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Phone System Notes

With people trying to improve their personal economy, many are looking for ways to lower their bills, or eliminate unnecessary expenses. Sometimes people consider cancelling their cell phones, but do not like the idea. Cancelling the home phone may save a few dollars, but then cell phone minutes may get used up. Before going to extremes, realize that there are plenty of other options.

In comparing phone service rates there are simple factors used to determine the best option.

  1. Amount of domestic and international calling
  2. Monthly Fees
  3. Equipment Costs

Not every system is best for everyone, but now there are more options than just the local phone and cable companies. The motivating factor of this study is saving money. Some of my co-workers who call India, China or Mexico, and rarely call the US, will prefer a plan that allows them to save money on international calls, while most people call the US with occasional or no international calls. Each person must decide what is important for their own use.


Home Phone System Options, sorted by monthly cost

Option Min. Monthly Int’l US Calls Phone Avg. Monthly Equipment Cost Best for
Cell only $0 $0 included cell phone $40 $100 domestic, minimal int’l
Ooma $0 cheap free standard $5 $250 domestic, some int’l
Skype $0 cheap cheap “special phone” or “headset + computer on” $10 $10 – $500 domestic & int’l
Vonage $25 + $5 fees included included standard $30 included int’l, some domestic
Cable $30 plans included standard $40 rent or buy expensive anywhere
Phone Co $25 $5.00 plans included with $35 plan standard $50 none expensive anywhere


All IP phones (Ooma, Skype, Vonage, etc.) require an internet connection. All long distance plans have a minimum charge of around $1.00 tax per month. Larger companies charge many other fees.


Links


More Details of Each Option

Ooma

Ooma is a revolutionary device that allows you to call anywhere in the U.S. with no monthly fees. You can also make international calls for next to nothing. Ooma is easy to set up and even easier to use. You donít need a PC. You donít need a headset. You simply connect the device to your high-speed Internet and your existing phone, and thatís it. Youíre ready to start calling and experience Oomaís great voice quality.

Skype

Software that is downloaded and installed on a PC. Skype phones are also available, but require the computer to always be on, or an expensive device to be on the network (around $500 in October, 2009).

Skype-to-Skype calls, video calls and instant messaging are free, any time of the day or night, anywhere in the world. Call phones and mobiles and send SMS messages at great value Pay As You Go rates, or call unlimited* to certain countries with a subscription.

Vonage

With Vonage, you make phone calls using your high-speed Internet connection with your existing home phone.

Magic Jack

We have to mention the magic jack, but are reluctant to recommend it, as there have been reports of the company charging more than they should, but other reports of satisfaction. We leave it to the reader to determine if it is a scam or not.

The Magic Jack is a device that connects to the USB port of the computer, and a standard phone is connected to the other end. The advantage is the unlimited calling for about $20 a year. The disadvantage is that the computer must be on for the device to work.


Feature Comparison of IP Phone Systems

Feature Ooma Vonage Skype Cable
Use with computer off Yes Yes Yes (with skype phone) Yes
Use Standard Phone Yes Yes No Yes
Emergency 911 Calling Yes Yes No Yes
Works with power off? Yes (with phone line) No No No
Keep current number? Yes ($40) Yes No Yes

Cost Comparison of Phone Service

Total Monthly Cost Ooma Vonage Skype Cable Phone Co.
Min. Monthly Cost $0 $25 $0 $30 $20
Actual Min. Monthly Cost after taxes and fees $1 $30 $1 $35 $35
Average Monthly Cost Domestic $1 $30 $4 $50 $50
Calling Plan Monthly Cost Domestic $1 $30 $4 $50 $50
Unlimited Monthly Cost Domestic $1 $30 $4 $50 $50
Unlimited Monthly Cost International plan none $40 $16 n n
Average International Rates (Mexico, India) $.07 $0 $.09 $1.00 $.50
Low Monthly Cost International (200 minutes) $14 $40 $18 $35 $50
Average Monthly Cost International (400 minutes) $28 $40 $36 $60 $60
Medium Monthly Cost International (600 minutes) $42 $40 $54 $70 $70
High Monthly Cost International (900 minutes) $63 $40 $81 $135 $150

As you can see, Ooma and Skype lose their appeal with high volume international calling. If you keep your international calls to under $400 minutes (6.67 hours), then Ooma and Skype are the cheapest options. When you get to around 600 minutes (10 hours) Vonage starts to shine.

The cable and phone companies charge for the line, plus the calling plans, plus fees and taxes, so if a line is $20, domestic calling plan $30, and limited international $5 they may have a bundle that includes line, plan, and fees for around $50.

Cheaper Still

Good options for international calling to answer these questions:

  • What are the cheapest options?
    • Skype to Skype calls are free.
    • Ooma to Ooma calls are free, and Ooma to any US number is free.
  • How can people calling me save money?
    • Skype allows you to have a local number anywhere in the world, so callers call a number that is local to them.
    • An Oooma device can be purchased, set up, and shipped, so they can call you for free.

Other Comparisons

For a very good comparison of IP telephony options check out: