Because Vonage et al, sell Resi VOIP cheaper than TDM Voice.
Why? Easier to market. Easier to take orders (notice I did not say sell?)
But termination will be going up (already seeing rising costs for Dedicated LD).
E-911 is not cheap (nor is it nationally available).

You can try to work with a friendly CLEC (or become one).
But Voice is way different from Data.
One bad 911 and you are being sued and possibly jailed.
Wouldn't you rather offer services that aren't competing against the growing monster?
You would be better off selling cellular for a residual than selling VOIP.

Vonage was going to IPO last year for $660M; this year they are looking for $220M

In 1Q05:
"Vonage Holdings Corp. Founded in 2001, the Edison (N.J.) provider of Internet phone service has raised $210 million and last year racked up about $100 million in revenue. It has spent enough on marketing in a bid to make itself a household name, and several VCs say it will go public this year or next. But critics complain that while its ads attract new customers, it doesn't retain as many as it should."

"Om says Vonage IPO. I don't think they can wait. Reports are their growth is slowing, that costs are rising and that founder Jeffrey Citron has a bundle of his own cash in the venture."

In 2006: /"The street writes: Vonage Holdings, moved to become the first major Internet telephony player to go public by filing Wednesday to raise up to $250 million via an initial offering of stock and named a Tyco International executive as CEO. Our revenues were $18.7million in 2003, $79.7million in 2004, and $174.0 million for the nine months ended Sept. 30, 2005," the company's prospectus says."While our revenues have grown rapidly, we have experienced increasing net losses, primarily driven by our increase in marketing expenses. From the period of inception through Sept.30, 2005, our cumulative net loss was $310 million. Our net loss for the nine months ended Sept.30, 2005, was $189.6million. During the same nine-month period, our marketing expenses were $176.3million."/

Jason Hensley wrote:

What about for those of us in small markets where the large VoIP players don't have access numbers? What is your opinion on them coming here? For instance, I'm in an area where the closest VoIP provider's number is 100 miles away with probably 25 or so NXX's that cannot call it locally. Not a feasible decision for a local business as any phone calls to them will be long distance for local residents. Is there a case for or against partnering / working with a CLEC who has the ability to be WAY more flexible than the ILEC's, have them drop you DS1's / PRI's / whatever and work with them on getting local VoIP numbers for the folks in these areas? I'm getting more and more people who want wireless Internet SOLELY because they do not have a home phone line other than their cell phone. Do you see that as what we're headed to? I do and I don't personally. I think there will be a market of some kind for that, but I feel as well that for at least the foreseeable future (say 10 years or so), markets such as mine will not be doing away with wireline. Too many challenges for both cellular providers, and WISP's due to terrain and sparseness of population.

I guess I'm having a hard time understanding why it cannot be profitable, at least on some level.

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