Understanding VOIP and lowering your phone bill with Vonage and Skype

I’ve written earlier about configuring Skype on your computer and how to get the best sound quality. To save money, there’s actually a multi-pronged approach I recommend.

First, in both of these cases you’ll need a high speed Internet connection. I’m not talking about DSL though. That’s generally not fast enough. You need a good cable modem connection in the home to typically get the performance (speed) that Voice Over Internal Protocol (VOIP) requires.

Already have a high speed Internet connection? Great. Here are your options (generally, both make sense).

1. Make computer-to-computer calls anywhere in the world with Skype

In this setup, Skype is like an IM client. Think Yahoo! Messenger or MSN Messenger, except Skype does and specializes in high quality audio and an interface that just works.

Both parties in the “call” must have Skype setup and with a high speed Internet connection. This gives you calls that are completely free, though you’re generally tethered to your computer.

2. Use a commercial VOIP provider for your telephone service

In this scenario, you get to use your familiar telephone equipment and call people in the traditional manner – by dialing their phone number. Services like Vonage (my favourite) give you a little device that plugs into your home network. Into this little device, you plug in your regular phone (there’s traditional phone jack on the back of these devices). Now calls to your phone number get routed over the Internet, into your home, onto your home network, into your little telephone adapter box and then they cause your phone to ring. You pick up the phone and it’s a normal telephone call to you.

In this space, there are quite a few companies. The front runner is Vonage and they do this service well. You get voicemail, name and number caller ID, call waiting and all the other typical features you normally pay extra for, all for a fraction of the regular cost. My phone bill went from $70/US a month to $35/US a month.

The only downside, is that if your cable modem connection goes out, you have no phone service at home during the outage. However, calls still go to voicemail and everyone has cell phones – so you’ve really not lost anything.

In my Vonage plan for example, I get to call anywhere in North America (yes, that includes Canada) for free – any time. And, places like the UK, Pakistan and India are really, really cheap to call. I also got a “virtual” Toronto number. It’s a local call for folks in Toronto and it routes to my phone in the US. The conveniences are great.

If you want to save money, have cell phones in the household and already have a broadband connection, you should take a look at Vonage. They’re available in the US, Canada, the UK and I believe a couple of other places as well.

Enjoy the savings!