US broadband player mulls Irish market entry

5 Jan 2004

US broadband company Vonage Holdings is understood to be planning to take BT head on in the nascent voice over internet protocol (VOIP) market in Ireland and the UK by the end of this year.

The New Jersey headquartered company is regarded as one of the fastest growing telephony companies in the US covering 100 specific market centres, with some 80,000 residential and corporate customers, 10pc outside the US. Some 4 million calls per week are made using the company’s Digital Voice services.

These services are sold directly over the internet at as well as through wholesale partnerships with players such as, Earthlink, Armstrong, Advanced Cable Communication and Coldwater Board of Public Utilities, who sell the VOIP services under their own unique brands.

Vonage, which was established in 2002, is expected to break even half way through this year. The company raised some €28m in October following a ruling in a Minnesota court that the company should not be regulated as a telephone services company.

The company’s VOIP technology converts voice patterns from an analogue to a digital signal which can then be sent over a high speed internet connection. The company has claimed that while it has not been the first to offer VOIP service, it is one of the first to get it right.

However the poor state of broadband in Ireland, with only 2pc of phone customers considered as having a high speed connection, may act as a deterrent to the ambitious company. Last month it cancelled plans to launch services in Canada at the same time that market incumbent Bell Canada revealed plans to launch VOIP services, causing analysts to assert that the difficulties of competing with an established incumbent may prove off-putting to players such as Vonage.

By John Kennedy