There has been an explosion of rumors and stories regarding former VoIP child star Vonage (NYSE:VG, news, filings) lately. The only one that was true turned out to be that Vonage is working on an iPhone app, the rest have been inventions of the street. As rumors go, they have generally been transparently silly, such as the AT&T buyout rumor over the last few days. Where is the imagination? Put some effort into it! You want a better buyer for Vonage? I’ll give you one…
Think about it… Right now Apple (NASDAQ:AAPL, news, filings) sits between the carriers and VoIP as something of a reluctant gatekeeper. They have an agreement with AT&T not to allow VoIP outside of WiFi, but this is at AT&T’s behest – Apple doesn’t actually give a hoot about it. What they want, in the end, is to sell more devices *and* more services using those devices. They didn’t just build the iPod, they built iTunes alongside it. Selling VoIP alongside the iPhone is obvious addition held back only by their need for the carrier’s bandwidth. The iPhone is unstoppable right now, and when AT&T’s exclusivity disappears and LTE and WiMax increase throughput by orders of magnitude, carriers would be in a tough position.
Nothing would scare the carriers more than a device their consumers DEMAND that cuts into their precious, overpriced wireless voice business. But they won’t all turn it down, the FCC may not even let them and one crack in the dam would be enough. If you successfully combine Vonage, which already has scale but not enough residual marketing power to grow, with Apple, which may have the greatest raw consumer marketing power of this decade, you get Apple iVoice – your new phone company – and a whole lot of dumb pipes, both wireless and wireline.
It couldn’t happen right away of course, or those pipes won’t get built. And it probably won’t happen at all, because Apple is in the business of making money the easy way and not starting a war even if it might win. The carriers would simply have to find a way to buy them off. But still, it would be a transformational M&A, whereas AT&T’s only real reason to buy Vonage would be to bury it in a deep hole somewhere.
In the end, voice is just data and Apple knows that. If the wall between the two breaks down, as it must sometime over the next 5 years, why should they let Google and Skype have all the fun?
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