Like the AOL of old, Vonage has cultivated quite a reputation as a company that often makes it incredibly difficult to actually cancel your service. The check for this behavior has finally come due, and it's likely considerably less than they made from the practice. According to an announcement posted to the website of Idaho Attorney General Lawrence Wasden, Vonage has agreed to pay $3 million in penalties to 32 states in order to settle an investigation into some of its business practices. The settlement also cites Vonage for failing to note their VoIP service needed broadband and then socking customers with cancellation fees, and for offers of "free" services that wound up charging a litany of activation and other fees.

Vonage has unveiled their first quarter earnings which indicate the independent VoIP operator technically posted a profit for the first time ever. Vonage posted a net income of $5 million, up from a loss of $4 million one year ago. However, Vonage notes their earnings were boosted by a one time "$13 million mark-to-market adjustment relating to the derivative liability in the Company's convertible debt," without which the operator would have posted a net loss of $8 million. The Company lost 6,000 net subscriber lines, ending Q1 with 2.6 million lines in service. The killer for Vonage has always been customer defections or "churn," which jumped to 3.1% despite churn reduction being a company priority.

Sure, we've given Comcast some grief over the years, but one thing that can't be denied is the speed at which the company absolutely dominated of the VoIP (sorry, Digital Voice) market. Today Comcast reached out to us to note that they're now the third largest residential phone company in the United States, only behind AT&T and Verizon.

We were recently the first to report that the FCC was concerned that Comcast's new de-prioritization system would degrade competing VoIP traffic, the agency writing a letter asking Comcast to explain how this wasn't anti-competitive, and why they hadn't previously mentioned the system's impact on VoIP. The new, protocol agnostic system was deployed late last year, after our users discovered Comcast was forging TCP packets in order to slow P2P traffic for all users -- a practice that resulted in an FCC investigation, and a rather toothless "sanction."

Comcast's new system temporarily de-prioritizes the traffic for customers who meet two criteria: they're on a congested node, and they have been using 70% or more of their assigned upstream or downstream throughput for more than fifteen minutes.

Yesterday we reported that the FCC was suddenly concerned about how Comcast's new network management system treats independent VoIP operators. As previously discussed, the new system temporarily de-prioritizes the traffic for customers who meet two criteria: they're on a congested node, and they have been using 70% or more of their assigned upstream or downstream throughput for more than fifteen minutes.

While a lot was made of the FCC's investigation and Comcast's shift to a "protocol agnostic" network management system, the FCC order didn't actually punish Comcast, came with no fine, offered no new guidelines, didn't request they do anything they didn't plan to do voluntarily, and might not even be enforceable in court. Still, Comcast has voluntarily changed from a system that throttled upstream P2P traffic for all users, to a new 250GB monthly cap and a new "protocol agnostic" de-prioritization system -- which we first profiled back in September.

Comcast has been signing up a ridiculous number of VoIP customers each quarter (half a million in Q3), and has very quickly become the nation's fourth largest phone carrier. Not only are they the biggest VoIP provider, they offer the highest quality calls, according to a new study (pdf) by Keynote Competitive Research.

Back in July, Vonage tagged former AT&T (technically Cingular) executive Marc Lefar to be the company's new CEO, replacing Vonage founder and interim CEO Jeff Citron, who was playing the role since April 2007. Lefar's primary job was to reduce customer defections, by improving the "customer experience." However, according to Vonage's third quarter earnings, while the company did narrow their net loss on the quarter, the company's "churn" or turnover rate remains unchanged at 3%. At that rate, Vonage is forced to replace a third of their customer base every year. In the third quarter Vonage added just 9,500 subscribers (for a little perspective, Comcast added half a million).

An economic slow down will hit some companies harder than others, and one company that could be in trouble is Vonage. According to intelligence firm Telecom Web (also see discussion in our forums), the $253 million in survival loans Vonage thought they had secured back in July isn't a sure thing, and for the third time, the VoIP carrier extended the tender offer for its outstanding loans needed to close on the new loans. "Those outstanding loans are due on Dec. 16, and if Vonage can’t pay them off, the company will in all likelihood be forced into bankruptcy," claims the firm. Obviously loan terms are even stiffer now, meaning Vonage's survival is even more unsure.

Vonage has picked former AT&T (technically Cingular) executive Marc Lefar to be the company's new CEO, replacing Vonage founder and interim CEO Jeff Citron, who has been playing the role since April 2007. Lefar has also worked at Verizon Wireless, GTE Wireless and Proctor and Gamble. "Moving forward, we will continue to improve the customer experience from end to end," says the new boss in a prepared statement. Given a third of Vonage's customers defect and need to be replaced each year, reducing churn is Lefar's biggest job in a market that's now dominated by large cable incumbents offering triple play bundle discounts.

Comcast today announced an agreement with Vonage that will "address the reasonable network management of Internet services," according to a press release. The new cooperation is aimed at ensuring Comcast uses network management techniques that address congestion without disrupting or degrading delivery of third party VoIP services.

A struggling VoIP company everyone thought would be dead by now partners with a CLEC everyone thought would be dead by now to resell broadband. Sound like a good idea to you? Vonage, still trying to dig out of their financial hole, has announced they've partnered with Covad to resell DSL service.

Earlier this year, Vonage filed a lawsuit against the Nebraska Public Service Commission because it believes that it should not have to pay into the controversial Universal Service Fund. Vonage’s argument was that its VoIP service is a data service, not a phone service, and therefore they shouldn’t have to contribute fees to the telecom deployment fund.

People have been reporting trouble with canceling their Vonage service for years now. There was some hope that these headaches would come to an end after a similar situation cost AOL $3 million in court charges.

Despite the 90% drop in stock price since its IPO, the contstant stream of costly patent disputes, and the fact that cable providers are now dominating the VoIP market -- Vonage CEO Jeffrey Citron puts on the brave face for USAToday. "Things are going very well," the CEO tells the paper, insisting the company can making a living catering to a niche audience.

The Universal Service Fund has long faced opposition from a wide range of sources which believe that the fund is inefficient and requires significant reform. One area of opposition comes from VoIP providers who don’t believe that they should have to pay into the telecom deployment fund. The argument used is that VoIP is a data service not a telephone service. Vonage is taking that idea to court with a lawsuit filed in federal court against the Nebraska Public Service Commission. The company is asking the court to protect Vonage and its customers from paying fees into the fund.

Vonage has launched an initiative, called MyVonage, which is designed to retain the customers that the VoIP company currently still has. Many Vonage customers fled the company in the last year as the provider dealt with its many patent lawsuits. Concerns about bankruptcy and problems with outages caused those customers to start looking elsewhere for VoIP services. The company hopes that MyVonage will give them more credibility with their remaining customers. The first step in MyVonage was the recent release of V-Portal, a troubleshooting gadget that should make it easier for Vonage customers to fix their own problems instead of having to rely on customer service.

The VoIP patent settlements just keep on coming for Vonage, who today announced they've settled their legal dispute with Nortel Networks. Fortunately for the struggling VoIP provider this settlement won't involve any monetary payments. Instead the settlement involves a "limited cross license":Vonage has settled four other patent suits already this year.

If you’ve been following the many different patent lawsuits that Vonage is involved in, you know that the company agreed to a settlement with AT&T last month. The terms of the settlement at that time were that Vonage would pay out nearly $40 million to AT&T over the next five years.

On the heels of news of yet another patent lawsuit (this time by Nortel), Vonage didn't help ease the minds of worried investors/users when a number of users suffered a multi-day outage over the weekend. An outage that started last Friday lasted until late Sunday for many users. "I've had Vonage for 5 years -- not counting this weekend, it's been years since I had an outage of any kind," says one user, who called the outage an "extreme situation." "I've only had Vonage for a few months and my service has been out twice for days," says another.