Improved customer service most important for Vonage revival

New software for the company's customer service operations is being rolled out to make sure there are enough bodies in the seats, and to redirect calls to call centres that are less busy.

Vonage founder Jeffrey Citron has admitted that the organisation grew very, very quickly, and along the way a few things got out of hand. Its subscriber base leaped to 2.2 million in 2006 from 1.3 million in 2005.

But Vonage didn't pour more money into customer service systems that could support that bigger client base. This led to long wait times, prompting some clients to hang up the phone and cancel their service.

At the same time, Vonage spent too much on ineffective advertising aimed at building its brand name amid fierce competition from cable operators that were also moving into the phone business.

Its marketing budget jumped to $365m in 2006 from $56m in 2004, eating up a lot of the revenue that should have been invested back in the business.

Now that the company has settled its patent lawsuits with Verizon, Sprint Nextel and AT&T, it is planning to bring out new products, including an international long-distance calling plan.