Comcast Digital Voice vs. Vonage: No Contest

The contrast between Comcast's and Vonage's voice businesses is stark.  Vonage announced earnings on Tuesday, and Comcast announced theirs on Thursday, providing a good head-to-head comparison between their voice products. 

It's clear from the table below that Comcast is kicking Vonage's butt, and that Vonage is trending worse over time:

	Comcast	Vonage
Total Subscribers	4,377,000	2,580,227
4Q07 Subscriber Growth	604,000	56,000
4Q06 Subscriber Growth	509,000	166,267
Addressible Market	42,000,000	111,162,000
Approximate Market Share	27%	16%
Years in Service	3 years	6 years

Vonage added a third as many subscribers in 4Q07 as they did in 4Q06, reflecting their out-of-control churn rates and their reduced marketing spending due to their need to conserve cash after enduring an onslaught of patent lawsuits.  Meanwhile, Comcast added about as many subscribers in 2007 as the entire Vonage customer base.  Shortly, Comcast will have twice the subscriber base of Vonage, after offering the service for about half as many years. I don't have good churn data from Comcast, but given that Comcast is provisioning their services on their own DOCSIS network, with quality-of-service mechanisms to ensure voice quality, it is highly likely that Comcast has a much lower churn rate than Vonage's 3% churn. 

Comcast doesn't necessarily have an easy road ahead of it, though.  Digital Voice subscriber growth slowed down a little in the 4th quarter, and I expect that the company will see tough competition from wireless phone alternative offerings from the incumbent telephone companies.  Comcast and the other cable companies don't have a coherent wireless strategy yet.

In yesterday's post, I speculated the Vonage might survive if they are able to refinance their debt.  That's good news for Vonage's customers, and for Vonage's vendors, like Level 3 Communications (Vonage is one of Level 3's top 10 customers).  However, survival for Vonage may be like an amateur runner staggering across the finish line at a marathon, four hours after the winner.