Tuesday, November 11, 2008

The Surprising Low Cost Phone Option

With all the hype over bundled services and broadband phone, you're probably thinking that only a chump would keep one of those old analog landlines. Not so fast. Despite all the heavy promotion, your cheapest telephone solution may well be that century-old technology combined with a competitive long distance service.

Perhaps that sounds outrageous, but have you actually priced out your options? To do this properly, you need two things. The first is the lowest cost local service that meets your needs. You're more likely than not to get that from your local telephone company. Depending on how many local calls you make and how long you talk, you can easily overpay by buying too much service. The minimum you need is line access, also called dial tone. It's just what it says. You pick up the phone, you hear a dial tone, and you make your call.

Next you likely need some way to make local calls. You can get unlimited service. But you may also be able to get metered service that charges so much per call or so much per minute. Sit down and figure out how much you really call in a month. It will be worth the exercise. If you make only a few calls or primarily talk long distance, you don't need deluxe local service.

You may also want Caller ID. That typically adds about $5 a month. I'd never give it up, because it helps me avoid talking to political campaigns, surveys, scams scheming for donations, and banks looking to promote yet another credit card.

Next, you'll want to have a low per minute rate long distance service. Ten years ago, switching your long distance service to save money was all the rage. Now it's something of a lost art due to the emphasis on cell phones, bundles and VoIP. Once again, before you buy too much, use a long distance rate calculator to see how much your long distance calling is really worth. Competition has driven rates down to a few pennies a minute for most calls. Even overseas calling is dirt cheap these days.

Why not just use the long distance service that comes with your local line by default? Because it's the default service, chances are pretty high that it is NOT the low cost option. It's just convenient for people who just want to call the phone company, ask to have a line installed, and dutifully pay the bills when they come in.

Hey, why not just buy one of those bundled services and get everything for one price? Once again, it sounds good, but a bundle may not be your lowest cost option. Competitive bundles give you local dial tone, a package of local minutes or unlimited service, and a package of domestic long distance minutes or unlimited service. It's really convenient because you get one bill and you know what the price is going to be every month. What you don't know is how much you could save by paying separate bills for local and long distance service.

You should also know that competitive bundles have to buy their local lines from the local telephone company. That's because by law all the analog copper phone lines belong to your incumbent local telco. So you won't be getting a break on local service. You may or may not get a decent deal on long distance service and calling features, depending on your usage pattern.

OK, then, why not avoid the copper phone line issue completely and go with a VoIP telephone service? The same discussion of paying a bundled rate for service you may not ever use versus paying by the minute applies. Also, unless you have very, very good broadband service, you'll find that voice quality suffers and you may not be able to talk on the phone and use your computer at the same time.

Certainly, this discussion makes the most sense for someone with a home office, or a small office with a couple of phones and one or two lines. Once your business gets larger than this, you should consider T1 digital phone trunks or SIP trunks to get the best value for your telephone expense dollar.

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