Sprint Nextel files suit against Vonage

Sprint Nextel, the recently merged third largest US mobile network operator, filed a Voice over Internet Protocol (VoIP) patent infringement suit against Vonage Holdings, the broadband Internet telephony pioneer, and two other companies.

The suit, filed in US court in Kansas, cites seven patents and seeks to block Vonage, Voiceglo Holdings and theglobe.com from using Sprint Nextel’s technology for sending voice communications over the Internet. Sprint Nextel said it would also seek “unspecified monetary damages.”

New Jersey-based Vonage is the most successful of a raft of startups that have launched low-cost VoIP services in the US over the past few years and recently signed up its one millionth customer.

The company is believed to be considering an initial public offering although the banks are also understood to considering a trade sale following the purchase of Skype by eBay for about $2.6bn. Like other VoIP companies, Vonage breaks voice calls down into digitised packets and routes them over a broadband Internet connection.

IP-based telephony is more efficient than traditional circuit-switched telecommunications services and VoIP service providers can charge their customers less because they do not have to pay all the regulatory and other fees imposed on traditional carriers.

As a result Internet telephony companies like Skype and Vonage pose a an immediate threat to established telecommunications companies, including wireless carriers which fear that customers will ditch their higher-priced calling plans in favour of low cost VoIP services.

Ultimately however, wireless carriers like their fixed line counterparts, will also move to packet-based systems and an IP-based network architectures creating a more competitive ‘level playing field.’