Update on E911 Deadline

The Mercury News has done their usual workmanlike job of reporting on this story, and now we have some rough numbers with respect to just how many users could lose their VoIP service.

Vonage: As many as 32,000 users. The company says it has 96+ percent compliance on their 800,000 users.

8x8, Inc.: Somewhere between 4,500 and 9,000 users. The company has a userbase of nearly 90,000, and said it has reached between 90-95 percent, and cut off those who have not responded.

AT&T's CallVantage: Not reporting.

Now for some back of the envelope estimates.

Given a conservative estimate of some 1.5 million VoIP users as the Merc reports, and a charitable compliance rate of between 90-95 percent, that's between 75,000 and 150,000 users facing service termination, for an average of 112,500, or the population of a small American city, like my hometown of Salinas, Calif.

The ultimate question is whether this shedding of customers is likely to take down any of the industry players.

AT&T, nope. Vonage, cash flush from the VC market, and likely to be headed into IPO or acquisition, nope again. 8x8, Inc. (EGHT) is still rated as a buy by stock analysts despite some hiccups, and appears to be on the upturn. It continues to add new products and services, and is reportedly going great guns with its videophone sales and services. And at 150 employees, it's nimble enough to respond to market changes aggressively.

Now 4,500-9,000 users at $19.95/month (an assumption that they're residential users) works out to between about $90,000 - $180,000, or $135,000/month on average, or about $1.6m/annum, for a company that made $6m in the last quarter. On balance, that loss will sting like crazy, but the company should still remain buoyant. Who knows? It may even have a tonic effect on the company's other operations.

To put all this user-shedding talk in perspective, I always think of America Online, which had something on the order of a 30 percent churn rate for most of its early history. Which is partly why the company added more and more hours of free service with all those CDs with which it continues to bludgeon the market. AOL may have gotten two big for its britches, but it's still around, and Time Warner finally seems to be done digesting it.