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Trek234
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Joined: Jan 30, 2005
Posts: 68

PostPosted: Wed Feb 23, 2005 4:43 am    Post subject: How can VOIP be so much cheaper? Reply with quote Back to top

Hi all,

This is a question for purely curiosity sake.

How can be Voip be so much cheaper than traditional telephone companies?

Now I understand it's exempt from certain taxes, but after that you're still looking at a huge difference.

Take my (former) phone company. Just the line was running me around $50 a month. That's with *nothing* extra.

If I want caller ID that would have been another $10 a month. Call waiting another $7. Call waiting with caller ID another $10. *69 $1.50 per use.

Then there's long distance. The month before I went to Vonage I got charged around $80 for IN STATE long distance in the 200 minutes of use range.

Now I can *maybe* understand long distance, but I have a hard time believing me having caller ID is costing the telephone company $10 a month.

So is it basically greed? Or is it actually expensive for a telephone company to have these features, but not Voip providers?

When I examined my bill in detail I even noticed the telephone company was charging me $1 a month for "touch tone service". ****? This is 2005 and I'm getting charged for touch tone service.

As far as long distance - how can Voip providers have that so cheap (free, basically) nationwide? That one really escapes me.

Thanks for any info
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ToddlerTN
Vonage Forum Evangelist
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Joined: Feb 12, 2005
Posts: 482
Location: Nashville, TN

PostPosted: Wed Feb 23, 2005 5:54 am    Post subject: Reply with quote Back to top

For starters, do you understand how much physical cable and equipment the telcos have to install and maintain? The Voip guys aren't running lines to your house, for starters.
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Trek234
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Joined: Jan 30, 2005
Posts: 68

PostPosted: Wed Feb 23, 2005 6:24 am    Post subject: Reply with quote Back to top

Yes, but don't the Voip people use the same lines? When calls are made to non-VOIP users?
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kenn10
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Joined: Jun 07, 2004
Posts: 196
Location: Kennesaw, GA

PostPosted: Wed Feb 23, 2005 8:43 am    Post subject: Reply with quote Back to top

Trek234 wrote:
Yes, but don't the Voip people use the same lines? When calls are made to non-VOIP users?


Trek - A typical wire-line carrier has to license features for the entire central office switch. They pay a base "right to use" fee. The more people they can sell calls-waiting, caller-id, etc. to, the more the profits will be. Obviously, they need a base number of customers in a given CO to justify the expense. Beyond that, it is mostly profit.

There is tremendous expense with customer no-service, repair crews, construction crews, and all the other human resources of the traditional phone company. They're bloated and over-paid. Their labor unions continue to hold the companies hostage for higher salaries and greater benefits. In addition, they must have profits high enough to attract stock-holders and pay dividends. Finally, you have all the greedy government entities tacking on additional taxes that the phone company must then pass on to you. The Northeast is most notable for all the outrageous add-ons to support their bloated governments and "gimme" programs that the Democrats love to force on the people.

I won't get into an economics discussion, but suffice to say that if all you need to provide is switching fabric (as the Voip companies do) and let someone else deal with the transport, your savings are massive. That's how they can do it for a lot less money.

Personally, I'd gladly pay a buck or two more just to have someone answer my tech support calls in under 30 minutes.
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bjevans
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Joined: Feb 17, 2005
Posts: 11
Location: Texas

PostPosted: Wed Feb 23, 2005 8:52 am    Post subject: Reply with quote Back to top

The public has been gouged for decades by phone companies because there were no alternatives. The first alternative was cell phones, but they are doing a little gouging of there own. Now comes Voip, a very sensible and a lot less expensive alternative.

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ToddlerTN
Vonage Forum Evangelist
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Joined: Feb 12, 2005
Posts: 482
Location: Nashville, TN

PostPosted: Wed Feb 23, 2005 10:57 am    Post subject: Reply with quote Back to top

Trek234 wrote:
Yes, but don't the Voip people use the same lines? When calls are made to non-VOIP users?

Yeah they do, just like you "use" the same lines when you make a phone call to your friend...the Voip provider isn't getting charged for routing the call over the lines, and neither are you. That's the whole reason Voip is so much cheaper.
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jmyyz
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Joined: Feb 06, 2005
Posts: 34

PostPosted: Wed Feb 23, 2005 7:28 pm    Post subject: Reply with quote Back to top

ToddlerTN wrote:
Trek234 wrote:
Yes, but don't the Voip people use the same lines? When calls are made to non-VOIP users?

Yeah they do, just like you "use" the same lines when you make a phone call to your friend...the Voip provider isn't getting charged for routing the call over the lines, and neither are you. That's the whole reason Voip is so much cheaper.


If they aren't getting charged than why are in network calls free and PSTN calls can potentially cost money?
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socrates
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Joined: Jan 12, 2004
Posts: 44

PostPosted: Wed Feb 23, 2005 8:05 pm    Post subject: Reply with quote Back to top

Utilities don't care what their costs are...they are typical guaranteed a return on their costs and as long as they are considered "reasonable costs"....reasonable is a very relative term, especially when it's compared to other utilities....if it was an open market place "reasonable" would be unreasonable
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ToddlerTN
Vonage Forum Evangelist
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Joined: Feb 12, 2005
Posts: 482
Location: Nashville, TN

PostPosted: Thu Feb 24, 2005 12:35 am    Post subject: Reply with quote Back to top

jmyyz wrote:
ToddlerTN wrote:
Trek234 wrote:
Yes, but don't the Voip people use the same lines? When calls are made to non-VOIP users?

Yeah they do, just like you "use" the same lines when you make a phone call to your friend...the Voip provider isn't getting charged for routing the call over the lines, and neither are you. That's the whole reason Voip is so much cheaper.


If they aren't getting charged than why are in network calls free and PSTN calls can potentially cost money?

Because in-network calls go from your internet connection to another user's internet connection. PSTN calls go from your internet connection to Vonage's internet connection, and then it's transferred to the local wire just as if you made a local call in that area yourself. They have extra equipment and service issues with calls that have to get routed over PSTN lines.
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pdgraham
Vonage Forum Associate
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Joined: Feb 24, 2005
Posts: 19

PostPosted: Thu Feb 24, 2005 4:04 pm    Post subject: Re: How can VOIP be so much cheaper? Reply with quote Back to top

Trek234 wrote:
Hi all,

..........................................

How can be Voip be so much cheaper than traditional telephone companies?

........................


I'm thinking that once we figure in the cost of cable modem or DSL it isn't all that much cheaper... But that's just a guess on my part.

I'm paying $44.95 a month for cable modem, which I need for Voip. That brings the total monthly cost of a 14.95/mo Vonage account up to $59.90/mo.

Of course I'm using the cable modem for other things.. but... it all adds up..
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