Small Business Resource: Packet8's Broadband Telephone Service

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August 20, 2007

Packet8's Broadband Telephone Service

The future of stand alone VoIP was brought to everyone's attention last month, when the number 2 stand alone internet telephone company in the nation, SunRocket, went bankrupt and closed their doors forever. While there were signs that SunRocket was in financial trouble when they laid off workers the previous month, it came as quite a shock to most of the telecommunications industry.

The big question is, "Will Vonage be next"? Vonage is still losing money like crazy, which has caused the price of their stock to plummet. And, since their cost of customer acquisition is still more than they make off of a customer in a year, it stands to reason that they aren't going to make it either. If Vonage doesn't make it, thousands of investors are going to get hurt financially, just like they did when Enron went under.

The only bright spot right now in the stand alone internet telephone market, is Packet8. Packet8 actually posted a profit last quarter, making it the first stand alone internet telephone company to

do so. It looks like they did it by concentrating on business customers and value added product upgrades. By going after business internet telephone customers, who usually pay at least

twice what residential VoIP users do, they lowered their cost of customer accusation to the point where they can now make money.

While the large cable and telephone companies are easily making money adding VoIP to their lineup of other services, small internet telephone companies are going to need to follow

Packet8's lead and find a niche where they can add enough value to their internet telephone services to create a viable long term business. I hope most of the stand alone VoIP's, like

Vonage, make it, if not for their investors, at least to keep the cable and telecom companies on their toes by keeping the market competitive.

Posted by David at August 20, 2007 10:12 PM