VoIP Review

VoIP phone service for saving money on phone bills

VoIP (voice over Internet protocol) is digital phone service that uses a high-speed Internet connection to bypass your normal local telephone company. A VoIP service can supplement your regular landline phone, saving money on long-distance calls. Some VoIP users eliminate their landlines entirely. Currently you can get VoIP service (commonly referred to as digital phone) through your cable company, from a dedicated VoIP provider such as Vonage, or by downloading software, such as Skype. Often you can use your own phone, although sometimes an adapter is required. A phone using VoIP service rings has a dial tone just like any other telephone, although some VoIP services work through your computer. Depending on your phone usage, VoIP may offer significant cost savings.

For this update, we found an excellent review comparing several cable and traditional VoIP providers from ConsumerReports.org. We also found excellent comparisons of cable VoIP providers at Keynote Systems, based on actual testing, and at J.D. Power and Associates, based on a large survey of phone users. For comparison tests of traditional VoIP providers, we found the most recent reviews at SpotCoolStuff.com and The New York Times. Current single-product reviews at Laptop Magazine and Computerworld.com are also excellent, as are slightly older comparison reviews at Wired magazine, PCMag.com, PCWorld.com and About.com.

We found the best summaries of user-written reviews and ratings of VoIP providers at DSLReports.com (also known as BroadbandReports.com). This site updates its chart of average VoIP-provider ratings weekly, tracking reviews for months so its awards are based on recent, consistent high ratings. We also analyzed user-written reviews and ratings of VoIP services at many other sites, including VoIPReview.org, NextAdvisor.com and Amazon.com.

Consistent call quality is a big factor in nearly all the VoIP reviews we read. Cable VoIP has the edge here, since cable companies route calls over their own networks. Traditional VoIP uses public Internet and is more subject to problems from crowded bandwidth. International calls and calls during peak hours can have glitches like echoes and dropped calls.

Vonage, arguably the most well-known hardware-based VoIP service, was launched in 2002, and currently has over 2.6 million subscribers. In 2007, cable company Comcast overtook Vonage as the leading VoIP provider. Now Comcast dominates the digital voice market, with over six million subscribers as of March 2009. Cable VoIP, in general, is growing faster than traditional VoIP. However, software-based Skype (free) remains the most popular VoIP service of all, with 443 million registered users worldwide, according to eBay, Skype's parent company. Skype is also moving into the mobile VoIP market, with service for about 50 different cell phone models, including the iPhone.

The future of most traditional VoIP providers is uncertain. Vonage -- a VoIP pioneer -- has faltered against competition from cable companies, as well as from patent-infringement lawsuits from Verizon and Sprint. AT&T is phasing out its CallVantage service, and Verizon terminated its VoiceWing service in March 2009. In 2007 SunRocket went out of business, leaving its 200,000 subscribers in the lurch. The FCC is issuing a rule that requires VoIP providers to give "reasonable notice" when closing up shop, but it won't be mandatory until sometime in 2010.

Meanwhile, VoIP providers continue to innovate, and Skype and Vonage have plenty of challengers. Two of the most interesting, especially for saving money, are Ooma and MagicJack. Both use innovative business models and hardware. Ooma charges only for the initial hardware kit (*Est. $215), after which VoIP service is free -- using any ordinary telephone. MagicJack (*Est. $40 per year) requires computer use, but the device plugs right into a USB port. These and other VoIP options get a full discussion, based on reviews, later in this report.