Saving with VoIP: The Magic Jack option

I'm trying to save money by shopping around my telephone, television and Internet service in two locations. Currently I pay $118 for those services at one location and $60 at the other. To my family that's a lot of money. We'd like to cut back.

This week I'm looking at VoIP alternatives for my land line telephone service.

The Phone Company

Sticking with what works is the easiest option for most people. It may also be the least expensive if you don't have or want broadband Internet service, which is needed to support competing voice over IP (VoIP) options. But if you already have broadband, you've got other options to think about. My plain old telephone services includes unlimited local dialing for about $23 per month, excluding taxes and fees. Packages with extra features and long distance calling are much more expensive, however, so I get my long distance from Pioneer Telephone.

One nice thing about Pioneer: It doesn't charge a monthly base fee for the service if you pay electronically (otherwise it's $.99 per month - much better than the $5 per month most telephone companies charge). I pay 2.7 cents per minute for long distance out of state. In-state calls are 7.5 cents per minute. Of course, we could also use calling cards for about 1 cent per minute, but they're inconvenient. We have them but don't always use them.

Magic Jack

Magic Jack is the cheapest VoIP alternative I looked at. At $20 per year it appears that users are getting something for almost nothing. So what's the catch? There's no free lunch.

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Q&A: MagicJack is an invention suited for the phone-bill weary

Magic Jack's VoIP service gives users unlimited local and long distance calling in the U.S. for $20 per year. To get started you must buy special hardware: a small device, available online or from retailers such as Radio Shack, that attaches to a USB port on any computer. Total up front cost: $40. You then plug a single telephone into the device. Once you've signed up for service, Magic Jack assigns you a telephone number and activates your account. From there you supposedly just plug the device in to get dial tone.

Magic Jack offers a few basic features, including call waiting, voice mail online, caller ID and three-way calling. It also offers free directory assistance - something other services charge for to the tune of $1 or more per call.

The device has the advantage of portability. You can bring your phone anywhere where there's a computer with broadband connectivity and make and receive calls. On the downside, your phone is tethered to your computer, which must be on at all times. And if you have power saving standby or sleep mode configured you'll have to disable them to receive incoming calls. That's a hidden cost. Not using power saving mode increases your computer's electricity consumption to the tune of $14 to $45 per year.

With other services, such as Vonage or Comcast's Digital Voice, you get a box that can power all of the phones in your house. You (or a technician if you use Comcast) disconnect the twisted pair feed coming in from the telephone company at the termination point (a plastic box mounted on the side of your home of office). Then you connect the VoIP-enabled device to any telephone wall jack to energize your telephone wiring. Voila! All of your existing telephone extensions will work. Magic Jack doesn't do that. You can still have multiple phones, but with only one jack in the house you'll need one of those cordless units with multiple hand sets.

Another consideration, as I learned after an ice storm last winter, is that VoIP products don't work when there's no electricity. While Comcast's VoIP service includes a backup battery that keeps you going for a few hours, Magic Jack has no such backup.

While other services can "port" or transfer over your existing telephone number, Magic Jack cannot. And in some areas of the country, such as New Hampshire, the company can't even assign the user a local telephone number.

Perhaps the biggest drawback is Magic Jack's support, which is limited to online chat through its Web site. Ironically, Magic Jack, which offers telephone service to its customers, has no public phone numbers you can call. Is that level of support adequate for your telephone? Judging by the number of complaints about Magic Jack from frustrated customers, including this Boston Globe reporter, this is a problem.

Magic Jack is cheap, but I can't rely on it as a land line replacement. As a product it seems to fall more into the toy or novelty category — and it's marketed in that way. Its Web site is a bit cheesy, with gimmicky come-ons and no e-mail, business address or telephone numbers you can call. It could save me money as a supplemental service for long distance calling if I made a lot of long distance calls from my land line. But I don't, and the service, tied to one phone on an always-on computer — isn't exactly convenient.

But there are other options. Next time I'll talk about them.

Upate: For more on Magic Jack, see the April 8, 2009 Computerworld interview with Magic Jack founder Dan Borislow.

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