Cheap calls, huge burn rate

Even before I could jump-up-and-down on Vonage’s ass, Andy does a fine analysis of their marketing burn rate.

Vonage is expending $375 per customer in marketing expense before you add in the cost of the ATA and shipping, just to acquire the subscriber. So in round number let’s say they are spending $450 per sub. With average cost per sub pegged at $30.00 before costs, lets say $15 dollars for the PSTN number and termination if the usage is light to moderate it would take 3 years before Vonage has recovered the cost to acquire the customer.

My two cents on this came via Guy Kawasaki who stopped by the office to promote his book. “Between AT&T and Vonage, you know which one I am going to take,” he said. The constant battle of competing with the giants is going to weight on Vonage, which is having more outages by the day it seems. Yesterday another reader wrote in and complained about not being able to dial out for days. My two cents on telecom downward spiral.