He attributed the high churn rate to several factors. "People aren't saving the money they thought they would, so they're not getting rid of their traditional phone lines -- their services can experience problems when the user's network connection isn't good enough, and they have the novelty problem. Their ads for the lobster in the revolving door are cute, but they're a novelty," he said.

Ironically, as speculations arise over whether Vonage is seeking a buy, it's the company's customer base that could be its greatest asset. A recent survey by Telephia Inc. said Vonage continues to have the largest market share of pure-play subscription VOIP consumers, with a 53.9 percent share. "The only reason to look at buying Vonage is for its customers. Buying Vonage to buy their customers is cheaper than acquiring customers yourself," Paulak said.

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Timeline of troubles

March 2002 -- The company officially launches its service.