Like the AOL of old, Vonage has cultivated quite a reputation as a company that often makes it incredibly difficult to actually cancel your service. The check for this behavior has finally come due, and it's likely considerably less than they made from the practice. According to an announcement posted to the website of Idaho Attorney General Lawrence Wasden, Vonage has agreed to pay $3 million in penalties to 32 states in order to settle an investigation into some of its business practices. The settlement also cites Vonage for failing to note their VoIP service needed broadband and then socking customers with cancellation fees, and for offers of "free" services that wound up charging a litany of activation and other fees.

Vonage has unveiled their first quarter earnings which indicate the independent VoIP operator technically posted a profit for the first time ever. Vonage posted a net income of $5 million, up from a loss of $4 million one year ago. However, Vonage notes their earnings were boosted by a one time "$13 million mark-to-market adjustment relating to the derivative liability in the Company's convertible debt," without which the operator would have posted a net loss of $8 million. The Company lost 6,000 net subscriber lines, ending Q1 with 2.6 million lines in service. The killer for Vonage has always been customer defections or "churn," which jumped to 3.1% despite churn reduction being a company priority.

Sure, we've given Comcast some grief over the years, but one thing that can't be denied is the speed at which the company absolutely dominated of the VoIP (sorry, Digital Voice) market. Today Comcast reached out to us to note that they're now the third largest residential phone company in the United States, only behind AT&T and Verizon. As of the fourth quarter of last year, the cable giant had leap-frogged over Qwest with 6.47 million VoIP customers, compared to 5.961 million (and dropping) lines for Qwest.

"Customers are choosing Comcast phone services because of the cost savings," Comcast Spokesman Charlie Douglas insists, claiming that Comcast service is 20 - 30% less than traditional phone service.

We were recently the first to report that the FCC was concerned that Comcast's new de-prioritization system would degrade competing VoIP traffic, the agency writing a letter asking Comcast to explain how this wasn't anti-competitive, and why they hadn't previously mentioned the system's impact on VoIP. The new, protocol agnostic system was deployed late last year, after our users discovered Comcast was forging TCP packets in order to slow P2P traffic for all users -- a practice that resulted in an FCC investigation, and a rather toothless "sanction."

Comcast's new system temporarily de-prioritizes the traffic for customers who meet two criteria: they're on a congested node, and they have been using 70% or more of their assigned upstream or downstream throughput for more than fifteen minutes. The FCC only just realized that these restrictions will impact competing VoIP services, but not Comcast's own Digital Voice service. The FCC's late discovery speaks to the often glacial movement speed of the agency.

Yesterday we reported that the FCC was suddenly concerned about how Comcast's new network management system treats independent VoIP operators. As previously discussed, the new system temporarily de-prioritizes the traffic for customers who meet two criteria: they're on a congested node, and they have been using 70% or more of their assigned upstream or downstream throughput for more than fifteen minutes. However the FCC only just realized that these restrictions will only impact competing VoIP services -- not Comcast's own Digital Voice service.

An open Internet cannot tolerate arbitrary interference from Internet service providers. -Free Press

Consumer advocates are giddy about the FCC's latest inquiry into Comcast's network management policies, the investigation into which began with a post in our forums back in May of 2007.