During a morning conference call, Vonage Holdings Corp. (NYSE: VG) interim CEO Jeffrey Citron acknowledged the Internet phone service provider’s difficulties and said the firm will focus on improving its customer churn rate and refinancing debt.

“Without a doubt 2007 was an extremely challenging year,” Citron said. “Litigation took center stage and it monopolized much of the company’s time and resources.”

For the quarter, Citron said the customer churn rate — or percentage of customers who cancel service — was an “unacceptable” 3%, compared with 2.3% a year earlier. To combat cancellations, Vonage hired a new head of customer care and is focused on improving the customer experience.

“We know that a majority of the churn is self-inflicted and driven by poor user experiences,” Citron said. “In order to resolve these issues, we are focused on people, process and technology.”

The company aims to improve customer satisfaction and the percentage of problems that are fixed on the first customer support call, he said. Although churn rate problems persist, the company lowered the cost of acquiring new customers to $223 from $306 during the fourth quarter of 2006.

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