IP Telephony news wrap-up for Apr 9 – 2007

Vonage was busy last Friday. In the early morning, the U.S. District Court in Eastern Virginia didn’t take much time to listen to arguments but instead quickly ruled, on a suggestion from Verizon, that Vonage could not sign up any new VoIP consumers until an appelate court had ruled on the case. The decision was to be effective April 12th. In addition, the company was asked to put up a $66 million bond for its appeal. Vonage acted quickly and soon after, received an emergency stay of the injunction from the Court of Appeals for the Federal Circuit, enabling the service provider to continue operations and signing up new customers during the appeals process.

The reversed decision undermined hundreds of editorials and blogs projecting Vonage’s doom.

The drama was preceded by three notable developments. First, Voange said that it wouldn’t file its annual report on time due to the uncertainty of the March 23rd court decision. The news accompanied a move by CitiBank, one of the companies that helped with Vonage’s IPO, to recommend selling the company’s shares.

Soon after, a vague press announcement was released by Vonage that mentioned a 2-year networking services agreement with VoIP Inc. The press annoucement had some of the most high profile media reporting that VoIP Inc. would likely be the company’s workaround solution to the patent infringements. VoIP Inc went along with Vonage’s bluff and released a press statement that it filed a Form 8-K with the SEC because of the deal, which due to competitive considerations, further details were not announced. The news may have kept Vonage’s shares trading above $3 during the week, but Brooke Shulz later clarified the arrangement with VoIP Inc with USA Today – defining the agreement as a standard termination deal that it has with up to 30 different companies at any given time and that there is no relationship between VoIP Inc and Vonage’s efforts to establish a workaround to the Verizon infringements.

Sharon O’Leary, Vonage’s chief legal officer, is confident that the appelate court will overturn the jury decision because Verizon’s construction to its patent claims is too broad. She stated that the Circuit Court of Appeals has reversed approximately 40% of verdicts that have involved flawed claim construction in patent cases.

U.S. Court of Appeals for the Federal Circuit
Cisco Systems has introduced Smart Business Communications System (SBCS), a plug n play, feature rich, IP-based voice and data system for small businesses. The system supports LAN switching, routing, VPN, firewall, wireless connectivity, security, unified communications, and extensive call management and third party application integration.

The Unified Communications 500 Series supports IP phones (including softphones), Internet connectivity with firewall protection, VPNs, and wireless LAN access. An optional desktop application supports instant messaging, single number reach, and desktop control of all calls and messages.

The Catalyst Express 520 is an 8-port PoE switch for establishing a LAN for both access to data and collobaration.

The Mobility Express consists of a wireless controller and access point for establishing a wireless connectivity to the LAN.

The Configuration Assistant enables the system to be plug n play by configuring telephony, messaging, switching, the wireless LAN, firewall, and security services.

The Monitor Director is a management tool for the systems integrator that enables real-time monitoring, alerting and reporting of network performance.

The SBCS is offered with connectors for integration with Microsoft CRM 3.0, Outlook, and IE. A connector is also available for integration with salesforce.com.

In conjunction with the system introduction, IPcelerate, a Cisco development partner, has introduced an application package to work with SBCS that provides business productivity applications for specific industries such as healthcare, legal, retail, and manufacturing office environments.

Cisco expects future releases or third party add ons to support multiple languages. The company also foresees an application package that would be tailored for elementary schools.

The new system, aimed at businesses with less than 100 employees, is scheduled for availability in June. The per seat pricing of the SBCS with unfied communications and plug n play capabilties as well as an IP phone will start at $700. The Catalyst Express will go for $1,395. The wireless controller will be $1,800 and the access point will be $500. The Monitor Director and Monitor Manager, which enable the remote monitoring, will be available for $2,900. The pricing makes it impractical for most small businesses. More likely, the SBCS is a way for a less than frugal CEO to blow some VC money.

The new small business system will be available to channel partners that achieve a SMB Specialization and earn a Selection Certification.

Channel partners have access to partner-development funds for advertising, acquiring demo equipment and training as well as financing programs through Cisco’s Capital’s Easy Lease program. Further, and possibly most importantly, partners are listed in the vendor’s Partner Locator database.

Over the next few years, Cisco states that it hopes to double the number of partners serving the SMB market, which is around 5,000 now.

In a separate announcement, Cisco introduced Smart Care Service, a new management solution that channel partners will be able to offer its SMB and midmarket customers. It can track 5 to 105 Cisco devices. Offered through a maintenance customer service contract, the service will provide network assessments, remote software repairs and tech support.

With the Smart Care Service, a hardware appliance or software client is deplayed at the customer site to collect network data. The data, hosted on a Cisco server, can be accessed by the channel partner to view the status of the health and security of a network as well as receive notifications of potential risks or issues. The remote management system also lets partners know if fixes can be made remotely.

General availability for the management solution is scheduled for Q3 of this year.

Cisco Systems
The FCC has recently passed new privacy laws that prevent a company from sharing customer information with independent contractors or joint venture partners, without the customer providing prior permission. The rule could cause problems for Sprint Nextel’s venture with Comcast, Time Warner, and Cox, which provides VoIP services to the three MSOs. Further, the Sprint venture promises to add a cellular component to the cable companies’ voice, video, and data services.

The FCC rules were established to prevent pretexting, which is an identity theft method.

Sprint Nextel
AT&T is offering U.S. businesses an IP toll free service that enables companies to improve the management and routing of calls to both IP and traditional customer equipment. The service features announcement options, routing management, and reporting.

Later in the year, AT&T will offer SIP based routing.

iBasis is undergoing an internal investigation to unveil incidents of stock option grant mischievousness – the same kind of crime that turned a Comverse executive into a fugitive, who was later captured in Sri Lanka. A Special Committee of independent directors, appointed by iBasis’ board of directors, has identified inconsistencies in the company’s accounting in regards to the grant options and as a result, it will be late filing its Q3 ’06 statement and its ’06 annual statement.

Nasdaq has been patient with iBasis and extended a one year deadline that it established for the company to complete its investigation. However, the delayed filings put the company’s continued listing in further jeapordy. The Listing Council is likely to delist the company or set new deadlines soon.

Westcon will distribute Alcatel-Lucent’s technology, with plans on intially offering the company’s products in France, where the vendor is a market leader in voice and data networking. Shortly after, Westcon will expand the offering to the UK.

Westcon already carries networking gear from Cisco, Nortel, and Avaya.

Westcon Group
Corrigent Systems has introduced the CM-4000, a packet transport system based on the company’s CM-4206 and CM-4314, that provides end to end delivery of packet and TDM services over a single converged infrastructure. The switch can be used for residential triple play services, Business Ethernet, 3/3.5G wireless and WiMAX backhaul, and peer to peer and on-demand content distribution.

The switch features:

* In-service scalability of network-side links of up to 100Gbps through advanced link bonding technologies

* Universal packet transport of any combination of TDM and packet traffic, from 100% TDM to 100% Ethernet

* Fully non-blocking switching capacity of 320Gbps scalable to 640Gbps
Support for the complete range of PDH, SONET/SDH, Fibre Channel and Ethernet interfaces

* Advanced TDM-to-Ethernet interworking functions on high-density, multi-service SONET/SDH and PDH interfaces

* Application and service-aware traffic management to overcome net neutrality, allowing carriers to benefit from higher margins on preferred services

* Multi-rate and Multi-protocol configurable interfaces for quick and flexible service activation

* Colored optics and OTN interfaces, for cost-effective integration with the photonic network

* Transport-class availability with guaranteed sub-50ms service recovery over any topology

* Hierarchical, fully-correlated, multi-layer OAM, providing transport-class performance monitoring, diagnostics and troubleshooting functionality

Corrigent Systems
Best Buy has acquired Speakeasy as an entry point into the market of providing voice and data technology to small businesses throughout the U.S. Speakeasy brings 300 employees and more than 40,000 customers, located in most major metro U.S. markets.

The deal, which when considered along with Cisco’s introduction of a top-end network for small businesses, further solidies the growing trend to move from marketing IP networks to large enterprises and midmarket companies, to addressing the sub-100 employee businesses.

Best Buy is buying Speakeasy for $97 million, which represents 1.2 times the company’s 2006 revenue of $80 million. Speakeasy opened in 1994 as an Internet cafe in Seattle.

Best Buy

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