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The Cranky Consumer

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The Cranky Consumer

December 28, 2004

By Shawn Young

Enticed by the cost savings, hundreds of thousands of people are experimenting with making phone calls over the Internet -- and many areditching their conventional phone service altogether.

A growing list of companies now offer Internet calling, known as voice over Internet protocol, or VOIP. In addition to start-up companies such as Vonage Holdings Corp., big phone and cable companies such as AT&T Corp., Verizon Communications Inc. and Time Warner Inc. have jumped into the business. SBC Communications Inc., the nation's second-largest local phone company (by revenue) after Verizon, also has announced plans to join the fray.

As the competition heats up, prices are falling. Some of the big providers have cut their rates twice in the past six months. Most providers sell the service for a flat rate, ranging from $20 to $40 a month, that includes unlimited local and long-distance calling. That is about a third to half the price of comparable conventional phone service.

By the end of this year, one million people are expected to be making calls via the Internet, up from slightly more than 100,000 at the end of 2003. The number of Voip customers is forecast to triple annually for the next five years on average, according to Gartner Inc., a research

To see how easy it is to make the switch, we tested five of the largest and most popular Internet-calling service providers: Vonage, AT&T, Cablevision Systems Inc., Verizon and Primus Telecom Inc.

The good news first: In most cases, we found that setting up Internet-based phone service isn't much more complicated than plugging in an answering machine. To get VOIP, customers have to have a high-speed Internet connection and a touch-tone phone. The service provider will furnish an adapter, which connects the phone to your cable or digital subscriber line modem.

Customer service was a mixed bag. The Verizon representative we spoke with kept talking about a router, which is the key component in a home computer network. So we asked if we needed a home network to use the service. He was stumped. "A router is, like, a box," he said hesitantly. (The correct answer is that, yes, a router is required by Verizon, though not all services require one.)

Vonage customers have complained of long waits to speak to customer-service reps. In our test, we got recordings saying customer service was simply unavailable. The company says it is doubling the number of customer-service reps.

One major drawback is that the service won't work if there is a power failure or Internet outage. We learned this the hard way when a storm knocked out our Cablevision phone and Internet service for four days.

The easiest way to sign up for Voip service is online. Generally, Internet calling will serve only one phone in the house, though some carriers will wire the whole house, or help you do it yourself. Others suggest getting a cordless phone system with a base station that feeds
multiple extensions.

The greatest potential savings from Internet calling are available to people who get their Internet service from a cable company. But they have to be willing to drop their conventional phone service altogether, and get Voip through a lower-priced carrier such as AT&T or Vonage.

Consumers with a DSL Internet provider usually don't have the option of cutting off their traditional phone service because the phone line also carries their Web connection.

Another plus with Voip is that customers usually can pick any area code they want and can take the service with them when they move or travel.

Internet calling isn't hassle-free, particularly for customers who want to keep their existing phone numbers. To do that, they need to get a temporary number and wait a few weeks to be able to move the old number to the new service -- sometimes, they can't move their old number to their Voip line. Also, 911 operators typically can't tell where a call from a Voip user is coming from, so callers have to announce their locations during emergency calls.

Among Internet-calling providers, AT&T has been particularly aggressive in pushing its Voip service, having spent millions of dollars advertising it on TV. The company has some appealing phone features, such as the ability to program the service to ring several numbers --simultaneously or in sequence -- if nobody picks up at home. AT&T also lets customers preselect (on its Web site) phone numbers that they want to send straight through to voice mail.

The service does have its downsides. In order to maintain voice quality, AT&T sometimes slows the Internet connection when a customer tries to do bandwidth- hogging Web-based tasks while also talking on the phone. We discovered this when we tried to upload photos and simultaneously use the phone.

With Cablevision, a technician spent about an hour setting up our cable TV, Internet and phone service. The service was hobbled by the fact that the cable running into our house was worn out. Then, a severe rainstorm resulted in a four-day outage -- which also laid bare a major weakness with Cablevision's customer service. Service for telephone, TV and Internet are handled separately, so we had to make multiple calls to report what was really one problem. Cablevision says our experience wasn't typical.

One attraction with Voip is that subscribers get a slew of advanced features that aren't available with conventional phone service. You can, for example, have an e-mail sent to you instantly when someone leaves you a voice mail, and then listen to that voicemail on your computer.

(You click on it, and it plays.) Most services also include: immediate logs of incoming and outgoing calls and a phone book with click-to-dial features.

It took only a few minutes to set up our Verizon service. We called for help twice, and both times the customer reps bent over backward to assist. One even made a follow-up call to make sure we were OK.

But while the voice quality on the calls was fine most of the time, it faltered badly when we tried to use the phone during a photo upload. The result was an echo-chamber effect. Verizon says customers can have the company make an adjustment to their connection.

Though we didn't have any service snags with Vonage, the company's Web site had several alerts to customers about problems with sound quality and voicemail. The company says it has since addressed those problems.

Where the Vonage service excelled was with its easy-to-use features. We particularly liked the option of replaying just the last 10 seconds of a voice- mail message, which is when most people leave their call-back numbers. It also had the clearest, most informative billing statements.

Signing up for Primus's Lingo service was a chore. We provided our information online three times and kept getting messages that there was a problem. A lengthy chat with customer service failed to solve the problem. The representative promised to call back the next day, but
didn't. When we called two days later, there was no record of our earlier attempt to sign up. A Primus spokeswoman said such problems are rare.

Later, we encountered some other bugs in the company's system. Some of our U.S. calls were repeatedly directed to the wrong number, and we weren't able to complete calls to cellphones in Europe that sailed through with our regular phone. Primus says some foreign carriers block calls from Internet-based services.

Because Voip is so new, ordering the service by simply calling the number on back of your phone or cable bill may not be the best way to go. One of our testers, for example, wanted to try out her cable provider, Time-Warner.

"Say what?" asked a cheery but perplexed sales agent when we called to inquire about Time-Warner's Voip service in Brooklyn, N.Y. "What do you mean by phone service over the Internet?" she asked. Time Warner says that the agent wasn't up to speed on the service because it isn't offered in our neighborhood yet.

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†AK and HI residents pay $29.95 shipping. ††Limited time offer. Valid for residents of the United States (&DC), 18 years or older, who open new accounts. Offer good while supplies last and only on new account activations. One kit per account/household. Offer cannot be combined with any other discounts, promotions or plans and is not applicable to past purchases. Good while supplies last. Allow up to 2 weeks for shipping. Other restrictions may apply.

1Unlimited calling and other services for all residential plans are based on normal residential, personal, non-commercial use. A combination of factors is used to determine abnormal use, including but not limited to: the number of unique numbers called, calls forwarded, minutes used and other factors. Subject to our Reasonable Use Policy and Terms of Service.

2Shipping and activation fees waived with 1-year agreement. An Early Termination Fee (with periodic pro-rated reductions) applies if service is terminated before the end of the first 12 months. Additional restrictions may apply. See Terms of Service for details.

HIGH SPEED INTERNET REQUIRED. †VALID FOR NEW LINES ONLY. RATES EXCLUDE INTERNET SERVICE, SURCHARGES, FEES AND TAXES. DEVICE MAY BE REFURBISHED. If you subscribe to plans with monthly minutes allotments, all call minutes placed from both from your home and registered ExtensionsTM phones will count toward your monthly minutes allotment. ExtensionsTM calls made from mobiles use airtime and may incur surcharges, depending on your mobile plan. Alarms, TTY and other systems may not be compatible. Vonage 911 service operates differently than traditional 911. See for details.

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