Vonage 2010 Annual Report Download - page 11

In December 2010, we completed the refinancing of all of ou
r
outstandin
g
debt. The terms of the new loan include si
g
nificantl
y
l
ower interest rates and less restrictive covenants than the
p
rio
r
debt. We believe this refinancin
g
helps to de-risk the business b
y
s
implifyin
g
the complex covenant structure and it
g
ives us
g
reater
flexibility to deploy the cash
g
enerated by our business.
SERVICE OFFERINGS
O
ur broadband tele
p
hone re
p
lacement services are offered to
r
esidential, small o
ff
ice and home o
ff
ice customers throu
g
h severa
l
s
ervice
p
lans with di
ff
erent
p
ricin
g
structures. The service plans
i
nclude an array o
f
both basic and enhanced
f
eatures, and
customers have the opportunity to purchase a number o
f
premiu
m
fea
t
u
r
es a
t
a
n
add
iti
o
n
a
l
fee
.W
ea
lso char
g
e
f
or local and interna
-
t
ional callin
g
outside o
f
plan limits. In
f
ormation on our revenues,
operatin
g
income, and identi
f
iable assets appears in Note 1 to ou
r
co
n
so
li
da
t
ed f
in
a
n
c
i
a
l
s
t
a
t
e
m
e
nt
s
in
c
l
uded
in It
e
m
8
h
e
r
eof.
O
ur primary offerin
g
is Vona
g
e World with approximatel
y
970,000 subscriber lines as o
f
December 31, 2010. This
p
la
n
accounted
f
or 81
%
o
f
our
g
ross line additions in 2010. For a
f
la
t
monthly
f
ee, this plan includes unlimited local callin
g
and
unlimited callin
g
to landline phones in all cities and locations i
n
more than 60 countries, includin
g
India, Mexico, and China, and
unlimited callin
g
to cellular phones in certain o
f
those countries. In
addition, the Vona
g
e World o
ff
er includes unlimited Vona
g
e Visua
l
Voicemail, which
p
rovides “readable voicemail” delivered via
email or SMS text messa
g
e, and directory assistance. We als
o
market other residential
p
lans that include enhanced
f
eatures o
r
l
imited minutes, in addition to o
ff
erin
g
our le
g
acy Residentia
l
Premium Unlimited plan to existin
g
customers.
We o
ff
er two small and home o
ff
ice callin
g
plans, one o
f
which o
ff
ers unlimited local and lon
g
distance callin
g
anywhere i
n
t
he United States, Canada, Puerto Rico, and five Euro
p
ean coun
-
t
ries and another that includes a s
p
eci
f
ied number o
f
minutes i
n
t
he United States, Canada, and Puerto Rico. Each of these
p
lan
s
a
l
so
in
c
l
udes a f
r
ee ded
i
ca
t
ed fa
x lin
e
.
As of December 31, 2010, approximatel
y
94% of our Unite
d
S
tates subscriber lines were for residential service. Approximatel
y
40% of those residential subscriber lines were under the Vona
ge
World
p
lan and 31% were under the Residential Premiu
m
U
nlimited
p
lan. We offer similar
p
lans in
C
anada and the United
Kin
g
dom. Please see Note 11 to our consolidated financial state
-
ments for financial information about our
g
eo
g
raphic areas
.
Each of our residential, small office and home office callin
g
p
lans provides a number of basic features including call waiting,
caller ID with name, call forwarding, and voicemail. We also offer
,
i
n some cases for additional fees
,
a number of enhanced services
t
hat we believe help differentiate our service from our com-
p
et
i
tors, suc
h
as
:
>
Area
C
ode
S
election.
C
ustomers can select from approximatel
y
2
70 United
S
tates area codes for their telephone number for
u
se with our service, regardless of physical location
.
>
Virt
ua
lPh
o
n
e
N
u
m
be
r. A
cus
t
o
m
e
r
ca
nh
a
v
e add
iti
o
n
a
l
inbound telephone numbers that rin
g
on a primary subscribe
r
line, each
f
or an additional
f
ee. Each o
f
these inbound tele
-
p
hone numbers can have a di
ff
erent area code. In addition t
o
United States virtual
p
hone numbers, we offer virtual
p
hone
n
umbers for 19 other countries. For exam
p
le, a customer liv-
in
g
in New York
C
ity with a New York
C
ity phone number ca
n
purchase a Toronto virtual phone number that rin
g
s on the
c
ustomer’s primary subscriber line. In this instance, a caller
f
rom Toronto could call the customer’s virtual
p
hone numbe
r
a
n
dbeb
ill
ed as
i
f
th
e cus
t
o
m
e
rw
e
r
e
in T
o
r
o
nt
o
. Virt
ua
l
p
hone numbers are not included in our subscriber line count
.
>
S
imulRing
.
C
ustomers can select up to five other phone
n
umbers an
y
where in the United
S
tates, Puerto Rico, and
C
anada to ring when a call is made to the customer’s Vonag
e
nu
m
be
r.
>
P
ersona
li
ze
dW
e
b
-
E
na
bl
e
dV
o
i
cema
il.
O
ur service allow
s
c
ustomers to receive e-mail notification of a voicemail wit
h
t
h
evo
i
ce message attac
h
e
d
to t
h
e e-ma
il
message as an
a
udio file.
O
ur customers can also check and retrieve voice-
m
ails online or from an
y
phone.
>
T
o
ll F
ree
Pl
us
.
A
customer can have toll
f
ree numbers that
ring on an existing subscriber line. Toll free numbers are not
i
nc
l
u
d
e
di
n our su
b
scr
ib
er
li
ne count
.
>
Vona
g
e Soft Phone
.
A
so
f
t
p
hone is a so
f
tware a
pp
lication
that can be downloaded
f
or
f
ree and installed on computers
,
l
aptops, an
dWi
-
Fi
ena
bl
e
d
persona
ldi
g
i
ta
l
ass
i
stant
d
ev
i
ces
.
I
t enables a user to use a computer as a
f
ull-
f
unctioning tele-
p
h
one, w
i
t
hi
ts own p
h
one num
b
er, t
h
roug
h
a screen-
b
ase
d
inter
f
ace that works just like a telephone ke
y
pad
.
O
ur mobile services are available throu
g
h mobile applications
t
hat can be initially downloaded
f
or iPhon
e
®
, iPod touch
®
a
n
d
Android™ OS devices for free. Vona
g
e World Mobile and Vona
g
e
M
obile Pay per Use provide seamless, low-cost pay-per-use
i
nternational callin
g
while on Wi-Fi or cellular networks, dependin
g
on the device,
f
or the Vona
g
e Mobile plan or unlimited callin
g
t
o
more than 60 countries
f
or a
f
lat monthly rate
f
or the Vona
ge
World Mobile
p
lan. Bundle discounts are
p
rovided
f
or customer
s
w
h
osu
b
scr
ib
eto
b
ot
h
our res
id
ent
i
a
l
an
d
mo
bil
e
V
ona
g
e
W
or
ld
pl
ans
.
Vona
g
e Mobile
f
or Facebook allows a user to call
f
or
f
ree an
y
Facebook
f
riends that have also downloaded the a
pp
licatio
n
usin
g
the users’ Facebook
f
riends list. The application works ove
r
Wi-Fi, 3G or 4G networks.
In connection with our e
ff
orts to develop next-
g
eneration
s
ervices to meet the emer
g
in
g
needs o
f
mobile and other con-
nected devices, we hired a new vice
p
resident to lead our
r
esearch and development e
ff
orts, which include drivin
g
ou
r
t
echnolo
g
y strate
g
y, evolvin
g
our IP-based communications plat
-
f
orm, and developin
g
next
g
eneration mobile and web-base
d
p
roducts. This vice president leads technolo
g
y teams in Holmdel,
New Jersey and in our new research and development center in
T
el Aviv, Israel.
D
e
vi
ces
In order to access our residential
,
small office
,
and home
office services, a customer need onl
y
connect a standard tele-
p
hone to a broadband Internet connection throu
g
h a small
Vona
g
e-enabled device. After connectin
g
the device, our
customers can use their tele
p
hone to make and receive calls.
O
ur
adapter
g
enerally permits a subscriber to connect up to tw
o
Vona
g
e lines throu
g
hahi
g
h-speed Internet connection and
i
ncludes a networkin
g
router. Vona
g
e-enabled devices allo
w
4
VO
NA
G
E ANN
U
AL REP
O
RT 2010