Vonage announces results for the quarter ended March 31, 2008. Revenue for the first quarter 2008 grew to a record $225 million, up 15% from $196 million in the first quarter 2007 and up 4% sequentially, driven by an increase in subscriber lines and higher average revenue per user.

For the first quarter of 2008, the Company reported a GAAP net loss of $9 million or $0.06 per share, down from a loss of $72 million or $0.47 per share reported in the first quarter 2007. Adjusted operating income was $8 million in the quarter, a significant improvement from an adjusted operating loss of $58 million in the year-ago quarter and adjusted operating income of $3 million sequentially.

A judge ruled in Vonage's favor barring the Nebraska Public Service Commissions from collecting a state service fee. This court order is the latest victory for Vonage in its fight to keep its customers from having to pay into state Universal Service Funds. The funds would help help subsidize phone and Internet services to poor and rural areas, schools and libraries.

In a lawsuit filed in U.S. District Court, Vonage said other courts have sided with them in allowing Vonage to not pay regulations and fees.

U.S. District Court Judge Laurie Smith Camp of Lincoln agreed and ruled that the Public Service Commission cannot collect the fees from Vonage.

Vonage has asked a federal court to prevent the state from forcing it and its customers to pay a state telephone fee.

In a lawsuit recently filed in U.S. District Court, Vonage says the Nebraska Public Service Commission and its officials should not force it to pay into the state's Universal Service Fund.

"These defendants know that Vonage's service is subject to exclusive federal regulatory jurisdiction, yet they are attempting to compel Vonage to pay a state-law surcharge for the Nebraska Service Fund in violation of the United States Constitution, the Communications Act of 1934 and the Telecommunications Act of 1996," the complaint reads.

Traditional phone companies pay into a Universal Service Fund. But VoIP providers say they provide an information service rather than a telecommunications service.

So what's your take--should Vonage have to pay into the Universal Service Fund just as traditional telephone companies do?

And even more to the root of the issue, is Vonage an information service or telecommunications service?

As previously announced on January 7, 2008, Jeffrey A. Citron, Chairman and Chief Strategist of Vonage will participate in the Citi 18th Annual Global Entertainment, Media & Telecommunications Conference being held today. At the conference, Mr. Citron will announce the following preliminary unaudited financial and operating information about Vonage's recently completed quarter and year ended December 31, 2007:

• Vonage's 2007 revenue will be more than $800 million
• Fourth quarter 2007 churn will show no meaningful change over the 3.0% reported the prior quarter
• Excluding payments made in connection with the settlement of intellectual property litigation which Vonage believes is not indicative of its core operating results for the quarter, Vonage expects to generate positive operating cash for the quarter ended December 31, 2007(1)
• Vonage's cash position at December 31, 2007 was $190 million, which includes $40 million in restricted cash

In June 2006, Verizon brought a lawsuit against Vonage to enforce several Verizon patents relating to Voice over Internet Protocol (VoIP) services.

In March 2007, a jury held that Vonage is infringing three valid Verizon patents. The jury awarded $58 million in damages. The trial judge subsequently issued an injunction which was stayed pending Vonage's appeal.

In September 2007, the U.S. Court of Appeals for the Federal Circuit upheld the trial court's decisions on infringement, validity, and injunction as to two of the Verizon patents (the '574 and '711) and remanded as to the third patent (the '880). Vonage filed a petition for rehearing which is pending in the Court of Appeals.

Today the parties have agreed to resolve the patent lawsuit. The terms of the resolution depend on how the Court of Appeals decides Vonage's pending petition for rehearing regarding two of the Verizon patents (the '574 and '711). If Vonage wins rehearing on either the '574 or '711 patent or if the injunction is vacated as to the '574 or '711 patent, Vonage will pay Verizon $80 million. If Vonage does not win rehearing on either the '574 or '711 patent, or if the stay is lifted reinstating the injunction, Vonage will pay Verizon $117.5 million.

The parties are pleased to have resolved this matter.

Sipera VIPER Lab disclosed multiple threat advisories for users of VoIP services and equipment from Vonage, Globe7 and Grandstream. Among other threats, unwitting VoIP users face eavesdropping, spam, spoofing and denial-of-service (DoS) attacks. Full details on these vulnerabilities are posted as an educational security service to Sipera's customers and the general public at http://www.sipera.com/viper.

Klausner Technologies announces that it has granted a patent license to Vonage for its Vonage Voicemail services, and that it has settled its lawsuit against Vonage for infringement of US Patent No. 5,572,576. Vonage joins Time Warner subsidiary AOL, and others, who have taken out licenses under the same Klausner patents for their Internet Voicemail services.

Vonage announces that the company has filed a motion for a review by the original three-judge panel or the full panel of the U.S. Court of Appeals for the Federal Circuit sitting en banc of the September 26 decision in its patent litigation with Verizon. En banc signifies a decision by the full court of all the appeals judges in jurisdictions where there is more than one three- or four-judge panel.

On September 26, the U.S. Court of Appeals for the Federal Circuit partially remanded a March 8 jury verdict in the U.S. District Court in Alexandria, Va. that the company infringed on three Verizon patents. The U.S. Court of Appeals for the Federal Circuit remanded the infringement verdict on the 880 patent and affirmed the verdict on one patent claim in each of the 574 and 711 patents. Further, the Court of Appeals vacated the entire award of $58 million in damages and the 5.5 percent royalty. The Court of Appeals remanded the case to the U.S. District Court and directed that the court retry those aspects of the original case.

Sprint and Vonage announce that they have settled their ongoing patent dispute and entered into a licensing arrangement under Sprint's Voice over Packet ("VOP") patent portfolio. On September 25, 2007, a jury in the U.S. District Court in Kansas City, Kan., found that Vonage had infringed six Sprint patents. The settlement agreement resolves all claims related to this dispute.

In addition, Sprint has agreed to license Vonage its VOP portfolio, which comprises more than 100 patents covering different methods, components and systems that efficiently connect telephone calls between a regular telephone network and a packet-switched network such as the Internet.

Vonage announced that it will seek to overturn today's U.S. District Court jury verdict in a patent infringement lawsuit brought by Sprint Communications Company L.P. and continue focusing on providing reliable, quality digital phone service.

Federal court jurors in Kansas City, Kansas ruled in favor of Sprint, finding that Vonage had willfully infringed Sprint's patents in providing its VoIP telephony services, and awarding $69.5 million in damages, which the jury found to be five percent of Vonage's revenues over the infringing period. Vonage will ask the court to set aside the verdict, and if it is not granted, will vigorously pursue an appeal of the decision, including the underlying issue of liability and the willfulness aspect. Vonage believes any damages awarded are inappropriate. In addition, we will seek to develop technological workarounds that don't infringe on Sprint's patents.