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Say hello to lower phone costs on Net

YOUR MONEY

Internet calling has improved so much and become so inexpensive, it's a good time to try some of the services

November 25, 2007|James S. Granelli | Times Staff Writer

The cost of phone calls has been dropping for years, but there's still a lot of room to push prices down to pocket change -- if you're not afraid to make calls through your computer.

A growing number of calling services take advantage of the technology known as voice over Internet protocol, or VOIP. Thanks to continuing technological improvements, the plans are easier to use than ever and can save you a boatload of money on long-distance and, particularly, international calls.

But don't rely on the plans as your only phone service: Most don't provide emergency 911 calling, and there can be other drawbacks as well.

You might not know it, but you're probably already using VOIP: It's the same technology that AT&T Inc. and Verizon Communications Inc. use to handle your long-distance calls, and it's the backbone in the so-called digital-calling plans offered by cable TV giants like Comcast Corp. and Time Warner Cable Inc.

The cost savings of VOIP has allowed upstart phone-based firms, including Vonage Holdings Corp. and Packet8, to compete against the big players, even though they don't own the lines to your home.

VOIP technology breaks up voice into data packets and sends it, like e-mail, over high-speed lines without the need for a lot of expensive hardware that phone companies use.

Scores of computer calling operations -- Skype Ltd., SightSpeed Inc. and Gizmo Project among them -- don't think those entrenched phone companies are passing the true savings of VOIP on to consumers.

And such companies as Mobivox Corp. and ISkoot Inc. believe that's especially true in the higher-priced mobile-phone industry, so they are bringing the same free and low-cost calls to cellphones.

"Costs of calling are dropping to free," said Andy Abramson, an industry and marketing consultant who has tested all the major VOIP operations.

Consumers might pay a basic access charge -- "an admission fee," Abramson called it -- for a connection or a basic calling plan, but they don't have to pay more just to talk to someone around the corner or around the world.

Neal H. Shact, chief executive of telephone services company CommuniTech Inc., recalled a visit to Paris two years ago when he spent $1,000 on cellphone calls.

"Two weeks later, I went to Sweden and used Skype through my laptop for even more calls and I didn't spend the whole $12 I had paid for," he said.

But the VOIP companies are businesses too and have to make a profit to continue offering service.

They typically make their money by selling extras, such as voice mail, extended voice and video recording, and international and nationwide calls to nonmembers. But even those prices are low: $30 a year for Skype customers to reach any number in North America and about 2 cents a minute for most providers to reach home phones in many countries.

The growing popularity of the programs has helped persuade two mainstream cellphone carriers -- T-Mobile USA Inc. and Britain's Mobile3 -- to create ways to let customers make calls and send messages without using their minutes.

T-Mobile uses software that links to high-speed Wi-Fi networks for free calls, messaging and data, and Mobile3 joined Skype on a new phone to allow free Skype-to-Skype calls on the cellular network as well as unrestricted Skype Chat messaging.

"All of these services give you a glimpse of what we are capable of doing if those who control the high-speed pipes into our homes aren't limiting access to what we want to use," said Marcelo Rodriguez, CEO of Voxilla Inc., a San Francisco company that provides information on Internet technologies.

For computer phone plans, the costs are so low that it's worthwhile to play with a number of them to see how they can cut your long-distance and international bills.

And with Skype, SightSpeed and a few others, free video is thrown in, as long as you want to sit in front of a computer and a webcam.

Setting up the calling programs is usually easy.

For the most part, you need only what many folks already have: a computer, an Internet connection and a headset with a microphone. Depending on the service, you might not need the computer or the headset once the programs are set up.

Skype, SightSpeed, Gizmo and others can be downloaded free from their websites. You'll have to register a user name and a password, much like you do for online banking and other services.

Some drawbacks

Sound quality can fluctuate from excellent to so-so, and calls can be dropped, albeit far less than with cellphones.

If you're looking for free calling, you'd better get your friends and relatives to use the same program you're using because nearly all of them allow free calling only among members.

Some drawbacks may be more in the eye of the beholder. If you spend a lot of time in front of the computer, then it may not be much of a stretch to use it to make a call.

If you have a laptop, you can take your calling plan with you. Computer-based calling plans usually don't offer mobile service. For that, you need programs like Mobivox and ISkoot.

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