A year ago, Vonage, which has never turned a profit, said it was facing bankruptcy after it lost an infringement trial to Verizon Communications Inc. and a judge ordered it to stop most operations. Vonage settled the case in October after an appeals court upheld most of the verdict.
The company declined to disclose the number of customers it has in Maryland or Baltimore, though its Web site says it has 2.5 million subscriber lines nationwide. That's about 0.6 percent of the voice market, said Jim Kohlenberger, executive director of VoIP trade group the VON Coalition.
"Baltimore probably spent more on legal fees than they might recover in the short run," Kohlenberger said.
If Vonage appeals, the case "will become a matter of national attention," said Baltimore attorney David E. Ralph, who represented the city against Vonage. "If Vonage loses that appeal, then conceivably other municipalities and jurisdictions across the United States where Vonage provides this service would probably seek to collect a similar tax."
Vermont lobbyist and economist Scott Mackey said most telephone tax laws are too old and outdated to apply to VoIP providers, making it unlikely that a mass effort to tax them would ensue. But newer ordinances, such as Baltimore's and one in Montgomery County, both of which also apply to wireless carriers, have a modern flexibility built in.
Still, Mackey, a consultant for the wireless industry, expects the ruling to grab some attention.
"As local jurisdictions are facing issues with their property tax base, ... they're going to be looking at all kinds of ways to try to raise money, and if they hear that Baltimore found this wonderful revenue source, I think they would be tempted to perhaps try to do the same thing," Mackey said.
tricia.bishop@baltsun.com
