Vonage 2013 Annual Report Download - page 9

3 VONAGE ANNUAL REPORT 2013
Vonage as a leader in the SMB hosted VoIP market. SMB and SOHO
services will be offered under the Vonage Business Solutions brand.
> International Expansion
Expansion opportunities outside of the United States. We
currently have operations in the United States, United Kingdom, and
Canada and believe that our low-cost Internet based communications
platform enables us to cost effectively deliver voice and messaging
services to other locations throughout the world.
The global consumer communications market is estimated to
be $200 billion and growing at approximately 7% per year. We are
expanding our geographic footprint through partnerships and are
pursuing a range of business concepts which include jointly providing
low rates and expanded footprints with international partners to
providing a full suite of communications services sold and marketed
jointly with or by other companies.
In 2012, we signed our first partnership with Globe in the
Philippines, offering a Philippines calling plan for the more than three
million Filipinos living in the United States. In February 2013, we signed
our second international partnership, a joint venture to deliver
communications services in Brazil. We are in discussions with other
prospective international partners in countries we have targeted for
expansion. These partnerships underscore our strategy to expand our
services beyond North America and the United Kingdom.
> Mobile Services
Mobile and other connected device services. Mobility has
become central to our development priorities, including enhancements
to our core services through our patented Extensions product and our
digital calling card, international expansion opportunities, and as a
standalone product through Vonage Mobile, our all-in-one mobile
application that provides free, high quality voice and video calling and
messaging between users who have the application, as well as low-
cost international calling to more than 200 countries to any other phone.
In 2013 we continued to improve Vonage Mobile with quality and feature
enhancements including video calling and video voicemail. In addition,
we recently conducted a technical trial of our new ReachMe roaming
feature in Western Europe.
Customer interest in our Extensions product, which allows
consumers to extend their Vonage home phone service to another
phone, including mobiles, continues to grow, and we now have 28% of
our customer base signed up to use Vonage on their mobile phone
through this service. 25% of all international calls on our network now
originate from a mobile phone. Our recently launched Digital Calling
Card for mobile phones makes use of the same platform, directly
competing with traditional calling card services.
We had approximately 2.5 million subscriber lines for
broadband telephone replacement services as of December 31, 2013.
We bill customers in the United States, Canada, and the United
Kingdom. Customers in the United States represented 94% of our
subscriber lines at December 31, 2013.
SERVICE OFFERINGS
Our home telephone replacement services are offered to
residential customers through several service plans with different pricing
structures. The service plans include basic features such as voicemail,
call waiting call forwarding as well as unique features Simulring, visual
voicemail and Extensions. We also charge for local and international
calling outside of plan limits. Information on our revenues, operating
income, and identifiable assets appears in Note 1 to our consolidated
financial statements included in Item 8 hereof.
As of December 31, 2013, approximately 89% of our United
States subscriber lines were for residential service. Our primary
residential offering is Vonage World with approximately 1.0 million
subscriber lines as of December 31, 2013. For a flat monthly fee, this
plan includes unlimited domestic calling (U.S., Canada, and Puerto
Rico) and unlimited calling to landline phones in more than 60 countries,
including India, Mexico, and China, and unlimited calling to mobile
phones in certain of those countries. In addition, the Vonage World offer
includes unlimited Vonage Visual Voicemail, which is “readable
voicemail” delivered via email or SMS text message, Vonage
Extensions, which extends the plan to additional phone numbers and
devices including smartphones and feature phones, and directory
assistance. We also market other residential plans that include limited
domestic or international minutes, such as our 800 plan that includes
800 minutes to the U.S., Canada and Puerto Rico. We offer similar
plans in Canada and the United Kingdom.
Each of our residential calling plans provides a number of
basic features including call waiting, caller ID with name, call forwarding,
and voicemail. We also offer, in some cases for additional fees, features
that we believe help differentiate our service from our competitors, such
as:
> Area Code Selection. Customers can select from
approximately 287 United States area codes for their
telephone number for use with our service, regardless of
physical location.
> Virtual Phone Number. A customer can have additional
inbound telephone numbers that ring on a primary subscriber
line, each for an additional fee. Each of these inbound
telephone numbers can have a different area code. In addition
to United States virtual phone numbers, we offer virtual phone
numbers for 19 other countries. For example, a customer
living in New York City with a New York City phone number
can purchase a Toronto virtual phone number that rings on
the customer’s primary subscriber line. In this instance, a
caller from Toronto could call the customer’s virtual phone
number and be billed as if the customer were in
Toronto. Virtual phone numbers are not included in our
subscriber line count.
> Web-Enabled Voicemail. Our service allows customers to
receive e-mail notification of a voicemail with the voice
message attached to the e-mail message as an audio file.
Our customers can also check and retrieve voicemails online
or from any phone.
Through our recent acquisition of Vocalocity, Vonage
Business Solutions offers SMB and SOHO customers several service
plans with different pricing structures. The service plans include an array
of features applicable to the needs of SMB and SOHO customers.
Customers also have the opportunity to purchase premium features for
additional fees.
Our mobile services include enhancements to our residential
calling plans as well as mobile applications that can be initially
downloaded for iPhone®, iPad®, iPod touch®, and Android® OS devices
for free. In August 2011, we launched Extensions, an enhancement to
our flat rate, unlimited international calling plan that extends the plan to
additional phone numbers and devices including smartphones and
feature phones. A customer may sign-up for up to two extensions with
the first extension provided free of charge and the second extension
incurring an additional fee. In early 2012, we introduced Vonage Mobile,
our all-in-one mobile application that provides free calling and
messaging between users who have the application, as well as low-
cost international calling to more than 200 countries to any other phone.
In addition, calls by users of the mobile application to Vonage home or
business lines are also free. This mobile application works over WiFi,
3G and 4G and in more than 90 countries worldwide.
Devices
In order to access our residential and SOHO services, a
customer need only connect a standard telephone to a broadband
Internet connection through a small Vonage-enabled device. In order
Table of Contents