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Save Money with VoIP (Voice over IP)





This is a guest column by Steve Zussino.

How I reduced my families phone bill to less than 10 dollars per month

Communication is very important for my family. My wife and I live in Victoria, BC and our families both live in Ontario and we speak to them many times a week. It is also important to keep the connections we have with our friends all over the world.

My wife and I run a website that publishes grocery deals and printable grocery coupons and we need to stay in touch with manufacturers and grocery stores and with our editors.

When shopping for a home phone line it was important that a great long distance rate was included for the frequent out of province calling.

When shopping around for the best rates, I visited with two companies, Shaw and Telus.

Here are the prices for the competition (from their websites)

  • Telus: $26/month standalone for the home phone service and $0.04/min calling within Canada, to the U.S. and 50 international destinations.
  • Shaw: $39.95/month as a standalone service and $0.04/min long distance anytime within Canada and to the U.S. and 50 other specified countries.

Steps used to keep our telecommunication costs low:

1. Use an inexpensive VoIP service for long distance.

We chose to use Skype with their SkypeOut service. This costs us $32 US / year. This gives us unlimited long distance to anyone in North America and cheap rates when calling Europe, Asia, and New Zealand. It is very easy to signup.

2. Find a cordless phone that is VoIP compatible.

We hate talking on a headset and we enjoy using a cordless phone. I purchased a phone that was compatible with Skype and can be used with an existing land line connection. These phones are readily available at major electronic retailers. Our phone cost approximately $80.

3. Find a low-cost home phone line.

Now, I am sure at this point you already can see that I have less than seven dollars left per month for incoming phone calls. Well, the beauty of Skype is that you can have a virtual phone number to redirect to your skype name.

For example, we registered the phone number for the 250 area code using VirtuFon’s WorldFon service (http://www.virtufon.com). This service allows you to own a local phone number in one of 34 countries. They forward that phone number to your Skype address. Our phone is setup to accept Skype calls so someone calling that phone number will actually be talking to us using VoIP and Skype.

Cons of using VoIP

There are some problems as to using Skype or other VoIP services completely.

No emergency calls

VoIP service providers are not bound by regulations to offer emergency 911 calls, so not all of them offer it. This can be fixed by using a cell phone as a backup.

VoIP Voice Quality

Using VoIP can sometimes give you delays, weird sounds, noise and echo.

Internet Connection requirement

Since VoIP depends on your broadband connection, if the connection goes down, your phone line goes down as well. The formula is simple: with VoIP, no Internet means no phone. This can be very annoying at home, and catastrophic for your business. Always have a backup plan!

Back to you, can anyone beat this price for home phone service?

About the Author: Steven Zussino, Founder of Grocery Alerts Canada – home of grocery deals, product reviews and money saving coupons. He enjoys personal finance and saving money in beautiful Victoria, BC.





34 Comments, Comment or Ping

  1. 1. Stephen

    My wife and I have been home phone free for many years, always using our cell phones. There was a period when my wife wasn’t working that we did the same as you and hooked up SkypeOut to make calls during the day so we wouldn’t go over our daytime minutes. This had the perk of free long distance, which I was already getting on the cell phone anyway using GrandCentral/Google Voice. However, I find Skype’s call quality and delay to be a lot better than that of Google Voice.

    I know there are cheaper VoIP solutions out there than Skype, believe it or not, and you can actually get it hooked up to your existing phone lines so you can use your existing phones if you know what you’re doing. I believe you use a VoIP adapter to do this. I haven’t gone that far yet as I consider the $3/month for Skype to be well worth it when we need it. I actually use a regular cordless phone with 1 base station and a VoIP adapter plugged into my computer instead of having a specialized cordless phone like you.

    Combining Skype and low cost prepaid phones is a very good and cheap solution.

  2. 2. DG

    I’ve tried to use SIP phones with a SIP provider and just couldn’t get good enough reliability.

    I toyed with the idea of getting a 7-eleven cell phone ($1/mo + airtime) and a bluetooth gateway ( http://www.myxlink.com/xlink_bt.aspx ), but decided I would use too many airtime minutes.

    So I’ve ended up with Shaw basic phone service for ~$20/mo. Will have to give Skype a shot sometime.

  3. 3. seshu

    I assume you no longer have a PSTN land line. So, how do you connect your home security system to a monitoring center if you only have a VoIP.

  4. 4. Mark

    Which cordless Skype phone did you go with, and where did you buy it ?

  5. 5. Big-D

    I know this is a Canadian blog but it might apply. I have used Vonage for about 10 years and in 4 different houses (same phone number, different states). $25 dollars a month and I can call anywhere in the US an Canada and very cheap for international (which I don’t call). I have only had an issue with call quality, when my ISP started blocking VOIP calling (I proved it to them – I am a network engineer) and they forced me to get a more expensive internet connection. That is fine – I am working to get a different internet connection at the moment (Come on FIOS !!!).

    I am also looking at Magic Jack. I have several people to swear by it, but the one thing I am not sure of is the phone number switching since I have had this number for so many years. However if you have a PC that does nothing (I have a home server) all you have to do is take a phone (or your home wiring – next paragraph), and plug it into the back and into a USB port. It runs some app you can minimize but they run flash ads all day. No biggie if your PC is not in your face all day.

    If you are running any VOIP – you can hook up your home wiring. First of, and this is important, Disconnect your home from the local telephone company. Even if you are “Turned off” you still are getting the 5v line voltage. You can do this by going to your phone box on your house, and there is usually a part that is for home owners to plug in their home into. You can unplug this and then your house is off their phone system. Once you do that, you can plug in a VOIP system into any jack. I have mine plugged into my den (where my computer and routers are) and several phones through out the house. You are then in business.

  6. 6. Bill

    I looked into this as well, as I’m in Ontario and my family is on the east coast. With friends in Australia and Costa Rica, international long distance is also priority.

    In the end, VOIP was too much hassle for me, and we decided to go with Primus – it’s $75/mo, including both unlimited high-speed internet (which you’ll need for VOIP anyway) and unlimited international long-distance calling (to 50 countries, but both Australia and Costa Rica were on that list, so it worked for us). Adding up the components separately, $35 for internet, $20 for basic landline (we wanted something, for emergency if nothing else), and $10 for VOIP, we weren’t saving anything.

    It let me cut both the long-distance plan and minutes from my cell phone, so I did end up saving quite a lot, as my cell was previously my primary phone.

  7. I used an older Netgear cordless model.

    They no longer manufacturer that model.

    Future shop doesn’t carry many models.

    Look at Best Buy or on Amazon

  8. 8. VK

    Just remember that some home alarm systems(including ADT) may not work with VOIP! They need a regular home phone line to work…

    So check with your home security company first before switching..

  9. 9. John Torrington

    I’m a big fan of the MagicJack. I’ve used it for 6 months now and love it. Call quality is about the same as a cell. Much better than Skype. You can hookup any old telephone set you have, so you don’t have to buy a special phone. We use an old vteck portable and put it on call forwarding to our regular landline phone. So, we have 5 portables that we can answer and 2 for outgoing calls. You can also plug a motel phone into it or use your laptop mic and sound when you are on the road. (Like Skype, you will get a lot of feedback when you use your computer’s mic.

    The cost is cheaper than Skype and the quality is much better. $59.95 buys the jack and one year of unlimited North America calling + cheap international. After that, it is $19.95 a year. I pay an extra $10 for a Canadian phone number. So, my cost for a year for incoming and outgoing is $29.95. I believe Skype is double that.
    Jack to Jack calls are also free anywhere in the world.

    I not only save my money, but I chose a Toronto number so my Toronto friends and family don’t have to phone long distance to get me.

  10. 10. Mike

    I think you have your “competition” prices wrong. I’m assuming that you have internet from either Telus or Shaw, so the prices are quite a bit cheaper than what you are listing.

    Telus, $21/month in a “bundle”: http://www.telus.com/portalWeb/appmanager/cpPortal/consumerPortal?_nfpb=true&_pageLabel=residential_line

    Shaw, $20.95/month in a “bundle”: http://www.shaw.ca/en-ca/ProductsServices/DigitalPhone/Default.htm

    It looks like Shaw’s basic service is only $30.95/month standalone, I’m not sure why you list $39.95.

    You can also pick up a MagicJack if you want to save more money – it works with any standard telephone handset, no need to find a special VoIP handset.

  11. 11. Elbyron

    @seshu
    Many security companies offer wireless (cellular) security monitoring for an additional charge, usually about +$10/month. This has the added benefit of making it impossible for a burglar to disable your alarm by cutting your Telus or Shaw lines (though some alarm companies are notified when the communication is cut off). But I figured that someone must offer internet-based monitoring, and indeed with a little research I found a US-based company that offers its service in Canada.
    Nextalarm.com has two service levels. Full dispatch monitoring (typical) costs only $18/month, $180/year (save $3/month), or even $430/3years (works out to $11.95/month). Or if you just want a system that will notify you when an alarm goes off, you can give up the live operator response and choose their NetAlarm service for $11.95/month.
    You do need to buy a $115 adapter to connect your phone-based alarm system (RJ11) to an ethernet (RJ45) network, or you can buy an even more expensive 802.11 wireless device that you can plug your phone line into. And the other drawback is that it depends on your internet connection, so if your service is flaky, your alarm system might not be protecting you all the time. But considering how inexpensive this service is (compared to $50/month or more for wireless monitoring), it’s a great idea for anyone with a security system who wants to switch to VOIP.
    Note: all prices are in US dollars and were obtained today from http://www.nextalarm.com

  12. 12. Ian

    As low minute users, we’ve gone with:

    7-11 (speakout wireless) prepaid phone – allows us to roll over the minutes each year by topping up ($100 +$25/yr)

    voip.ms ($1.99/mo account + $1.50/mo optional 911 access, then between 1/2-1 cents per minute incoming and outgoing plus a $25 fee to port over the landline number).

    We were keeping Shaw high speed for internet access so voip.ms is accessed through a 2 handset Uniden DECT cordless phone ($28 XS Cargo) plugged into an PAP2T ATA box ($60 NCIX) plugged into the router.

    That gives us 2 handsets in the home that can be used without the computers on with caller ID, voice mail, forwarding etc. Voip.ms offers 2 levels of quality, so far the value level has been fine for us. Internet access has been quite reliable so we felt it was worth the risk with a cellphone backup.

  13. 13. Stephen

    Big-D … that’s exactly what I was talking about when I mentioned using your existing wiring to use regular phones. I haven’t taken that step yet, but I might sometime in the future.

    You will need a VoIP adapter to do this, which you can pick up fairly cheaply on Ebay. I think Linksys makes these too don’t they? I have a D-Link, but it isn’t very well supported anymore with newer operating systems unfortunately.

  14. Big-D,

    I have to take a closer look at the VOIP adapter.

    Great idea (getting off the phone company).

    We live in a condo and it works for us but if we bought a house I would definitely do this.

    Would it still work if I used ADSL vs Cable?

    Thanks

  15. @John,

    I would love to try MagicJack, but I have heard poor things about them in forums – lack of support.

    Would I still need to have a PC turned on constantly?

    @Mike,

    I didn’t list the prices for bundles because bundles is where they get you to sign contracts.

    Currently, I pay $10 / month for high-speed Internet with Telus.

    No contract – although we have this price until Dec 2010.

    I might try Magic Jack but I like the flexibility of Skype for when I am travelling – I hate carrying extra hardware around.

  16. 16. Greg

    I wanted a real phone so that it would work with my alarm system and so that 911 works and also it works if the power goes out. We have Telus for $20 per month with bundle. We live in BC and make regular calls to Ontario and Australia as well as the US. I found http://www.telehop.ca for long distance. They are 2.4c per minute in Canada and 2.7c to Australia (you can choose your 2 favourite countries and get a slightly better rate than the standard rates). I have used Telehop for several years and have been very happy with their service.
    I also use Skype and SkypeOut and I really like them, but they are simply not reliable enough for long calls (my wife ofter talks to her sister for 2 or more hours at a time) or for emergencies.
    I have played with several VOIP systems and they all work with varing degrees of reliability but for now nothing is as reliable as the POTS system.

  17. 17. Big-D

    @Stephen .. Linksys makes them (They are now owned by Cisco – so it might say Cisco on them). Mine is a Linksys that I got in 2000 and still works fine. You can buy them at Fry’s or Walmart, etc. or get them used on E-Bay for not much less.

    @ Steve Zussino .. You can use it on ADSL (or RDSL or any form of DSL depending on your analog phone company) or Cable as long as you have about 256kbps up and down stream bandwidth for the phone conversation. I happen to have cable which is 16 Mbps down and 2 Mbps up. I have done it with 2 Mbps up/down ADSL when I lived in Seattle and St. Louis and Dallas. xDSL is just not available where I live at now.

  18. Skype is a brilliant thing.

    Chances are, once I get much more independent, I won’t be using a typical phone like most people do.

    WIth the cons in mind, I can tolerate the lack of an emergency number along with a drop in quality, as well as dependency to an internet connection. Fits my call requirements perfectly, which is little. :P

  19. 19. saveddijon

    One thing that wasn’t fully mentioned (but implied), and which is a killer for me:

    VOIP likely won’t work during a power failure or any other kind of emergency.

    And that’s a big difference. A regular POTS (plain old telephone service) may seem expensive for the capabilities you get, but it, and the switching gear behind it, are designed for high reliability. The POTS network is independently powered. It will be there if your power goes out, or the cable pole falls over, or…

    Even if you aren’t dialing 911 (which is, as mentioned in the article, not guaranteed to work well with VOIP or even a cell phone) you will still appreciate emergency communications with loved ones or non-911 services if that’s required. (With a cell phone you have no control over which tower picks up the call. There have been incidents near Ottawa where a cell phone located in Ontario was tracked by a tower in Quebec. The Quebec 911 operator was not able to access Ontario dispatch services to efficiently handle the call. If you’re having a heart attack, every second counts.)

    Even if you have a POTS line at home, please ensure that at least one phone in the house is not cordless. The cordless phones will eventually go dead in a prolonged power outage. Your 50 year old Nortel 500 set won’t.

    And no, I don’t work for the phone company…

  20. 20. Oldi

    I have been using VOIP for over 5 years now.
    We started with Primus, they offer for 29.99 with unlimited local and long distance US and Canada. Now I am with VOIPGO for $144/year for the same service we used to have with Primus but I am going to try a free service now. It is free for local calls only but is worth to give it a try, it is free right? http://www.freephoneline.ca/. For long distance I will pay 13.99/month for ulimited call to over 50 countries – http://www.worldline.ca/
    Good luck on your search

  21. 21. Jake

    I’ve been using a company called les.net for several years now, with very good call quality. Very cheap too. All you need is an ATA adapter for your phone, a little bit of knowledge to set it up which can be quickly learned, and an internet connection.

    If power outages are a concern, consider getting a battery backup for $50. It’ll run your internet and phone for hours. :)

    Also folks, never pay full price for internet or phone. NEVER bundle phone/tv/internet with one company or else you lose your bargaining power. Competition is what makes these companies knees shake, and if you know how to talk to them, you can get dirt cheap rates.

  22. I have used MagicJack for almost a year and it works very well. It has the additional benefit of being very portable, since you can use it with any computer and as such, we were able to use it and call North America from South East Asia on a recent bycycle trip. As well, voice messages are also sent by email, and thus can be accessed without a telephone on any computer.

    A one time cost is $40 is good for a year and about $12/yr thereafter.

    great deal

  23. 23. mode3sour

    @Ian I use voip.ms too! Far cheaper/better than Vonage/skype/magicjack imo

    @saveddijon I’d like to know how a landline works when the telephone pole falls over

  24. 24. DAvid

    Steve asks: “Back to you, can anyone beat this price for home phone service?”

    Yup! Try the net-Talk TK6000. $100 forever, and no need to have your computer running like MagicJack or Skype. Plug it into your router, plug a plain ol’ phone into the device, and you’re set.

    Cost: $1.40 per month if you keep it 5 years.

    DAvid

  25. 25. bob

    I don’t get it.

    If you need to have high speed internet to use your phone, then you need to include that cost in your calculations.

    And, by the way, Shaw doesn’t require any contract to sign up for their bundles.

    With high speed, the phone is only $20.95/month.

  26. 26. Marc

    Using voip.ms,switched 3 weeks ago. It was a little bit of hassle to set up, but well worth it.

    I was able to port my number and it’s .99 month for my incoming number, 1.50 for 911/month and half to one cent minute for calls in NA. I figure it will be ten dollars per month, down from 40.

    It was $25 to port my number and 60 for the phone adapter.

  27. I was looking at getting rid of my land line… but the incentives on other services by bundling packages left me at a disadvantage. And the cell phone plans were really rich… any ideas?

  28. 28. Rob

    hi John Torrington ,

    you said you use Magic Jack & pay just $10/year extra for a Canadian phone number….where do you get it for just $10/year…

    http://www.canadianmagicjack.ca/ charge $99.95 Yearly Fee for a Candian number..

    thanks
    Rob

  29. 29. Robert

    @Steve For Post 15 – Shaw has no contracts on any of their services, bundled or not.

  30. 30. twocents

    I use magicjack with a 5 years paid plan, all the calls to US and Canada are included.
    I think the calculated monthly cost does not overpass 3 dollars per month. One detail, you should have good internet connection.

  31. 31. brother toner cartridges

    I believe Voice over IP service is going to save us a lot of money if we know how to do it. I never use it before since My family and I stay at the same place. I’ll try to use VoIP next year when my best friend will move to US

  32. Perhaps another reason why landline industry is dying. For people like myself who are single and have no other connections outside the US, VOIP is not much useful when most cell phone plans include free nationwide minutes. But for people like yourself with families, I can see how it could save a few bucks every month.

  33. 33. Shirley

    No one has mentioned iTalkBB. VoiP with phone adapter. Can use with router or not. I am using low bandwidth with a Seimens Dect phone from Costco. Sounds better than high speed with VTech 5.4. Some echo some times. 7/m on 2 year plan. Unlimited N. America calls incoming outgoing and the no. is portable. Take the small adapter with you travelling for free calling anywhere you go to N. American calls.
    italkbb.com and use the English language tab on the side. They are in Canada.

  34. 34. ewan benin

    I’ve use vonage here in Canada since 2006. I have the 500mins plan for Canada and the United States ($19.99 a month). I don’t use the phone a lot and this is an excellent plan for me. They also have an unlimited calling plan to Canada and United State for $39.99 a month. Their long distance charges to other countries are very competitive too.

    Set up is easy with vonage, the device can be purchase at Staple, Walmart, Futureshop, Best buy office depot or directly from vonage. I paid $89.99 for mine and just transferred by old phone number from Telus to vonage.No land line is needed, vonage device connect to your computer.I have a phone in my living room and bedroom. No extra charge for voicemail, call waiting, caller id and I can check message online too. Also, for those that have family overseas, you can purchase an adapter and take overseas for your family and they call from that phone (computer connect is needed) is on your Canadian phone number and its cost you nothing more.

    Enough said, I sound like a sales person for them and I’m not.

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