But having watched the company botch its initial public offering, the Newport Beach, Calif., resident says he is considering switching to a rival.
"I have enjoyed their service to date but cannot believe how they are handling all this," says Harper, who owns an apartment investment and management company with offices in Orange County, Calif., and Denver, in an email. He says he has been a Vonage client since 2004.
Investors are going to be keenly interested to see how many Vonage customers like Harper end up standing by the company. Vonage, which held the IPO in part to pay for its hefty marketing costs, was already spending a ton to draw subscribers. Now rivals such as
claim to have gained Internet phone users at Vonage's expense, though they decline to provide numbers.
"It's going to be more expensive to get customers," says Internet phone consultant Jon Arnold of J Arnold & Associates. "Plus, it's going to be less profitable to keep them."
Loyal customers like Harper were exactly who Vonage intended to reward when it set aside 15% of its initial public offering. The company raised $531 million last week by selling shares to the public. About 10,000 people purchased Vonage's shares though the special program, according to media reports. A company spokesman didn't respond to a request for comment.
But customers' enthusiasm for Vonage has been put to the test. First, the stock had the worst first-day performance of any public offering in two years. Shares of Vonage have continued to drop since. They fell 40 cents Thursday to $11.62, after starting trading last week at $17.
Worse yet, some customers believe they were shortchanged in the IPO. Some people who bought shares thorough the allocation process are threatening not to pay. Others have complained of technical glitches that led them to mistakenly believe that they didn't own shares.
Then their disappointment turned to anger. Earlier this week, Vonage indicated that it might be willing to buy back shares of customers who lost money in the IPO. Securities attorneys questioned whether that was legal, because it would have treated one class of investors differently from another.
Late Wednesday, Vonage moved to "clarify" its position, saying that it wouldn't let clients get out of buying shares even though it indemnified its underwriters against such a possibility.
Vonage in some ways a victim of its own success. A plethora of large cable, Internet and cable companies have entered the market with low-cost and in some cases free offerings. Some rivals say they are seeing some benefits from Vonage's missteps.
"Last week was our best week ever for orders," says Verizon spokeswoman Bobbi Henson, whose firm has recently cut prices for its Internet phone service. Vonage customers, she said, "are coming to us."
Verizon, the No. 2 local phone company after
, doesn't disclose how many customers have signed up for its broadband phone service, which also is known as VoiceWing.
Comcast also has seen an influx of Vonage customers, says Jeanne Russo, a spokeswoman for the Philadelphia-based cable giant.
Though it may be too early to say whether Vonage's brand has been damaged by the publicity, there are some potentially worrisome trends.
Investors have already noted that Vonage's monthly churn rate, which measures how many customers quit, rose to 2.1% in the first quarter from 1.7% a year earlier. Vonage blamed the increase on problems with its customer-service operations.
Also, people seem to either love or hate Vonage, according to a survey of how consumers talk and think about different brands done by Keller Fay Group.
"Vonage has both more negative and more positive talk than other brands in the telecom industry," says Brad Fay, a principal in the New Brunswick, N.J.-based firm, adding that the results are unusual. "They have nobody in the middle."