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A Guide To Cheap Online Phone Calls

Vonage In Print News

November 24, 2005

By Cliff Joseph

PC users have long been able to make free calls through instant messaging services such as MSN Messenger and Yahoo Messenger, but many were dissuaded by the idea of having to buy and wear a headset and the inconvenience of having to make sure that friends and family were online when they fancied a natter.

Well, things have changed since we last wrote about making telephone calls using a broadband connection. A number of services now enable you to use a proper telephone handset to make cheap or free calls by placing an adapter between the broadband modem or router and a standard telephone.

This growing industry is known as internet telephony, and it offers consumers substantial savings over traditional phone networks, as well as added features such as voicemail, and a means to get in touch with non-PC-owning acquaintances.

You may see it referred to in shops and advertisements as 'VoIP', which stands for Voice over Internet Protocol, the technology used to transform an internet connection into a cheaper way of using a standard phone line.

So why is it cheaper to make a phone call using the internet? After all, the same wire is used to carry the signal. The answer is in the way the line is used. When you dial a number using a normal household phone, the telephone systems set up at lightening speed a direct connection between the two handsets.

That specific set of links between the two use the copper line to the exchange, then a small part of the main UK-wide telephone network. That link is physically maintained for the duration of the call and can't be used by other customers.

When making a call via the internet down the same telephone line, it is first chopped up into tiny elements called packets, each of which contains the data of a tiny part of the sound of your voice. These packets are then sent down the line to the next router on the internet.

Routers, which are spread throughout the internet in places such as the headquarters of ISPs, are like the traffic police of the internet, telling packets of data the best way to get to their destination. Not every packet will take the same route depending on how much traffic there is on a line between routers.

The upshot is that the same network cable in the telephone system can be used by thousands of different users at the same time, making it cheaper and more efficient.

If you're confused about how a broadband service can be accessed without using a computer, here's how it works. The adapters supplied by the likes of Vonage and Freetalk convert your voice into data in the same way that a PC would if you were using Skype or an instant messaging program. Then it is fed into the broadband router or modem and sent on its way.

With all the new services, tariffs can be quite confusing, so here's our guide to the best value internet telephony services and how to choose the one that's most suitable for your needs.

Handsets and softphones

There are two main types of internet telephony services: those that require software to be installed on a computer, and those that require additional hardware devices to be connected to an existing broadband modem or router (dial-up users can use internet telephony in instant messaging programs, but most of the services we're going to talk about require a connection of at least 256Kbit/s).

As we mentioned earlier, while instant messaging software provides free calls, you will need a headset (a pair of headphones with a integrated microphone, which can be bought for about £10). The other person has to be online, and making a call involves clicking on their username to begin a chat session and then instigating a voice call by clicking the green call button.

However, the software is now more sophisticated, and enables callers to dial telephone numbers using a softphone, a graphical 'handset' that appears on the PC screen. Tap in the phone number you want to call on the computer's keyboard and the software just dials straight through.

The software will also provide an address book so that you can store your most commonly used phone numbers for one-click dialling.

The most well-known internet telephony software is probably Skype, followed by BT/Yahoo Communicator and the lesser-known Callserve. Skype started life as an ordinary instant messaging program used to chat with other PC users on the internet, but it now offers an additional premium option called 'SkypeOut' that allows you to make low-cost calls to ordinary phone lines as well.

BT Communicator is also an extension of an existing chat program. BT and Yahoo have an agreement to collaborate on a number of internet services, and this has allowed BT to add an internet telephony option to Yahoo's popular Messenger program.

As with Skype, you can use the software for free internet chat with other computer users or to send a call to an ordinary telephone line.

Callserve's Telephone software is less sophisticated. It has no internet chat features, and simply concentrates on the process of making calls from the computer to a telephone.

Skype and Callserve operate on a pay-as-you-go basis. You use a credit card to pay for calls in advance (the minimum amount is £10 on Callserve and €10 with Skype). There's no monthly subscription fee, nor any need to sign a contract. This means you can try the service for a while without having to make a long-term financial commitment.

BT Communicator is even more straightforward, but only if you already have a BT telephone line. If this is the case then the cost of any calls you make using BT Communicator is simply added to your normal quarterly phone bill.

But if you're signed up with a telephone company other than BT, such as NTL, Telewest or Kingston, then you can't use BT Communicator at all.

Call routing

The other way of using internet telephony services is to try what's known as a digital telephone adapter. This is a small device that can be connected to an existing broadband modem or router. You can then plug an ordinary telephone handset into the digital telephone adapter and make calls using the phone handset rather than the computer.

The advantage of this approach is that it's very easy to set up and convenient to use. There's no software to install or configure, just the little phone adapter and a telephone handset. It also means that you can make calls while your computer is turned off, or while someone else is using the computer.

There's one big potential fly in the ointment, though, which is that these adapters need to be connected to a modem or router that has a network socket, often referred to as Ethernet. Many modems only have a USB port, which means that digital telephone adapters can't be connected.

That's not a problem if you opt for BT's Broadband Voice service, as BT thoughtfully provides you with an all-in-one router and telephone adapter, with both USB and network interfaces, at no extra cost.

However, BT's main rivals, Vonage and Freetalk (which is part of the Dixons group) both use adapters that require an Ethernet connection. It is possible to plug the Freetalk handset into a PC network socket, but that means the PC would need to be switched on in order to use the service and a raft of settings need to be changed.

In short, people with USB modems will need to buy an Ethernet-enabled modem before they can take full advantage of Freetalk or Vonage.

This also means that an Ethernet interface needs to be installed in your computer as well. Most PCs - and all Macs - have Ethernet already built in, but those with older PCs will need to buy an Ethernet interface card for their PCs. The combined cost of buying this additional Ethernet card and a modem should be no more than £100.

Start-up costs

Another factor to consider is that hardware-based services have higher up-front costs when you first set up an internet telephony account with them. They all require a monthly subscription fee that can range from £5 to £11.

Both BT Broadband Voice and Freetalk require you to sign up for at least 12 months. You can cancel a Vonage account after just one month, but the company charges £24 to activate accounts, which is not refunded on cancellation.

Some people may be put off by these monthly subscriptions and fixed-term contracts. However, you do get a number of extra options from Vonage, Freetalk and BT Broadband Voice in return for the monthly fee. All these provide services such as voicemail and call waiting as part of the monthly subscription.

One further advantage of paying a monthly subscription for Vonage, Freetalk or BT Broadband Voice is that you also get proper technical support if anything goes wrong. If using the Skype, Callserve or BT Communicator software, your only technical support option is to send an email via the company's website or to hope that one of their online FAQs - lists of 'frequently asked questions' - can help you out.

The cost of calls

You may not be too worried about added extras such as voicemail, but the real reason that it's worth paying a monthly subscription for an internet telephony service is that you also have the potential for greater savings overall.

For instance, Vonage and Freetalk have relatively high up-front costs, but they provide unlimited calls to UK landlines at any time of day, so they could end up saving you more over the course of a year.

And that, of course, brings us to the nitty-gritty: deciding which internet telephony service provides the best value. As with mobile phone tariffs, this is very much a personal choice, and largely depends on the sort of calls you're most likely to make.

Let's get the bad news out of the way first: none of these services offers anything more than small savings when it comes to making calls to mobile phones. The good news is that you can make huge savings on international calls and calls to UK landlines.

The situation with international calls is very simple, as Skype is the cheapest option. Skype offers a standard 'global rate' of just 1.2 pence per minute that applies to dozens of the most popular countries, such as the US, Australia and most of Europe. That's a huge saving over BT's standard daytime rate of 15p per minute to the US, 24p for Australia and 22p for Spain.

All the other services charge 3p to 4p per minute for most countries, which is still pretty good, but there's no doubt that Skype comes out tops for international calls, although Freetalk and Vonage are also much cheaper than BT standard rates.

In fact, Skype is so popular around the world that it's spawned a mini-industry of accessories, with companies such as Logitech producing microphone headsets that are specifically designed for use with Skype, and include introductory vouchers for making an hour or more's worth of free calls.

You can even buy special telephone handsets with a USB plug so they can be plugged straight into a PC and numbers dialled in a more familiar way. These accessories range in price from about £20 to £50, and a big selection can be found on Skype's website.

Local rates

Skype may be the clear leader when it comes to saving money on international calls, but the situation is more complicated when it comes to working out the cost of calls within the UK. For instance, BT Communicator's international rates are pretty good, but its calls to UK landlines and mobile phones are charged at the standard BT rate (based on its residential 'BT Together' tariffs).

In contrast, Vonage and Freetalk apply no extra charges above the monthly subscription for calls to UK landlines at any time of day.

Even so, these subscription services can still offer some serious savings. Let's say that your normal phone bill is a relatively modest £50 per quarter, which adds up to an annual total of £200. That makes Freetalk's £80 annual subscription look like pretty good value, as long as you don't need to buy a new Ethernet modem to get started.

And, of course, a larger family could easily rack up much higher call costs, which makes the potential savings even greater.

BT's Broadband Voice service removes those extra hardware costs because, as we mentioned earlier, it provides an adapter that will work with any type of existing broadband equipment. However, its subscription rates and call costs are less competitive. Its £5 Evenings And Weekends monthly plan offers reasonable international rates, but its prices for UK calls really don't offer much in the way of savings at all.

To make real savings on UK calls with BT Broadband Voice you need to pay £11 per month for its Anytime plan, which is the highest monthly charge of any internet telephony service.

If you've already got a suitable Ethernet router then Freetalk's £80 per year is probably the cheapest option for people who want to make lots of calls within the UK. If you don't want to commit to a year-long contract, you could try Vonage for a few months or just go back to good-old Skype again.

Skype charges 1.2p per minute for UK calls at any time of day. That's less than half the 3p per minute charged by BT on its standard BT Together plan, so you still save money on all calls with no monthly subscription at all.

The numbers game

There's one other little twist that could save you some extra money or, to be precise, it could save your family and friends some money when they call you here in the UK. People in other countries who use Skype or Callserve to call you in the UK pay only the standard UK call rate for their calls. For most countries that's 1.2p per minute for Skype and 3p per minute for Callserve, which is handy if you've got friends or relatives overseas.

Some of these services can also give you a new internet telephone number that effectively acts as a new telephone line. That's ideal if you want to give the kids their own phone number that is separate from the main household phone number, or for self-employed people who can use the internet number for their business calls.

Skype and Vonage also offer one final clever option, although it costs a bit extra. This may sound strange, but both allow you to choose a new internet telephone number with an area code in another country. Vonage can give you a telephone number with an area code from anywhere in the UK, US, Canada or Mexico.

Let's suppose you've got family in Chicago. For an extra £3 per month, Vonage can supply a new internet telephone number with a Chicago area code. This means your family in Chicago can call this Vonage phone number and will only have to pay local call rates because they're only calling another Chicago number.

It works the other way around too. If your Chicago relatives get their own Vonage telephone number with a UK area code then you - or anyone else in the UK - can call them in Chicago at the ordinary UK rates.

Skype's version of this option is called SkypeIn, and it's even more versatile. Skype allows you to choose SkypeIn telephone numbers from the UK, US, Hong Kong, Denmark, France and a number of other European countries. There's an extra subscription fee of €30 per year (approximately £20 per year), and this includes a voicemail service as an added extra.

Who's listening?

There's no need to worry too much about hackers listening in on your internet phone calls. When you make a call over the internet, your voice is converted into a digital data signal that is indistinguishable from all the other data buzzing back and forth along your internet connection, such as web pages, emails and music downloads.

Any hackers would need to isolate that particular signal from all the rest before they could even start to convert it back into a voice signal they could listen to. It's probably easier for them to tap your normal phone line than to listen in on internet calls.

Be aware, though, that there are a couple of other potential glitches that do need to be taken into account. Many less expensive internet services impose a limit on how much data can be downloaded through an internet connection. This can be as low as one gigabyte worth of data per month.

According to BT it would only take about three or four hours' worth of internet phone calls each week to hit that 1Gb limit, and don't forget that you also have to take all your ordinary web browsing, emails and downloads into account on top of that.

Self-employed people, or families with kids who hog the phone for hours at a time, could easily go way over that limit, so they may need to upgrade their internet account to provide a higher usage limit.

Talk of the town

The last thing we need to point out is that most internet telephony services don't allow you to make 999 calls to the emergency services. This highlights the most important aspect of these internet telephony services, which is that none of them can really be used as a complete replacement for your existing home telephone service.

It will happen in time, but it's going to be at least a decade before digital internet telephony services completely replace the traditional telephone system. In the meantime, though, internet telephony can still save you a bundle, as well as getting the kids off the main phone line for a change.

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