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At least three reasons why Vonage subscriber count is flat-lining

During yesterday's quarterly conference call with analysts, Vonage founder and interim CEO Jeff Citron noted that for the second quarter the company spent just $68 million on marketing, compared to $91 million in the first quarter.The cuts helped Vonage reduce their losses for the quarter by about 50 percent, but may have played a key role in the struggling VoIP company adding just 57,000 customers in 2Q, vs.
Written by Russell Shaw, Contributor

During yesterday's quarterly conference call with analysts, Vonage founder and interim CEO Jeff Citron noted that for the second quarter the company spent just $68 million on marketing, compared to $91 million in the first quarter.

The cuts helped Vonage reduce their losses for the quarter by about 50 percent, but may have played a key role in the struggling VoIP company adding just 57,000 customers in 2Q, vs. 166,000 new signups in 1Q.

My colleague Maggie Reardon notes more troubling statistical indicators for Vonage. During the second quarter its churn rate or the rate at which customers cancel service rose to 2.5 percent from 2.4 percent in the previous quarter.

She writes that Citron said he had surveyed customers at Vonage and discovered that as many as seven out of 10 customers who left the service did so because of spotty customer service. Citron vowed to change this.

"It doesn't take a lot of bad experiences to cause a few thousand customers to leave, and that reduces net adds," he said. "We expect to make modest improvement in the next quarter dealing with these issues of churn and improving the customer experience."

In my view, all these numbers and trend lines can't be good for Vonage.

Could it be the real reason signups are slower is that Vonage has pretty much:

Max-ed out the segment that does not yet have VoIP, but is early-adopter-y enough to sign up with a pure-play VoIP service?

Is losing newer customers who need their hand-held to the reality that a call to Vonage First Tier tech support gets routed to Asian call center reps that don't have insights into tech fixes than what is available to them on help screens? And, the fact that there sometimes are language issues communicating with these folks?

Is being beaten to newer VoIP customers by triple-play, VoIP-providing, Internet broadband services?

I'd vote all of the above.

You?

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