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Will Vonage Ride a VoIP Surge in 2010?


New features reflect a growing interest in web-based voice calls.

Although VoIP company Vonage (VG) has taken a beating in the past few years, the company has announced new features in its Vonage World Mobile app, pushing its stock up as a result and possibly marking a comeback for the struggling tech service. The app is available now for Apple's (AAPL) iPhone and iPod Touch as well as BlackBerry (RIMM) devices.

Boasting an unlimited international calling plan, Vonage allows VoIP service to 60 countries for a flat monthly fee of $24.99 when calling from a mobile device. While the international service is available on both cellular and Wi-Fi, free domestic calls in the US can be made over Wi-Fi on the iPhone and iPod Touch without using up minutes. Existing customer contacts and cell phone numbers will be used for connections.

Vonage CEO Marc Lefar expects dynamic growth for the company as mobile devices become more advanced, high speed broadband becomes more prevalent, and 3G/4G networks become more open. "[We] envision a future where Vonage delivers calls, readable voicemail, texts, MMS, and video calls from any device, using any broadband connection," Lefar said.

But Lefar brings up a good point about VoIP in general: Although the service had missteps upon initial availability, recent pushes in mobile tech have buoyed a sharper rise in VoIP use, portending the service to undoubtedly become a major competitor to traditional telecoms in the coming years.

In fact, the last two months have seen major business moves for VoIP providers.

Google (GOOG) acquired VoIP startup Gizmo5 to be integrated with its Google Voice app. Jajah, another VoIP company, has been reportedly snatched up by O2, the European arm of Telefónica (TEF), for $200 million. And Skype, which recently gained independence from eBay (EBAY) and was in talks to buy up Gizmo5, could be in the running for an acquisition of its own. But if Skype's 521 million registered users have any clout, the company could go for a lot more than Jajah's price tag.

Considering the price reduction VoIP provides with international calls, it's a wonder that any of the apps are available on mobile phones -- especially when AT&T (T) reportedly urged Apple to reject the VoIP-esque Google Voice app on the iPhone and the long negotiations involved with approving the Skype app.

But availability could come under question if and when VoIP use grows as expected. If mobile providers see a gradual shift to cheaper Wi-Fi voice calls, more acquisitions will come into play, shares of revenue start shifting, or companies like Skype and Vonage will start disappearing from your app menu.
No positions in stocks mentioned.
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