Save money by using VOIP to make phone calls

What is VOIP?

“VOIP” stands for “Voice Over Internet Protocol.”  Simply put, with VOIP, your phone conversations go over the internet rather than through landlines.

Okay, why does that matter?

The advantage to VOIP is that it is far less expensive.  For example, the first phone service I ever had was absolute bare bones.  No Call Waiting, no Caller ID, no Voice Mail – just plain old telephone service.  Including taxes, I paid about $28 per month.  The cost only goes up from there.  I just did a quick internet search and discovered that in my area, Verizon charges $40 per month before taxes for unlimited calling to the US, Canada, and Puerto Rico.  If I want voicemail, caller ID and call waiting, I would pay $45 per month before taxes.

I have all that and more for about $17 per month through VOIP.com.

My current phone package:

• Unlimited calling to the US and Canada.
• 1.8 cents per minute to call my sister in Germany.  Similar rates to many other countries.  Verizon, by contrast, charges 14 cents per minute.  If I used my cell phone to call Europe, I would pay over a dollar per minute.
• Caller ID
• Voice Mail
• 3-way Calling
• Call Waiting
• Anonymous Call Rejection
• Selective Call Acceptance/ Rejection
• Sequential Ring – If no one answers at my home phone, I can have the call automatically forwarded to any other phone I choose.
• Simultaneous Ring – I can have incoming calls ring multiple phones until one is answered.
• Call Forwarding – I can have incoming calls forwarded to any other phone I choose without ringing my home phone.

I have all that for $17 per month.  None of those features cost me any extra to use.

How does VOIP work?

To use VOIP, you have to have high-speed internet such as cable or DSL.  Unfortunately, dial-up just isn’t fast enough.  When you sign up for VOIP phone service, you can either talk through a software program on your computer or get a little box that plugs into your modem and allows you to use a regular telephone handset for your calls.  Some VOIP providers give you a box when you commit to a certain length of contract, similar to how cell phone companies subsidize handsets.

I pay by the year for my VOIP service.  It costs a total of $204 for 12 months.  I could also pay by the month, which costs $20 per month, but I would also pay an additional $5-10 per month in taxes.  Apparently when I pay by the year, I only pay the taxes once.  Weird, but that’s the way it works.  I was happy enough with the service to renew for a second year last July, so I’ve now had it about 18 months.

Update 7/26/09: I no longer use VOIP.com.  I terminated my contract with them earlier this month after I figured out how to set up free phone service using Google Voice, Gizmo Project, and my old Sunrocket analog telephone adapter.

VOIP Providers

• VOIP.com – This is the company I use.  I chose them because at the time, they were the least expensive option for my purposes.  $17 per month and a free adaptor if you pay for a year in advance.  Also, at the time I signed up, they offered a 30 day money back guarantee.
• Skype allows you to make free calls from computer to computer using a piece of software.  You need a headset, but you don’t pay a monthly fee.  You can also call cell phones and landlines, either on a pay as you go basis, or for a low monthly fee.  Unlimited outgoing calls to the US and Canada for $2.95 per month, and calls worldwide starting at about 2 cents per minute.  You can also use Skype with a laptop or internet tablet at a WiFi hotspot.  For a little more money you can get an incoming phone number.

Disadvantages of VOIP

• Power outages – regular phone lines use a power source separate from the other appliances in your house.  For that reason, your phone will often still work when the power goes out.  with VOIP, unless you have your system plugged into an uninterruptable power supply, no power = no phone.  That said, last summer when I experienced my first earthquake, I tried unsuccessfully to call my wife on my cell phone and a regular landline.  As you might expect, all circuits were busy.  My VOIP phone, by contrast, worked just fine, because power was still available.
• Occasional outages.  VOIP is a relatively new technology, and it is not yet as reliable as regular phone service.  Although problems are rare, I have occasionally been cut off in mid call, or been unable to dial out.  Resetting my VOIP adapter usually solves the problem.

Have you tried VOIP?  Share your opinion by commenting.

© 2008 – 2009, Jonathan Johnson. All rights reserved.

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