EDISON: Vonage Holdings Corp. has put out the call for help.
The Edison-based Internet-telephone company is about to double its work force by adding another 600 employees to manage explosive subscriber growth.
“We're growing very, very quickly, and we've got to hire a lot of people,” Chairman and
CEO Jeffrey A. Citron said in an interview at Vonage's Route 27 headquarters on Tuesday. “Hiring those people and training and scaling up our personnel is an enormous logistical challenge.”
Branding itself as The Broadband Telephone Company, Vonage has the telecom world talking.
The company is fresh off a victory before the Federal Communications Commission, which ruled Internet phone service is not bound by state regulations. The company plans to take its aggressive expansion plans to the next level.
“The FCC's decision was very important for us because it allows us to make additional investments in deploying our services … we had halted our deployments for awhile pending this decision,” Citron said. “We just weren't sure if we were going to invest in new markets just to go take on and fight a state regulator.”
Founded in January 2001, the privately held firm serves more than 300,000 customers in the United States and Canada, with about 80 percent residential accounts.
The 34-year-old chief executive, founder of brokerage Datek Online Holding Corp. in Iselin, is putting his golden touch on the home-grown Middlesex County firm.
“This quarter our goal is to add 100,000 customers,” Citron said. “We added 82,000 customers, approximately, last quarter, and we're shooting at 100,000 this quarter.”
The Voice over Internet Protocol (VoIP) telephone-service provider is creating positions across the board in customer service, software development, engineering, training and other departments, Citron said.
More than half the company's employees work in customer service in the call-center and support groups.
Technical support manager Bill Carter said call-center employees have risen to their biggest challenge of satisfying the public's demand for Vonage services.
“There's a lot of talent here,” he said.
The call center handles up to 8,000 calls per day, said Carter, a Rahway High School Class of 1985 grad with a B.S. in business administration from Susquehanna University in Pennsylvania.
Citron declined to make any predictions on the company's future, but with the aim of signing up tens of thousands of new customers every month Vonage could reach a half-million sometime early next year. “We don't put big stakes in the ground, we just try to go out and execute everyday,” he said.
Because residential and small-business customers traditionally have been underserved,
Citron said, the firm is targeting its home and SOHO (small office and home office) customers with online, print, and TV ads and marketing. “We at Vonage are trying to deliver value to these two sectors,” he said.
The IP telephony provider offers phone service using broadband, high-speed digital or
Internet connections through cable TV, Internet providers like AOL or EarthLink, and telephone companies.
“You can have any flavor of broadband,” Citron said, pointing to DSL and wireless connections. “There really are a lot of broadband options for consumers, and there are new options being created everyday.”
The adapters used to hook up phones to broadband connections, including routers and modems that enable the lines for VoIP calls, are sold through Radio Shack, Circuit City, Best Buy, Staples and other retailers. Rebates accompanying the purchases often bring down the retail price from about $60 to $10, and Vonage also gives away the devices on its Web site, Citron said.
“We work really well with our partners in putting a wide variety of products on the store shelves to give consumers a lot of choices,” he said. “The retail format is really good for that because we need that shelf space to show people the kinds of products they can buy that work with our service.”
Citron dismissed any suggestion that regular folks might be put off by sophisticated and complex products or services, saying installation typically takes the consumer 15minutes.
“I think people use ‘the technology fear’ too much, particularly nowadays with people so accustomed to seeing technology as part of everyday lives,” he said. “Yes, 20 years ago the personal computer was a pretty scary piece of equipment; today just about every single home has a computer.”
DVD players, computers in cars, and cell phones are just a few innovations that have become commonplace and transformed the way people view technology.
“That's been a real help for us,” he said. “It's really more about awareness and what Voice over IP means for you and how you improve your life than about any technical obstacles.”
The large numbers of consumers signing up for broadband every month, seeing the realities of pricing structures, is good for Vonage's business, Citron said.
“Most people who are on the Internet and don't have broadband yet, see the cost of their phone bill and the cost of Internet service . . . find that cost in totality is more expensive than going out and getting broadband and getting Vonage.”
Vonage has national flat-rate pricing regardless of where in the country the customer lives.
Residential and business packages range from $14.99 to $49.99 plus fees and taxes monthly.
For $24.99 per month, residential customers get unlimited long-distance and local calls in the U.S. and Canada. The $14.99 plan includes 500 minutes to anywhere in the U.S. and Canada.
The small-business unlimited plan is $49.99 per month. For $39.99 per month, businesses get 1,500 local and long-distance minutes.
Voicemail, caller ID, call waiting, and call return (star 69) are among features included in the plans, and the service does support TTY devices. The company touts the ability to retrieve voicemail by phone, on the Web or by e-mail. Its Virtual Phone Number offering, featuring more than one phone number per line, allows a customer living in the 732, 908 or 609 area code to have a telephone number in places like New York City, London, or Mexico City for an additional $4.99 per month.
The service is valuable to businesses wanting to have a market presence with a phone number rather than a physical site.
People with families in Mexico, Canada, or England, where the service is available, can call a local number without incurring long distance charges and reach New Jersey, Citron said.
“We don't know geographic borders like states,” he added.
New markets for the company include areas in Ohio, North Dakota, Maine and Iowa.
Vonage also offers wholesale service to commercial customers and resellers.
Citron would not release sales or earnings figures but did say the company has raised $280 million in private capital.
The company has automated sites throughout the world, but the firm operates from 70,000 square feet on two floors at the Revlon building on Route 27, Vonage's lone major facility. The setup, the billing part, of every Vonage phone call – there are more than 5 million calls per week – passes through the Edison center. Most of the Internet calls must eventually move from broadband to traditional phone lines in the ""last mile'' connections to people's homes and businesses.
Jared DeNigris, director of systems operation, oversees the NOC, Network Operation Center, on the second floor.
“We basically monitor the whole network, keep track of service,” said DeNigris, a ’94 graduate of J.P. Stevens High School in Edison who has a bachelor's in engineering from Stevens Institute of Technology in Hoboken.
From the outset Vonage's challenge was to use telephones already in people's homes to provide at least comparable, or better, service.
“Obviously, making Voice over IP work for 300,000 people is not easy. It's not trivial; it's a really complex problem,” Citron said. “We spent all of 2001 building our technology so that people would have a very seamless migration from plain-old telephone service to Voice over IP, and that was important for us.”
Vonage plans to stay its course of adding subscribers with low-cost pricing as companies join competitors like Skype and Net2Phone in the field that is quickly getting crowded, Citron said.
Earlier this week San Antonio, Texas-based SBC Communications Inc. announced it will enter the VoIP marketplace next year to compete with Vonage and Verizon Communications Inc., based in New York. Long-distance giant Bedminster-based AT&T announced earlier this year it would cease its residential service, citing hostile state regulatory environments.
Cable television and high-speed Internet provider Comcast Corp. is preparing to roll out its own Internet telephone service some time early next year.
“Comcast is currently in trials in three markets with Voice over Internet Protocol to deliver voice services over our managed, private network,'' Robert Smith, a Comcast spokesman, said. “Those trials are designed to develop all the processes and procedures necessary to give our customers a great experience with the services.”
Not all VoIP is created the same, Smith said. One of the things that differentiates Comcast from Vonage and other IP telephony providers is the cable company's hardware.
“Our calls will not touch the public Internet,” he said. “Vonage is not a facilities-based provider like we are. They have no network. Their calls all ride on the public Internet.”
The Philadelphia-based cable company is testing in the western suburbs of Philadelphia, Indianapolis, Ind., and Springfield, Mass. Comcast will likely announce in the first quarter next year in which markets its telephone service will be available to complement its high-speed Internet and digital and high-definition cable offerings.
Smith emphasized that Comcast will offer professional home installation for its phone service, the same as its other services, in contrast to Vonage's self-install devices.
“We're working on features, we're working on packaging … we want to get it right,” Smith said.
Comcast has about 370,000 cable TV and Internet subscribers in Middlesex, Mercer, and parts of Union and Monmouth counties in Central New Jersey.
Vonage spokesman Mitchell Slepian had a counter perspective.
“Vonage runs its service over its managed network, where its Internet capacity is leased from its partners and managed through its data centers throughout the world,” Slepian said.
Verizon Communications Inc. has been offering its VoiceWing VoIP since July.
“We see Voice over IP as a critical part of our future, and we're pretty confident we can compete with any provider,” Verizon spokesman John Vincenzo said.
Verizon's ability to bundle its broadband with VoIP telephone service, and its video-entertainment offerings starting next year, makes its services more advanced and desirable than its competitors, Vincenzo said.
Verizon's DSL broadband is offered for $29.95 per month, and VoiceWing VoIP with unlimited local and long-distance calling is available for $29.95 per month for the first six months and $34.95 per month thereafter, he said. Self-installation is a simple process, he said.
Verizon did not provide subscriber figures.
The VoIP industry is in its early stages in a period of high growth, according to Kate Griffin, senior analyst at Boston-based communications and networking research and consulting firm The Yankee Group.
“At the end of last year there were about 130,000 subscribers,” Griffin said. “We estimate we'll near a million at the end of the year.”
Estimates show growth to roughly 17.5 million subscribers by 2008, she added.
Companies are developing their products, which differ from provider to provider, she said.
Citron said that even with all its growth, Vonage hasn't outgrown the Garden State.
“We are a New Jersey firm,” he said. “We're not going anywhere.”
