Vonage Sifting Through The Pile

Reporter’s Notebook: Vonage  is still mulling the complaint that Verizon filed against it earlier this month.

However the Holmdel, N.J. VoIP provider isn’t too concerned.

Brooke Schultz, vice president of communications at Vonage, called many of the allegations of patent violations “suspect.”

But as much as the substance, it is the timing of the suit, and the manner in which Verizon handled it, that seems to bother Vonage most.

Schultz told internetnews.com that Verizon didn’t follow the usual protocol that most companies observe in this kind of situation.

“They didn’t do the customary thing, which is send us a letter and say, ‘We think we have a problem, let’s talk about it,'” said Schultz.

She also suggested that Verizon timed the filing of the court action to create as much havoc for Vonage as possible. Vonage has had to contend with a disappointing IPO and shareholder lawsuits in recent weeks.

Schultz noted that, according to Verizon’s own paperwork, the factual basis of the complaint was based in large part on pre-IPO filings Vonage made with the SEC.

“We filed the first S-1 [registration statement with the SEC] in February,” she said.

Verizon has a less sinister explanation for the timing of the suit.

“We weren’t able to confirm until recently that our patents were being infringed by Vonage,” Bob Varettoni, executive director of communications for Verizon, told internetnews.com.

Schultz said Vonage is still reviewing more than 5,000 pages of documentation, and may have an official response ready this week

Pushing through the static

Mike Snyder, CEO of Vonage, acknowledged to a group of reporters here in New York that the quality of his company’s Wi-Fi phone, introduced a little under a year ago, still leaves something to be desired.

“The current quality of Wi-Fi is about at the level that cell phones were four or five years ago,” he said.

But he expressed confidence that “we will catch up in a very short period of time.”

Next moves for NetSuite?

Zach Nelson, CEO of NetSuite, a provider of ERP solutions to small and medium sized business (SMB), dropped by our office for coffee the day after he gave a keynote address at the C3 Expo here in New York last week.

Having already created one enterprise solution at a small enough scale for smaller companies to swallow, Nelson is interested in addressing another: health care costs, which he said are the most difficult challenge that SMBs face.

“The cost of health insurance for my company has gone up 20 percent every year for the last five years,” he told internetnews.com. “I don’t have any other expense that has gone up that much every year.”

Indeed, Jackie Chan, an analyst with AMI-Partners, a New York-based consultancy that focuses on SMBs, explained that the cost of providing these benefits is a major stumbling block.

She told internetnews.com that many SMBs don’t offer health benefits because of the cost, and that “can become a major impediment to the growth of this business segment.”

The reason those costs are so expensive, said Nelson, is that it’s inefficient for providers to sell into a market as fragmented as SMBs.

“Whether it’s insurance or 401(k) plans, there’s no way for them to address the SMB market efficiently,” he said.

Nelson said the next challenge for NetSuite is to find a way to pool SMBs together into a single customer for health insurance and other benefits providers to address, using eBay as a model.

“We should be looking at ways to aggregate them, the way eBay aggregates buyers and sellers in a single community,” he said.

A bit of common sense

Another speaker at the C3 Expo addressed online security issues.

Glenn Brunette, distinguished engineer at Sun Microsystems criticized the tendency among corporate executives to blame regulations such as Sarbanes-Oxley (SOX) for creating a morass of rules.

“All the things they’re telling us to do is common sense, it’s stuff we should have been doing on our own.”

He noted that Section 404 of SOX, which mandates strict controls and procedures for safeguarding financial information, doesn’t require any specific actions. Companies need to decide which solution best fits their needs.

“You shouldn’t use a network IDS because of SOX,” he said.

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