Internet Phoning for Lower Bills

VoIP comes of age as big providers enter the market.


Hard times are calling, making it a good time to slice some bucks from phone bills. At the same time, phoning across the Internet has gotten easier, more reliable, and cheaper. It no longer means being tethered to a PC or trusting phone numbers to shaky start-ups.

Internet phoning is taking hold after a decade at the geek fringe and will have some 20 million U.S. customers by year's end, according to the consulting firm Pike & Fischer. Many are tapping service from cable TV companies, which are quickly becoming phone companies, too. Even telcos are offering their own versions of the technology, which goes by the awkward name of voice over Internet protocol, or VoIP.

Wired. Making the switch can easily save hundreds of dollars a year on a package of local and distance calling with extras, such as caller ID and voice mail. The savings come with tolerable hits, if any, to quality or reliability and without the nerd gear of PC microphone and headset. Services now work with conventional handsets, offering all the convenience and ease of corded and cordless phones. Cablecos and telcos will even hook the service to existing home wiring, making the switch as easy as picking up the same phone as always.

Still, landlines remain the gold standard. VoIP service usually goes down with Internet connections, which happens more often than with plain phone service. Also, it's important to ask if the provider offers complete 911 service for emergency calls. But most households find that today's Internet phoning is more than good enough, considering the savings.

Some consumers elect to keep the landline. They strip it to minimum service and add Internet long distance, voice mail, and other goodies. For added savings, many VoIP services travel with you and even on your cellphone. Here's a look at the best options for consumers ready to dial up savings:

Cablecos: Their calls travel over dedicated Internet channels, with such sound clarity that Comcast has even bettered AT&T landlines in tests by Keynote Systems. Promotional rates of about $30 a month might go to $40 after six months or a year. That's still less than a typical conventional line and long distance. Bundling with TV and Internet service will shave $5 or $10 off the cost.

Telcos: As they lose landline customers, telcos are starting to embrace the enemy. AT&T offers VoIP with its new cablelike TV service called U-verse. The phone service adds about $30 a month. Verizon no longer sells VoIP to all comers, though it may revive it in its FiOS bundled service. T-Mobile, meanwhile, sells VoIP service for only $10 a month to its wireless subscribers.

Start-ups: Pioneers like Vonage and Packet8 still offer some of the biggest savings on landline-like service. Their $25 monthly fee includes free calls to some European countries. They are more challenging to set up, and some competitors have tanked, leaving customers to scramble for service.

PC calls: Stores now sell cheap phones that work with Skype's free, PC-based calls to other members. Skype users can also make calls to landlines and cellphones for $3 a month. Or magicJack connects a conventional phone to a PC and offers unlimited, good-quality long distance for $40 the first year and $20 a year after that. Jajah will connect your conventional phone with another through calls arranged at its website, which rings both to start the Internet call. Calls to other Jajah members worldwide are free; those to others typically cost pennies a minute. With no contract to sign or gear to buy, it's an easy way to sample what VoIP offers.