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Internet Phones
Simple Solutions For Calling Over The Net

May 5, 2004

By Rafe Needleman

Your next telephone may not actually be a telephone. It may look and work like a phone, but it will connect to the Internet, not a telephone line, and it will cost less than today's phones. You’ll also get better features and ease of use.

Over the next few years, more products using Voice over Internet Protocol, or VoIP, will be coming online. But there's no need to wait--today's batch of Internet phone products have useful features and can save you money, starting now.


An Internet phone service uses the Internet, instead of old-fashioned phone lines, to send voice. In most cases, you just plug your current telephone into a small box that your Internet phone company provides to you.

The box, in turn, plugs into your broadband connection. Just as with regular telephone service, you pick up the phone to get a dial tone and press numbers on the keypad to call the person you want to talk with. And as with a regular telephone, you can call anybody in the world who has a phone. Alternatively, some services have softphones:

Your computer becomes your telephone, and you talk via a handset or a headset plugged into USB ports.

It saves money

Since the old-fashioned phone system works fine for most people, why bother?

There are two main reasons: cost and features. The most popular advantage of Internet telephones is that calls can be extremely cheap or even free to anywhere in the world.

However, just as with ordinary phone services, it can be
hard to figure out which companies offer the best savings for your particular calling habits. But if you regularly call a particular area (for example, a relative overseas), you can almost certainly find an Internet phone plan with
rates that are incredibly low. And calling other users of your Internet phone system will likely be free.

Cost may or may not get you in the door to Internet calling, since for many people, regular calling plans could save a lot, too. Regardless, it's the features that really hook most Internet phone users. You can do things with an
Internet phone service that no traditional phone can offer.

Pick your area code

Internet phones work independent of any local exchange, so you're not tied to any one area code. This means that you can take your phone number with you when you move; it's as easy as packing the adapter you get from your service provider. You don't have to end your old phone service in one city and go through the hassle of setting up service in another. And get this: with many systems, you also get a choice of area codes. You can be running a small business in rural Montana and have a high-rent, New York 212 area code, if you want.

You can also get great integration with your computers. Some systems send all your voicemail to your e-mail in-box and let you dial phone numbers directly from Outlook. And even the smallest company can set up a virtual phone system
that spans offices (or home offices) yet functions very much like a phone system used by a corporation with dozens of worldwide offices. For example, a small business can get features such as simultaneous ringing, in which a
call to your main number rings on all three of your employees' phones, even if some of them are not Internet phones.

Not as easy as a regular phone

At this point, though, Internet phone service isn't for everyone. While Voip hardware and software isn't as complex and hard to set up as other standard office technologies--such as wireless networking--it's still not as hands-off
as plain-old telephone service. And finally, the quality of Voip is variable.

In the best cases, it can be far superior to that of a regular phone, especially for international calls. However, if your call ends up routed over a congested portion of the Internet, quality can degrade, which manifests itself
as an uncomfortable lag between two parties in a conversation.


Many different forms of Internet telephony exist. Some systems, such as Skype, the popular free download, work only between two computers using particular software.

Others, such as Vonage's service, allow anyone with a broadband connection to use their existing telephone hardware or their computer, if they want, to call any other phone in the world, whether that phone is on the same service or not.

Finally, businesses can install local VoIP, in which their internal phone system uses their local network. Once these calls go outside the company, they may run over either the Internet or regular phone lines, depending on what the company prefers and pays for.

The one thing all Voip solutions have in common is that they take your voice and convert it into data packets that are then routed over the Net just like e-mail. For calls to a standard telephone, the data call obviously has to connect to the public phone network at some point; Internet phone services provide this connection seamlessly.

Internet phone service

In the most flexible form of VoIP, Internet technology replaces the connection between the telephone and the phone company. You plug an ordinary telephone into an adapter that connects to your broadband setup. Your call is routed over the Web to a Voip service provider. This provider connects your calls to the telephone system. If the person you are calling is also a user of the same Internet calling system, the call will never touch the phone system at all.

PC-to-PC Internet phone

Free Internet phone systems such as Skype and FreeWorld Dialup bypass the telephone system completely, but in most cases, they allow you to call only other Voip users.

Internal VoIPP

In a medium or large office, the internal phone system can be Internet based. In this case, calls between extensions, and possibly between office buildings,
run over a private data network. To reach the outside world, the company's Internet phone system can connect to the Internet, the regular phone system, or both.


Despite many advantages, Internet-based calling faces technical and political roadblocks that may affect you if you opt to go with it


First of all, plugging in to Internet phones requires gear that not every household has. You must have an always-on broadband connection, either DSL or cable, and you need a spare Ethernet port on your hub or router to plug the
Internet phone gateway into.

If your network connection goes out or the power to your network equipment fails, your Internet phone dies too. You can insure against power outages with an uninterruptible power supply, but if your ISP is less reliable than your
phone service, keep that in mind if you'll be relying on your Voip phone.

Since Voip phone numbers move with your phone, not with the jack the phone is plugged into, calls to emergency services (911) won't automatically go to a local emergency call center. Until recently, in fact, 911 calls were not
available on many hosted Voip services. Today, 911 handling can be turned on, although you need to register your phone so that the call is routed to the right location. Also, when you make an emergency call, you will still have to say
where you are, since that won't pop up on the operator's screen.

If you have DSL and want to keep your phone number, you might have a challenge because a DSL usually has a phone number attached to it. You can't turn off the number without interrupting your DSL service. You can, of course, get a new number from your Internet telephone provider, and this may be what you want to do anyway if you're looking for a Voip line to expand your phone system. Today,
only Qwest offers a DSL line without a phone number attached (this is called naked DSL). If you're a cable-modem customer, this isn't an issue.


The FCC greased the way for Internet phone service by exempting Voip from the regulations and the taxes applied to regular telephone service. That's why Internet phone calls are cheaper than regular calls: Internet phone carriers don't have to pay the same taxes for 911-center or federal wiretap-access maintenance.

The reasoning behind the FCC's platform is sound: innovation grows more quickly when regulations and taxes are kept at bay. And there is a lot of innovation ahead in Voice over IP.

But vast and powerful forces are arrayed around telephony, and the current state of affairs is being maintained, in part thanks to ongoing hearings in Washington, D.C., as well as pressure from technology lobbies. Facing off
against them are players in the telephone industry that claim that Voip has an unfair advantage because of its regulatory exemptions. And taxation isn't the only roadblock Internet telephony companies will have to navigate: as of this writing, the FBI has proposed that Internet providers, including Voip companies, provide wiretap access, which could require rearchitecting how these
services work.

For an up-to-the-minute look at the status of Internet telephones and how this could affect you, see's ongoing coverage of this topic

The future

Though Internet phone service gives you features and performance that traditional phone systems can't offer now, this disparity won't last forever.

Already, IP is used by the major telephone companies to carry an increasing amount of voice traffic on their own networks, and AT&T, Bell Canada, Qwest, SBC, and Verizon have already announced plans to roll out Internet phone service directly to their customers. AT&T is the first major telephone company to do so, with its CallVantage product. At this writing, it is available for only Texas and New Jersey area codes, but the company hopes to roll out the service to 100 major U.S. markets by the end of 2004.

Moving voice to a fully digital platform means that innovation will continue to accelerate, and small, nimble companies will continue to come out offering new communications services. Teleconferencing,ideoconferencing, and collaboration applications may soon be available as part of your integrated IP-based voice communications package.

Consumers and businesses alike will come to appreciate the
low monthly rates, useful features, and clear voice quality of an Internet phone service. We reviewed five such services and found one clear winner.

Until a couple of key features are added, we suggest you hold off on Broadvox's otherwise excellent service.

iConnectHere will save you money on your long-distance bill if you can live without consistent call quality and 911 support.

Flat-rate international calling plans, a videophone option, and low rates make Packet8 a good choice, but only as a second line.

Voiceglo offers clear calls and reasonable monthly rates but lags behind its competitors in the number of features it provides.

Though not the cheapest Voip service, Vonage offers the features and the call quality needed to replace your traditional telephone service.

The good:
Excellent Web-based account interface; inexpensive fax capability and softphone support; superb feature set; 911 support; emergency call forwarding.

The bad:
More expensive than some Voip providers; not available in Hawaii and some Midwestern states.

Vonage is the granddaddy of all Internet phone services--if a three-year-old company can be rightly considered the granddaddy of anything. Its wealth of features, extensive coverage, and strong support combine to make it a good Internet phone selection. Its monthly rate plans, ranging from $14.99 to $34.99 for residential customers and $39.99 to $49.99 for businesses, are a bit higher than those of competitors, such as Packet8, but Vonage's phone features are more numerous, and the company offers useful services, such as transferring your existing phone number to your Vonage account.

With its easy setup, nontechies ditching their traditional phone can quickly get up and running, and Vonage's easily activated and inexpensive fax capabilities will appeal to businesses. While some Voip services are best used as a secondary line or for saving money on especially expensive long-distance calls, Vonage offered clear call after clear call, making it a suitable replacement for your primary phone line.

Sign up for Vonage, and you'll receive a setup package that includes a digital-phone adapter with Ethernet cable, an installation-and-troubleshooting guide, a user guide, and a card showing how to configure your voicemail.

Instructions range from simple plug-and-play installation, which should work for most broadband providers, to more-detailed installation plans. For instance, placing the phone adapter before your broadband router allows the device to engage its quality-of-service function, which guarantees good voice quality during calls regardless of other Internet activity at the time of the call, such as performing a bandwidth-hogging download. Once connected, the phone adapter works smoothly, with a dial tone available within seconds the first time, then immediately for all subsequent calls.

Once you get a dial tone, you'll need to locate your account information to set up your account. It's all on one sheet that ships with the adapter and includes an account number, a phone number, virtual phone number(s) if applicable, a username and a password for the Vonage site, and a password for voicemail. We breezed through the setup, getting help along the way from Vonage's Web site. From this Web interface, we forwarded calls to a POTS line, configured voicemail to pick up the phone after 20 seconds instead of the default 30, established a network availability number (a forwarding number if the Vonage network is unavailable), and disabled international calling. We also set up two new virtual phone numbers (see the Features page for more info), following an easy three-step process.

Finally, we quickly set up the 911 dialing service. To do so, you provide your physical address so that the 911 call can be directed to the correct service location. Many Voip services, such as Packet8, do not offer support for 911 calls. But like all Voip services, if your Internet connection goes down or the power goes out, you lose the use of your phone, which isn't the case with a POTS line. But in the event that your power or your Internet service goes out, Vonage will forward the call to your cell phone or any number you specify beforehand.

You can manage your account by logging in at Vonage's Web site. The default screen, called the Dashboard, shows a list of the most recent incoming and outgoing calls, provides service announcements, and offers links to configuration screens. The billing screen lets you segregate activity information by phone number, including virtual numbers, and offers a billing history for each number.


Vonage offers three residential plans and two plans for businesses, none of which require a contract. For residential customers, $34.99 per month (plus a one-time activation fee of $29.99) gets you unlimited calls within the United States and Canada. The $24.99-per-month plan gives you 500 minutes per month to U.S. and Canadian phone numbers, with unlimited local and regional calling, as well. If you choose the least expensive plan, $14.99 per month, you get 500 minutes combined (local, regional, U.S. or Canadian long distance). If you exceed your monthly minute allotment, you pay a reasonable 3.9 cents per minute.

Business plans are $49.95 per month or $39.95 per month. The former gives you unlimited local and U.S./Canadian long-distance calling, the latter 1,500 minutes and 3.9 cents per minute over that. You also get a free fax-line activation, which costs $9.95 to activate for a residential line. Business customers get 500 minutes per month of free faxes; residential customers get 250 minutes. To use a fax line, plug the phone line from the fax machine into the second port on the Phone Adapter (the included adapter has two ports, expressly for this purpose). Vonage assigns a separate phone number to this port.

No matter which plan you choose, Vonage offers international long distance at extremely reasonable rates: 3 cents per minute to most of Japan and much of Europe, 7 or 8 cents per minute to Mexico, and from 9 to 18 cents per minute to the Caribbean.

Each account carries the following no-charge services: voicemail, caller ID, call forwarding and call transfer, call waiting, three-way calling, repeat dialing, call return, international call block, and call hunt (the call rings on another phone if you're talking on the called number). You can choose from a wide variety of area codes, with coverage in most of the United States. To date, only Alaska, Hawaii, Idaho, Iowa, Montana, West Virginia, and Wyoming have no available area codes in the Vonage system, and Vonage expects to add these states as it expands its service. Vonage is about to open its service in Canada's five most populated provinces, as well.

If you need to know about voicemail messages as soon as you receive them, you can configure Vonage to send a voicemail notification to your e-mail address. The e-mail tells you a message is waiting and also gives you the caller's phone number, obtained through caller ID (if available for that call). You can also have Vonage convert voicemail messages to WAV files and forward them to your e-mail address so that you can listen to them from another PC.

You can add virtual numbers for $4.99 each per month. A virtual number is an additional phone number in a different area code that will ring your phone so that, say, your mother in Florida can call you without paying long-distance charges. And for $9.95 per month, you can opt for one of two softphones, which give you a phonelike interface on your PC, that Vonage offers. If you are traveling a great deal, the softphones will let you make calls on your laptop (with a headset) without running up the minutes on your cell phone. And if you live your life out of a hotel room, take note: as with other Voip services, you can connect to your Vonage account through your adapter and any broadband connection, which means you can throw the adapter in your suitcase and take your number with you when you're on the road.

Service and supportt
Apart from a collection of FAQs and details on the Web site, Vonage offers e-mail answers for installation and technical support, customer service, and billing, as well as a toll-free, 24/7 Vonage help phone or fax line. Our calls were answered promptly and usefully in all cases, whether the questions dealt with installation or the service, such as how to change phone numbers and how to activate the fax service. In one case, the attendant was unsure of the answer (to a question about the possibility of purchasing a second phone adapter for the purpose of traveling) but quickly and courteously found out what we needed to know. Service, in other words, proved perfectly satisfactory.

Installation and interface 8
Features 9
Service and support 8
Editor's Rating: 8.3


With a headset or a microphone and speakers, either of these two free apps will let you make free calls over the Internet with your PC.

True to its name, this service is free and lets you talk to any other FWD user anywhere in the world.

Anyone familiar with instant messaging will quickly come to love Skype, a free and easy-to-use P2P Internet phone app.


NAME: Mitch Ratcliffe

WHAT I DO: Editorial director

WHERE I LIVE: Lakewood, Washington

Q: What is your job? What does your company do (if you're using Voip for business)?

A: Journalist/research. InnovationWorld surveys a variety of technology industries to identify companies expanding internationally. The organization is completely virtual, with 12 people working in offices in several states.

Q: Do you use Voip at home, business, or both?

A: Business.

Q: Why do you use Internet telephony?

A: It is cheaper, and call quality is as good as switched telephony. I also find that IP telephony works when the PSTN is down, rare though that is.

Q: Where do you call?

A: All over the United States, Europe, and Asia.

Q: What's your favorite feature?

A: Vonage just works. I can use a telephone and connect to anyone with a telephone rather than having to run software on my PC. I've also used Skype, which is an excellent but isolated service that requires the people I want to call to install and use the Skype client.

Q: What do you miss from regular phones?

A: With Vonage, nothing. With Skype, connectivity to almost everyone I want to call.

Q: Any problems?

A: There is sometimes a tinniness in the audio when using a speakerphone.

Q: Any tips for other users?

A: No, it's just a phone.

Q: Would you recommend it?

A: Absolutely. We're saving around $15,000 per year on long distance as a small organization, compared to traditional telephone service.

NAME: Raines Cohen

WHAT I DO: Consultant

WHERE I LIVE: Berkeley, California

Q: What is your job? What does your company do?
A: Consultant. We create database-driven Web sites for small businesses and nonprofits.

Q: Do you use Voip at home, business, or both?
A: Home office, although sometimes the box goes with me to client sites, including in one extreme case, the middle of the desert, out of reach of cell phone coverage but with satellite Internet: Burning Man.

Q: Why do you use Internet telephony?
A: Flexibility, price, features.

Q: Where do you call?
A: Local and domestic long distance. Mostly long distance, lots of conference calls with long-distance bridge line numbers.

Q: What are your favorite features?
A: 1. Dual ring. I can have incoming calls simultaneously ring my cell phone and a cordless plugged into the Voip box. I don't have to remember to turn on forwarding when I go out. I can also use the cell phone for caller ID and answer on the IP phone without incurring any billable cell minutes.

2. Web-based administration. I can change call forwarding and ring preferences with the Web, even when I'm out of cell range.

3. Web-based voicemail. Notification by e-mail straight to my cell phone via SMS. Listening to messages in random-access order.

4. Free calls to other Vonage users. Comes in handy when calling a couple of clients and colleagues.

Q: What do you miss from regular phones?
A: 1. Ability to operate without power.

2. Independence from IP connection, reliable quality.

Q: Any problems?
A: Still wrestling with trying to change over an existing phone number to the service. The process has changed and the response has been slow; we have had to file several trouble tickets and jump through several hoops.

If there's lots of traffic on the Net, I sometimes get dropouts (rare).

There are some bugs in the Web interface.

Q: Any tips for other users?
A: In combination with a cell phone, it can provide an alternative to a standard landline.

Q: Would you recommend it?
A: Generally, yes. If [I were] buying today, I'd do more comparison shopping since choices have expanded. There are still some features I'd like, such as Wi-Fi options.

NAME: James Tucker
WHAT I DO: Creative Director
WHERE I LIVE: San Francisco, California

Q: What do you do?

A: I'm creative director for ThunkInc. We do integrated brand development. Since 1997, we've helped more than 100 companies with trend, lifestyle, and consumer-based projects.

Q: Why do you use Internet telephony?

A: I work at home so that I can be with family. Cell phones are limited and not very clear. So I got a Vonage setup to call during business hours and also for clients in different parts of the world. I did not want to use the home phone, and I also wanted a decent long-distance rate that could be expensed by the business.

Initially I got it for cost savings: business lines add up. I'm saving $1,000 to $2,000 per month.

Q: Where do you call?
A: Mainly national, about 80 percent outside the local area.

Q: What's your favorite feature?
A: Being able to check voicemail through e-mail.

Q: What do you miss from regular phones?
A: If your Internet connection goes down, the phone does too.

Q: Any problems?
A: The volume level is low. They can't figure out what's happening.

Q: Any tips for other users?
A: Sign up for the 800 number. It's cheap and makes you look more accessible to different markets.

Test the phone you want to use with it. Get a phone you can boost the volume on.

Q: Would you recommend it?
A: Definitely. If we move, we're going to go Voip all the way, no regular line.

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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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