For over 100 years, simple copper wires have transmitted phone calls between households and offices around the world. It’s a system far more technical and complicated than soup cans attached to string, and the expensive wire and complex systems are owned by big phone companies. It’s tough to find a lot of “new” phone companies, so while your provider may not have a monopoly on the industry, chances are it has a pretty good stronghold on business in your area.
Comfortable with the demand for service, these companies frequently raise the rates on long-distance calls and seem to enjoy adding fees and charging for every little feature you want to add to your service.
Though new companies are rare, big phone companies are finally getting a challenge as newer technology develops and new industries can reduce the need for traditional phones and copper-wire networks altogether. If you’re tired of paying for voicemail, caller ID, or long-distance calls, it’s time to cut back on your commitment to the phone company – or sever it entirely – by considering some of the money-saving alternatives.
Going Mobile Only
When cell phones first became mainstream products, they were clumsy, heavy, and convenient only as a supplement to a traditional phone. But over the past fifteen years, improved technology and family plans have made it easier to scale back telephone landline plans to the bare essentials, and many people have simply abandoned traditional phones altogether. While relying on mobile technology can be a cost-effective solution, this plan can have a few drawbacks for individuals and families as well. Consider the key advantages and disadvantages.
If you commit to using only a cell phone for your communication needs, you’ll just have one number and one bill, which means savings and some enjoyable benefits:
- Unified calling. Going mobile only simplifies your contact information, since you just have one number to give out to friends and business contacts.
- Accessibility. Going mobile only means no more confusion about who should call which phone and when. You won’t have to call your home voicemail every half hour just to find out if someone called your other number.
- Flexibility. If you’re comfortable with technology, giving up your landline can be very liberating. Instead of having a cell phone as a backup or extra phone, you’re carrying your primary line with you. You can relax while traveling and worry less about unexpected delays and emergencies.
- No double spending. Cell phone packages and landline plans both come with basic monthly charges just to get started, so by cutting one out, you can stop throwing money away.
When you’re relying solely on a mobile plan, you have to commit to certain costs and services, which reduce the effect of your smart savings strategy.
- High cost of service. When you cut off your traditional line, you’ll have to depend on your cell phone plan, which is probably already at least $40 a month for basic cell service or $80 for high-tech smart phone plans. You’ll likely see that bill climb a bit.
- Limited minutes. Though some plans offer unlimited minutes, most major providers still limit your minutes, at least during peak hours. When you don’t have your home phone to fall back on, you’re more likely to spend more on overtime minutes or an expensive unlimited plan.
- Device decisions. You can only choose from your provider’s limited selection, and it’s getting tougher and tougher to find the phone that’s “just right” for you.
- In-home convenience. One of the nice things about home telephone service is that you can keep a phone in every room, avoiding the trouble of running around the house looking for your tiny cell phone.
- Emergencies. Cell phones have emergency calling features and can reach 911 services, but they’re not quite dependable enough for a family to trust them in an emergency. If the battery dies or service is weak, you can lose precious moments. Traditional phones, on the other hand, are only subject to the perils of damage to the line; they’re more dependable for emergencies.
- Loss and theft. Your flexible connectivity relies on a single valuable device, and if you lose it or someone steals it, you’ll be cut off until you find or replace your phone. You’ll face some inconvenience or the added expense of a cell phone insurance plan.
- Call quality. Mobile phone call quality leaves much to be desired. Many people find they can’t even make calls from certain parts of their homes, rendering the mobile phone virtually useless and reversing the effectiveness of the mobile only plan.
- International calling rates. If you make a lot of international calls, you’ll quickly learn that mobile phone rates for international calls are alarmingly higher than landline rates to other countries.
Though it might sound like a high-tech solution, Voice over Internet Protocol (VoIP) providers offer top-quality solutions and incredibly low rates. VoIP transmits your phone calls over a digital connection, combining the content and style of phone calls with the speed and accessibility of the Internet. If you have broadband service via a high-speed Internet service provider, a VoIP provider will send you a small router that connects your DSL or cable modem to your home telephone wiring. You’ll use your standard phones to make calls the same way you always have, but the VoIP fees will be far lower than the rates your phone company charges.
Advantages of First Generation VoIP Providers
The first generation of VoIP providers, like Vonage, Lingo, and some local cable companies, give you a free router and charge a monthly fee.
- Low monthly rates. The equipment is free, and monthly rates are usually between $15 and $25.
- Low-cost international calls. Unlike your cell phone company, a VoIP provider will crush the traditional phone companies when it comes to international calling prices. Most VoIP providers offer free calls to Canada and Mexico, and some even offer free calls to dozens of European countries.
- Included features. Most VoIP providers throw in voicemail, caller ID, call waiting, and almost any other feature you can think of. My provider, for example, sends emails with audio files of my voicemail messages.
- Portability. While VoIP used to be a convenience that only worked at home, many new devices are small enough that you can travel with them. You can even make calls from overseas just as if you are using a telephone line in the United States. In fact, I know many people who live in other countries who use these devices as their home phone so that they can send and receive calls from the United States for free. Further, if you ever move, you can bring your number with you and keep your service running (just be sure to update your address with your provider for the purpose of 911 calls).
Disadvantages of First Generation VoIP Providers
- Equipment. Devices are usually free, but they’ll take up space and add to your electric bill. You’ll also have to dedicate some time to connect the router to your phone line and cable modem or home computer data network.
- Call quality. Sometimes the connection quality isn’t as good as that of a traditional phone line. Depending on your computer system, you may find that downloading files or browsing complex web pages can interrupt your call.
- Technology. You know that feeling you have when you get a new computer, like the technology is already obsolete? VoIP technology moves quickly too, and you may find that your free router is out of date sooner than you expected. Some providers will provide periodic upgrades however, so make sure you check the fine print.
Second Generation VoIP Providers
The second generation of VoIP companies, including Magic Jack and Ooma, are quickly becoming popular. The main differences between the first and second generations are in the hardware and pricing structure.
1. Magic Jack
Magic Jack is very similar to traditional VoIP providers, with a few exceptions. First, you’ll attach their VoIP adapter directly to your computer. This USB adapter will let you plug your phone cord into your computer, essentially using your computer as the VoIP router. That means that you’ll have to keep your computer running at all times to keep your phone line live, but at least you won’t need any additional clunky devices.
While they charge $20 for the adapter, the annual cost of MagicJack service is a mere $20. This price includes service to Canada, but calls to other countries come with a moderate per-minute fee. The biggest drawback to this system is that you cannot port your existing home telephone number. Magic Jack has been promising their customers this feature for so many years, but they haven’t yet delivered, so it’s become somewhat of a joke among people who follow the company.
Ooma’s router costs about $200, but you’ll face very few costs after that initial investment. While they market the service as “free,” if you read the fine print closely, you’ll learn that you’ll be responsible for about $3.47 worth of “taxes and fees” each month. While their fees still add up to less of an expense than monthly costs of phone companies or even first generation VoIP providers, the $41.64 a year still works out to more than twice the annual cost of Magic Jack.
Unlike Magic Jack, Ooma will port over your original home number, but they’ll charge you a one-time fee of $40 for the service.
Ooma’s international rates, while reasonable, are subject to “connection fees” of 3.9 cents as well as another 15% to 18% added on as a tax. The fact that they are unable to offer a simple per minute rate, inclusive of taxes and fees, leaves me wary about doing business with this company. Once you invest in the expensive device, you run the risk of their increasing fees in the future.
A newer and increasingly simple way to avoid the phone company or perhaps avoid phone bills completely is to make inexpensive or completely free calls to and from your computer. Emerging technology and popular brands are making this option very attractive, particularly two mainstream choices: Skype and Google Voice. They’re not telephone companies, but rather providers of computer telephony service.
Skype uses your computer’s speakers and microphone to send calls through the Internet. You can even buy a headset to make your calls more private or more closely mimic the experience of being on the phone. Your only expense is your Internet connection and the electric bill for running your computer.
Using Skype, you can make free “calls” to anyone else in the world who uses Skype. For a very small fee, you can use SkypeOut service to make a call from your computer to a telephone number. Though you’re probably not quite ready to give up all of your phones and rely solely on Skype, the company’s mobile applications are making it an attractive option for cutting long-distance fees and the expenses of going over your minutes.
2. Google Voice
If you have an account with Google, you can install a simple Gmail plugin through which you can make and receive calls from your computer. Calls within the U.S. are free, and Google offers very low international rates. If you travel outside the country, Google Voice is a great way to call home for free.
You can port your own number over to a Google Voice account, or you can choose a new number in almost any area code. This feature makes it an attractive option for families with college students, since you can basically set up a local number for cheaper calls. You can also choose to forward calls from your Google Voice number to your home, office, or cell phone, so it provides all of the flexibility you could ask for. Plus, if your phone has a “favorites” program that allows you to select a short list of numbers for which all calls are free, you can use Google voice to essentially negate any minutes charges on your mobile account.
Google Voice also provides text or email alerts when you have new voicemail, but their visual voicemail feature will have to improve before you can trust the transcripts.
Phone bills are one of those expenses that most people just accept as part of everyday life. The phone seems like a basic necessity, and most households choose to keep a traditional phone line open. But as an exciting array of new telecommunications options becomes more accessible, the phone companies will face competition like never before. And you won’t have to just assume the regular cost of your standard phone service.
You’ll have the power to negotiate better rates, or walk away and use your consumer dollars to set up a more modern system. By carefully considering your home telephone needs, as well as the costs and features of the various providers, you can reduce or eliminate your cell phone costs and even improve your personal communication system.
What alternate phone plans have you used to cut phone costs, or what technology developments are you looking for to be the next big thing in communications?
(photo credit: Shutterstock)