The Buzz - 31

GAO report

The IPv6 lag

According to a report from the Government Accountability Office, federal agencies are lagging in their transition to IP Version 6, which will expand the amount of available space for the procedure that defines how information is moved across networks.

In August 2005, the Office of Management and Budget issued a memo specifying time frames for agencies to switch to IPv6. The conclusion in a report from the GAO: "Federal agencies have taken steps in planning for the transition to IPv6, but several have not completed key activities." For instance, the GAO says that all 24 major agencies have assigned an official to lead and coordinate the IPv6 transition, but 10 had not developed IPv6-related policies and enforcement mechanisms.

Until these early efforts get going, applications that take advantage of IPv6 are lacking, said the GAO. These potential applications would support emergency response operations, enhance war-fighting capabilities and facilitate operations planning. The GAO reckons that incentives would prod the transition.

In any case, the clock is ticking. The OMB wants IPv6 infrastructure and all agency networks interfacing with those backbones by June 2008.

IPO blues

Vonage collection call

The saga of voice over ip service provider Vonages adventure as a public company continues. On Aug. 1, the company disclosed in its second-quarter earnings (actually, loss) release that it is trying to collect from deadbeat customers that have refused to pay for initial public offering shares they agreed to buy.

Vonage, which went public May 30, offered customers the chance to invest in the company at its IPO price of $17. Given that few investors ever get in on IPOs, Vonages plan to reserve more than 4.2 million shares for customers in a DSP (directed share program) sounded like a nice goodwill gesture—until shares tanked to about $6.

Oops. Not so surprisingly, some customers ran away from IPO shares they had agreed to buy. Now Vonage has to collect the dollars to back more than 1 million shares worth $11.7 million. It also has to pay its IPO underwriters another $6.2 million. "The company expects to pursue the collection of monies owed from the DSP participants who failed to pay for their shares," said Vonage officials in a statement.

It remains to be seen if Vonage actually is able to collect from its former IPO-happy customers. In the meantime, it has a few more issues on its plate. Among them:

• Vonage reported a second-quarter net loss of $74 million on revenue of $143 million. Revenue was up 141 percent from a year ago, but adjusted operating profits arent expected until 2008.

• Customers continue to defect. Second-quarter defections increased to 2.3 percent per month, up from 2.1 percent in the first quarter. Vonage said it is working on improving customer service to stem the tide.

• Cable competition is intensifying. "Comcast reported solid growth in VOIP [voice over IP] subscribers with 306,000 net additions, an increase of 45 percent from the 211,000 net subscribers added in the first quarter," said Piper Jaffray analyst Troy Jensen, in Minneapolis. "Vonage added 256,000 net subscribers in the June quarter, which represented a 22 percent decline from the prior quarter."

Broadband

AOLs right price: Free

Time Warner on Aug. 2 revamped America Online to become a free service for anyone with a broadband connection. The idea: AOL can grow more through advertising even as dial-up subscribers defect to AOL-free broadband services. Bear Stearns analyst Spencer Wang cancelled his AOL account on Aug. 3 to see how the free transition was going. Heres what he found:

• AOL was pelted with customer calls. Wang, in New York, found longer-than-usual wait times as customers called about free AOL. He waited 18 minutes, longer than the usual 5- to 10-minute wait from previous checks.

• An AOL customer service representative said every second call she got Aug. 3 was for free AOL. She usually gets 70 to 80 calls per day.

• Overall, Wang estimated AOLs 6 million-strong broadband base will churn off in 19 days.

—Compiled by Larry Dignan