Vonage Awarded Two-Week Sigh of Relief

U.S. District Judge Claude Hilton has slapped Internet telephone provider Vonage with a permanent injunction against using Verizon technology in its VoIP service, but delayed the actual enforcement of the injunction for two weeks. Holmdel, N.J.-based Vonage moved quickly to assure its more than 2 million subscribers of continued service. "We are confident Vonage customers will not experience service interruptions or other changes as a result of this litigation," Vonage CEO Mike Snyder said in a statement. "We're pleased the court has decided to issue a permanent injunction to protect Verizon's patented innovations for offering commercial-quality VoIP and Wi-Fi services," said John Thorne, Verizon's senior vice president and deputy general counsel. Verizon claims a permanent injunction is necessary as the company contends Vonage's service has drained more than a million customers away from Verizon and that Vonage's precarious financial situation might put it in a position of being unable to pay the infringement judgment.

The next critical court date for Vonage is April 6, when Hilton is expected to rule on the company's motion to stay the decision. Vonage said if the court denies the stay, it would appeal to the Federal Court of Appeals. "Our fight is far from over. We remain confident that Vonage has not infringed on any of Verizon's patents -- a position we will continue vigorously contending in federal appeals court -- and that Vonage will ultimately prevail in this case," said Snyder. Sharon O'Leary, Vonage's executive vice president, chief legal officer and secretary, said that the company's appeal of the jury decision will be based on erroneous patent claim construction. "Vonage relied on open-standard, off-the-shelf technology when developing its service," she said.

News source: InternetNews

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Bascially, when you call from Vonage it hits their softswitch to find the IP address of the number you are calling. A softswitch is basically a massive database of phone numbers and their IP addresses. It changes as IPs change. Once the softswitch figures out where to go, usually in milliseconds, rings the number. Faster path is to another VOIP number. The tricky part is the path to a PSTN (public switched telephone network). The QoS problem of VOIP is the multiple paths the packets take in reaching their destination. It does find the closest connection point and the terminates to that PTSN, which is then connected to that POTS number. The system has to convert the digital signal of VOIP to the analog signal of the POTS line. Net Congestion, or even many softswitches, can cause all kinds of problems unless the VOIP is on a dedicated network (like Cable VOIP). Once it hits the PTSN and connects, the call is at a termination point--call connected.

So, a VOIP call, if properly routed, can bypass a lot of the PTSN but not all of it. Hence, it does terminate at the closest access point, which is usually the phone company's network. Hence, the phone company is basically paying for the connection probably in their intralata system.

Now, FIOS uses softswitching but is dedicated and digital until it terminates at an analog switch. The more dedicated the network the higher the cost.

Now, if everything was fiber and digital, Vonage would not be but an irritant to the telcos since the cost of connection to a digital phone is a heck of a lot cheaper since it is just a better IP phone system. Copper POTS is costly to maintain so termination fees are higher.

So, that is basically how it all works and why vonage needs to pony up and deal with this and pay up.