it's not only the dollars that we've put into it, but time as well."

Schulz said it's the first time Vonage has sued a company for trademark infringement.

AT&T is unmoved by the argument. "We believe their suit is without merit," said AT&T spokesman Gary Morgenstern, who declined further comment.

Privately held Vonage has spent significant sums on advertising and marketing, and has earmarked a portion of its recent $40 million venture financing round for that purpose.

It appears to be working. The Edison, N.J., firm recently signed its 100,000th customer -- doubling its base within a five-month period. Vonage offers a flat-rate phone service that is cheaper than traditional carriers because voice traffic over the Internet isn't subject to regulatory and switching fees (at least for now).

AT&T has launched its own CallVantage VoIP service in the Austin, Dallas, Fort Worth and Houston metropolitan areas. The service will be expanded to serve the San Antonio metropolitan area over the next several weeks.

The Texas rollout comes a day after the company announced the local availability of AT&T CallVantage Service in parts of New Jersey.

The two companies haven't exactly been chummy before the legal action. Vonage is clearly aiming to lure new customers from long-distance carriers such as AT&T (as well as MCI and Sprint) by offering a flat rate service that trumps traditional wireline long distance rates.

In recent years, AT&T has seen long-distance revenues erode as customers switched to regional providers moving into the long distance business, wireless carriers, and now new VoIP services.

By embracing the VoIP technology, AT&T is looking to snatch those customers back. For its part, Bedminster, N.J.-based AT&T has maintained that it will offer better quality than Vonage and other VoIP providers, whose voice packets at some point travel the public Internet.

By comparison, AT&T is using its own IP backbone to carry the voice packets for its CallVantage service. AT&T will also try and sell VoIP as part of a bundled package of services. As it pushes CallVantage into new markets, AT&T is launching ad campaigns and offering incentives and discounts for new subscribers.

Besides Vonage and AT&T, a number of other VoIP providers are testing the market, including Time Warner Cable and Qwest .