Monday, September 15, 2008

It may be time for you to consider cutting the (phone) cord

If you haven't rethought your home phone service, now might be the time. Intense competition among companies and technologies has traditional standalone phone service from a Ma Bell descendant seemingly going the way of the dodo.

The dodo, a flightless island bird, became extinct in the 17th century because of human behavior and the introduction of new predators. Ditto, perhaps, for traditional landline phone service. Landline phone service is high quality and extremely reliable. But phone companies are losing customers daily to competing companies and technologies.

Bill Kula, a spokesman with Ma Bell descendant Verizon Communications Inc., said the company is experiencing an 8 percent to 9 percent decrease per year in landline phones. But he said the traditional landline has a future in the home telecommunications mix. Surveys show customers like the reliability of a landline and the security of knowing it has full emergency 911 capabilities. ''The wired telephone is not going away with the dinosaur,'' he said. ''It will continue to be a versatile part of the society for decades to come.''

Time will tell, but here are examples of predators and human behavior invading the habitat of traditional phone companies. They might just save you money:
Bundles. Deals abound, with phone and cable companies duking it out to sign customers to their triple-play services--TV, Internet and phone. Landline phone service has become such a commodity that it's almost a throw-in. It often includes unlimited long-distance calls and a wide host of features, such as call-waiting and caller ID. If you already subscribe to pay TV and Internet access, you might save by moving all your services under one roof.

Wireless. Cutting off landline service and using only a wireless phone is becoming more common as people become used to calling people, not places. A generation ago, callers would dial up a place, such as a home or an office because phones were tied to buildings. Today, wireless phones are associated with individuals, so people call other people. As they become commonplace, it's harder to justify duplicate landline telephone service.

Before cutting the cord, make sure you have adequate reception throughout your home and enough minutes on your wireless plan to handle calls at home and on the go. Several wireless carriers have introduced unlimited calling plans, many for about $100 per month. They often are of dubious value, said Allan Keiter, president of wireless comparison site MyRatePlan.com. For $100 per month, consumers already could receive 2,000 minutes--33 hours--with free nights and weekends, and free mobile to mobile. Few people use that much. Unlimited plans are aimed at dangling the concept of unlimited calling at customers on $80 plans with about 1,300 minutes so they trade up.

VoIP and MagicJack. Consumers have many choices for using their broadband Internet access as a phone line, using a technology called voice over Internet protocol, or VoIP. Maybe the most interesting and easiest is from MagicJack.com, which offers phone service with unlimited long-distance, voice mail, caller ID, call waiting and other features for $19.95 per year.

For an additional $20, you must buy a matchbox-sized device that plugs into the USB port on your computer. You plug a phone line and phone into the other end of the device. Software loads onto your computer automatically and you get a dial tone. So, to get started, the device plus a year's service costs $39.95, and you never receive a monthly bill.

MagicJack inventor Dan Borislow said the company has sold more than 1 million of the devices so far. He assumed his customers would be business travelers, perhaps taking the device abroad to call home for free. Not so.

''They're people on budgets, people trying to save money,'' Borislow said. The average age of users is 55. The other major group of customers wants to dump their landline but their cell phone doesn't work well in the house, he said. They use MagicJack as their landline, often plugging a cordless phone base into the MagicJack line and adding multiple handsets throughout the house.

Drawbacks of MagicJack include not being able to keep your existing phone number. You'll receive a new one. And you must have the computer on to place and receive calls. If it's off, incoming calls go to voice mail. Borislow said the company is working on solutions to both of those disadvantages.

And while MagicJack works flawlessly for many people, others seem to have problems. The service is only as good as your broadband Internet connection. Voice quality can range from as good as a landline to as poor as a cell phone with a weak signal. Use the 30-day money-back guarantee to try MagicJack before canceling landline service.

Other Internet-based phone services, such as Skype and Vonage, can also use regular telephones and can be cheaper than landline phone service. Several traditional phone companies also offer VoIP service.

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