Like a lot of folks, I have been trying to figure out what the ultimate fallout will be from a recent jury verdict that Internet phone company Vonage violated patents held by telecom giant Verizon.
C/NET News is out with a well-reported piece today that goes through the various possibilities.The article does a great job of laying out all the details of the case, so we won't get into all that here.
While it remains unclear exactly how the situation will play out, Vonage says it might be forced out of business if it isn't able to get the verdict turned over on appeal.
By itself, that would be bad for all phone consumers, not just Vonage customers. Competition from new rivals such as Vonage and cable operators have forced traditional phone companies such as Verizon and AT&T to fight harder for customers, generally driving down prices and improving service.
Far more troubling, however, is the possibility that Verizon might try to use similar litigation to cripple or shut down other new competitors in the phone business.
Let's put this in terms of cold, hard cash. For years I had plain old phone service with Verizon, which cost me more than $60 a month. That didn't include long distance. I was also charged extra for features such as call waiting, etc.
A few months ago I switched over to Comcast for my phone service, taking advantage of a bundle deal for phone, Internet and cable television. My phone service now costs about $35 a month, including free long distance, call waiting and a bunch of other features.
Verizon offers similar savings to its customers through bundles of services, but it doesn't yet provide it's fiber optic television service in my neighborhood. When it does, I will consider going back to Verizon.
This is why the Vonage/Verizon patent case should be so worrisome to everyone who pays a phone bill. If Verizon and other traditional phone companies can get the courts to kill off their new competitors, they will have little incentive to offer cheaper rates and better service.
Competition has clearly benefited phone consumers. It will be unfortunate if Verizon is able to use lawsuits to kill off its rivals rather than competing with them.
