There's a saying in the fourth estate that if it bleeds, it leads. A thousand pardons for starting with such a cliché, but hey, it's true. Disaster is interesting, especially when it's happening to someone else.

Disaster has been happening to Vonage for quite a while now. I was a subscriber when it launched its initial public offering in early 2006, and I kept getting letters about buying shares. I was also covering telecom hearings on Capital Hill, where the network neutrality debate was heating up. Verizon and Comcast were leading the pack to create tiered pricing for web applications that used heavy data rates. Voice does not use heavy data rates, but it generates revenue, and the implication was clear. Network owners were going to have a say about what was transmitted through their wires.

There could not have been a worse time to do a third-party VoIP IPO. Rich Greenfield of Pali Capital was firing off warning shots like Paul Revere. Vonage went out anyway at $17 and lost $4 a share by the following day. It was definitely bloody.

Meanwhile, Comcast and Verizon have quietly (and sometimes otherwise) developed alternative strategies to avoid the network neutrality regulations that would prohibit tiered pricing. Comcast has pulled the plug on a few of its more piggish broadband subscribers, while Verizon sued the pants off of Vonage. Clever move. Easier than buying them outright, because even though the IPO tanked, the company was still valued for a time in excess of $1 billion.

Then Sprint joined the fun, and of all things, SunRocket.

So here you have a bootstrap company that came out of nowhere to pioneer the VoIP market in the United States, having pulled off one of the worst IPOs in history being sued by two corporate giants and one dead firm. So it was when the Verizon appeal verdict was released last week I interpreted it to be less than horrific [0]. Indeed, the appellate court upheld the verdict on two of three disputed patents, but the $58 million and royalties damages award was vacated completely. While it's true that the lower court will just have to come up with another number, it'll likely be a third less than the original. Vonage put up a $66 million bond for damages last April so it could keep signing up subscribers, so it wasn't completely unprepared for the outcome.

What more Vonage can endure is hard to say, but it's a testament to the company that it's still standing at all. The stock seems to have stabilized at $1, down from the $3 range where it settled after the original Verizon verdict in March. Before that, it was hanging in at around $7. The real question is who's buying the shares and what do they expect? Vonage went into business mostly with noise, a name and a good idea. (VoIP itself, not the business plan.) AT&T just announced that it would start bundling VoIP with it's U-verse TV offering. Verizon's FiOS, now with Vonage? Hmm. Let me know your thoughts, at dmcadams@fiercemarkets.com [1].