The telcos have been very slow to upgrade broadband networks. The few enhanced speed offerings have been in very limited areas or as an adjunct to a pay TV system. Consumers are now leaving for higher speeds where they have a choice. Verizon and Qwest are facing potentiual strikes, and AT&T’s pay TV take rates has been abyssmal. Does this sound bad? There’s more:

The second-quarter 2008 financial reports are in –- and the tea leaves aren’t showing a sunny future for phone companies. While their financials today look bearable, economic and demographic trends are acting as gale-force headwinds for the future. Here are some of the major issues they’re facing:

• A slowing economy means people are choosing wireless phones over landlines, resulting in increased access line losses. That, in turn, is reducing the number of people the phone companies can convince to switch to their higher-speed networks and video services.
• Cable’s triple-play bundles, which include higher speeds and voice, are starting to resonate with the residential customers, leading to further landline losses.
• Phone companies’ own higher-speed services are starting to cannibalize their installed base instead of luring customers away from cable companies. (GigaOM)

To the Telco suits: we told you this was coming, time and time again. The world wants a big dumb pipe. Time to invest in that. It will require fewer resources and fewer people to operate. Flat rate billing will provide dramatic decreases in both cost of billing and customer service. Your high gross margin with lower operating costs, and growth of market share will reverse the negatives. If you get a clue and get with the program, and your companies still have a chance to survive.

First, I want to say that I was a happy Vonage customer for 4 years. The only reason I chose to leave them was I got a better deal. Leaving is the rub. Even after you leave, Vonage keeps on billing, and they resurrect dead service without notice. This company is technically a good operation, but the customer service and billing has earned this fiasco of a company the right to a dirt nap.

In late September 2005 I ordered VOIP service from another carrier and canceled Vonage. Several calls to Vonage sent me through a succession of people, many who had poor command of English, and eventually led me to wait on hold for the person authorized to end my account. The wait was too long, and I finally believed I closed the account on a Saturday after spending more than 2 hours on the phone with them. When I had allegedly discontinued service, I had been using my new carrier for several weeks and had disconnected the Vonage ATA box. They billed my American Express charge for the entire month, and I paid the entire bill. All was well until the next American Express bill arrived and the usual charge from Vonage was again on the bill again. I had now not used the service for 2 months Long waits finally got assurances form a Vonage employee that the service was discontinued, although no one would agree to credit me for the illegitimate charges. I paid the bill and moved on to more productive endeavors rather than fight over $30. The next month, you guessed it. Vonage billed my American Express again. I phoned American Express, and they contested the charges and since Vonage did not bother to try to prove they were legitimate, the charge was reversed. Every Month following that time, I had a new charge from Vonage that was contested and reversed. I repeated called Vonage and emailed them to no avail. As a rule no one could find my account when I phoned them or I was told it was an error. This continued for more than 2 years until I finally closed the American Express account. Finally all was quiet after 2 years of trying to get rid of the Vonage beast.

Today I received two collection notices from an agency writing on Vonages’ behalf. They say I owe more than $250 for Vonage service including charges from last year - more than 2 years after I canceled service.

Well, dear reader, it’s time for me to take the gloves off. If you have Vonage service, I encourage you to cancel service and get confirmation in writing. There are a plethora of other VOIP carriers in the world who are less expensive and have much better customer service than Vonage. If you are looking for new VoIP service, please do yourself a favor and avoid this company at all costs.