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Vonage Broadband Telephone Service

January 20, 2004

By Jeff Fila


Many of you may have done the same thing my wife and I did more than two years ago - we went “totally digital”. We got rid of our POTS line (Plain Old Telephone Service) and decided we only needed our cell phones.

We had cable access. Since we were already paying for two cell phones, getting rid of that landline bill saved us over $40 a month.

But things have a way of changing. We had a baby and were home more often than before. We received and made more calls than ever before. That first month after our child was born, we had over $100 in extra charges because we went way over our alotted minutes. We’ve gone over by $50 or more twice since then. But there was no way we were ever going back to a landline.

Then I was presented with the opportunity to review the Vonage service. I had heard about it and had seen their ads all over the Internet, but never really looked into what they offered.

Could Vonage be the cure for our phone problems?

About The Service

Based in Edison, NJ, Vonage is a privately held company of over 200 employees. They offer Voip service to over 100 U.S. markets and are steadily growing. They first started offering residential Voip in April of 2002.

Voip is a relatively easy concept to understand. The system uses a device to turn an analog voice communication made on a regular telephone to a digital signal that can be transmitted over the internet.

Vonage has a PoP (Point of Presence) with telephone companies throughout the U.S. where that digital telephone call is forwarded on to the local phone systems and turned back into an analog transmission. All of this takes milliseconds to do.

The heart of the Vonage system on the client side is a VT1000 series Voice Terminal. The model we tested was a VT1005V. Think of it as a “reverse telephone modem”. The Voice Terminal takes an analog voice transmission from your regular telephone and turns it into a digital transmission to be sent over the internet. It then receives the digital voice transmission from the person you are talking to and turns it into an analog signal that your phone transmits through the earpiece. It is about 5.5” wide by 7” long and 1.5” high at its highest point - roughly the size of three CDs stacked on top of each other.

The VT1000 series Voice Terminal won a CES “Best of Innovations” award in the Small Office/Home Office category for the 2004 Consumer Electronics Show. After using it, we certainly can see why. The device hooks up to your internet connection via a regular Cat5 Ethernet cable. It then hooks up to your telephone with a regular telephone cable.

There are several ways to hook up the VT1005. If you only have one computer, the VT1005 acts as a DHCP server that assigns an IP address to your computer. If you have several computers on a network chances are that you already have a router or switch, in which case you would connect the Voice Terminal to one of the open ports on your network.

The router functions of the VT1005 are not as robust as a regular SOHO networking router, but for a single computer it is more than adequate.

We tested the effectiveness of the router functions by making phone calls while performing tasks online on a computer connected directly to the VT1005 Voice Terminal.

In our tests, we downloaded large files and played multiplayer games online while talking on the phone. Our download speed was consistently similar in three such tests.
We made many phone calls while playing online multiplayer games, listening to streaming audio and downloading files and voice quality was consistently excellent.

When we really hammered our cable connection with a lot of downloads - such as downloading binaries from newsgroups while simultaneously downloading a 56MB game patch file, there was a noticeable hit on the quality of our voice communications. The speech from the person we were talking to got a bit choppy at times. The person on the other end however, said our speech sounded just fine and did not change. This is presumably because what we were hearing from the person we were talking to was being downloaded, while what he was listening to was being uploaded by us - and we were not using any other upload.

Curiously, when uploading two files at once to an FTP site, the person we were talking to said there was no change at all in voice quality.

We used over 500 minutes in a month of testing and had no problems with the service at all. Calls were clear, features worked as intended and basically, it worked just like a regular phone service. You may think there would be a lag associated with placing calls over the Internet, but there is none whatsoever. If you didn’t already know you were talking on VoIP, you would just assume it was a regular POTS line.

All Of The Features You Could Want

Vonage has three residential calling plans. Like a regular POTS carrier, you are not charged for toll-free, 911 or incoming calls. They offer a “Premium Unlimited Plan” for $34.99 a month. This plan offers unlimited long distance minutes and unlimited local minutes. For $24.99 a month, the “Unlimited Local” plan allows for unlimited local calls and 500 minutes of long distance. The “Basic Plan” offers a total of 500 minutes combined for local or long distance. There are also business plans that add a second line for a fax machine.

These prices already look pretty good compared to the plans offered by most telephone companies. But it’s the added features that really set Vonage apart. Included free with every service plan is voicemail, support for caller ID, 3-way calling, call forwarding, call transfer, and many more features. Each subscriber also has access to their “Dashboard” - a secure portion of the Vonage Website used to view and control subscriber accounts and features.
Vonage also offers some useful add-on features.

One such feature is the “virtual phone number”, which allows subscribers to pay $4.99 a month for a second phone line that rings on their main Vonage number. The usefulness of this is, if people often call you long distance from the same area code, you can get a number that is local to them so they don’t have to pay long distance fees.

Other pay features include toll-free numbers, fax lines, and an enhanced directory assistance system.

The voicemail system alone is quite an impressive feature. Voicemails can be retrieved from your Vonage connected phone or any phone in the U.S. Vonage even offers local access numbers across the U.S. so you can check your mail without being charged a fee. You can also download your voicemail from your account Dashboard as a .wav file. This .wav file can be saved on your hard drive and even e-mailed with ease. We thought being able to check and store your voicemails over the Internet was one of the best and most useful features.

Another great feature of the Vonage voicemail system is that it sends you an email when you receive a message. This is great if you are at work and want to know when you receive a call at home. The .wav files are available on your dashboard literally within seconds. In several tests we conducted, our voicemails were ready to be downloaded in less than 30 seconds. We also received the notification email just as fast.

Your outgoing messages can be changed with ease and you can actually program messages for different times of the day.
The only down side of the voicemail system that we could find was that the .wav files it creates are a bit on the quiet side. We had to crank up the volume on our PC when we wanted to listen to the Voicemail. Hopefully Vonage will fix that soon.

The rest of the “Dashboard” system is just as useful. You can view a real-time log of your calls for the month. A list shows all incoming and outgoing calls, the duration, the to and from numbers and the date and time. You can sort and search your call activity to see how many calls were made to or from a certain number, by time and date, or even by duration. All call activity information is available on the “Dashboard” almost instantly.


Vonage billing is done only by credit card which may make the service unattractive to some potential customers. Your credit card is billed in advance for the month’s service. Since everything is done online, you can instantly view all charges in your “Dashboard”.

The bill is presented electronically but you can choose a printer-friendly version if you prefer to keep a printed record.

Vonage charges a $29.99 setup fee and one month service up front and the taxes and surcharges are minimal. The average customer not in New Jersey seems to pay about $2.25 in fees and charges in addition to their monthly fee. Since Vonage is located in the Garden State, New Jersey residents are subject to taxes.

We tested the Vonage service using Road Runner cable internet service in Albany, NY. A typical AT&T telephone customer in Albany pays $30.23 for basic service and over $6.00 in taxes and surcharges. That is before features are added. For example, call waiting is $4.95. A sample phone bill that we compared to was $41.61 for the month of December and this only included the call waiting feature.
Verizon also offers telephone service in Albany and charges $44.95 for a local basic package including a choice of five calling features.

As you can see, Vonage seems to offer the better deal if you compare price alone. The “Local Unlimited” plan is about $5 cheaper than the AT&T service and that even includes 500 minutes of long distance. Add to that the host of features and Web services and it looks like a no-brainer. But it may not be for everyone.

Vonage offers a great incentive to sign up and refer others to sign up. For every person you refer that signs up for Vonage service, they will get a free month and your bill gets credited for the based on the plan they sign up for. Sign up twelve friends and you can have free service for a year.

Is It Worth It?

There’s no disputing that the Vonage service can be cheaper than most local calling plans and offers a host of features at no additional cost. But there are some aspects of the service that may not be appealing to everyone.

First, you must dial the area code for every call you make -long distance or local. While this is only an additional four digits, not needing to dial the area code on your telephone may be a hard habit to break. We routinely found ourselves having to hang up and dial again because we forgot the area code. A phone with a good amount of speed-dial numbers makes this a non-issue. There is talk that Vonage will change this in the future though.

With Wireless Number Portability mandated by the FCC, as of November 24, 2003, you can transfer wireless numbers to different carriers. This works with Vonage so if you have a wireless number you’d like to use for your Vonage account, it may be possible. However, if you’ve had a POTS line for many years and really want to keep that telephone number, that is not possible at this time.

Another obstacle that some consumers may not want to deal with is the possible rewiring that may be required in your house. With normal POTS service all of the telephone jacks in your house are connected at one point to the line coming from the telephone company. With Vonage, you need to take that line coming from the telephone pole out of the equation. By simply connecting all of the existing lines together at this point, you’ll be able to hook your Motorola Voice Terminal up to one of your household jacks and power the whole system.

The down side of this is that you will lose one jack in your house since it will now take the place of the line coming from the pole, and you may have to rewire where they all meet. It really isn’t a huge undertaking, but it is something that you’ll have to deal with if you want more than one phone connected to your Motorola Voice Terminal.

Vonage does a great job with their written installation instructions and adds some excellent Flash animations on their Website to help in several types of installations. For most people, installation shouldn’t be much of a chore at all.

You are also at the mercy of your cable Internet provider. If the service goes down, you will be without a phone. If your power goes out you will also be without a phone - unless you connect your cable modem and voice terminal to a battery backup. For this reason, we only recommend Vonage for families that have cell phones. With a cell phone, you’ll be able to make emergency calls in the event your power or Internet goes down.


The Voip arena is starting to really take off and Vonage has really set the bar high for potential competitors. They already face competition from a few other Voip players, such as VoicePulse, who offers interesting features such as extensive call filter options. The big players in telecom have also announced plans for their own Voip solutions. Let’s just hope that as the Voip industry booms, the great service, price and features aren’t compromised by big business or the government trying to get involved. Several legislators and industry experts have already asked for a moratorium on government involvement, so that the Voip industry doesn’t get bogged down in fees, surcharges and bureaucracy like the telephone industry.

Vonage offers service similar in performance to POTS, at a lower cost with better features that are included free. If you have a cell phone, cable Internet and don’t mind doing a quick install, Vonage makes a lot of sense. In our opinion, the cost savings and excellent features are well worth the change.

Phone Features: Dialing 911 Free 3 Way Calling Free Caller ID with Name Free Call Hunt Free Call Waiting Free Personalized Voicemail Free Call Forwarding Free Call Transfer Free Caller ID Block (*67) Free Repeat Dialing Free Call (*69) Free International Call Block Network Availability Number Free Bandwidth Saver Advanced Services: Adding additional lines to your account Free Area Code Selection Free Telephone Number Portability Virtual Phone Number Toll Free Plus Fax Service Enhanced 411 Dialing Free Real Time Billing Information Free Real Time Online Account Management Benefits: Keep Your Existing Phone Number Great International Rates Free Calls to Any Other Vonage Subscriber Free Phone Adapter Money-Back Guarantee Refer-A-Friend Program Free Live Customer and Via Toll-Free Telephone and Online

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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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