Internet Phones: Clear Winners

With improved call quality and low rates, the best Net phone services may finally be ready to replace your Baby Bell.

By Jeff Bertolucci

Jeff Bertolucci is a California-based freelance writer. Michael Reagan is a staff reporter for the Times Record in Brunswick, Maine.

Internet phones have come a long way since the early days. A few years ago, you had to use software and a PC microphone to initiate a call from your PC to a regular phone. And you probably encountered some of the most garbled, inaudible conversations since tin can met string.

Thanks to advanced technology, the call quality of Internet phones has improved dramatically. The upsurge in affordable broadband service, combined with a new breed of hardware adapters, has led to a slew of Internet phone (aka Voice-over-Internet-Protocol, or VoIP) services eager to woo you away from your phone company. The Internet phone market includes telecommunications titans such as AT&T and Time Warner Cable, Net phone veterans like Dialpad and Net2Phone, and upstarts like VoicePulse and Vonage.

So is the Internet phone a viable alternative to your trusty landline? To find out, we tested eight broadband-phone services (see the chart "Internet-Phone Calling Plans: Choose Your Provider Carefully"). For one month we made a series of local, long-distance, and international calls, morning, noon, and night, and rated each service on its ease of use, audio clarity, and value for the money. Our verdict: Net phones vary considerably in price and performance, but the best--VoicePulse and Vonage--offer near-landline dependability, as well as a host of advanced features (voice mail, call forwarding, and so on) for much less money. (And as of press time, Net-phone customers pay minimal taxes and surcharges, in part because of the ongoing regulatory debate.) Still, we did encounter some setup problems and choppy calls.

Choice of Net Phones

Both hardware- and software-based Net phones are available. The hardware-based services give you two options: adapters (to which you connect your own standard phone) and all-in-one phone units (which include a built-in adapter). To use the hardware-based services, you must have a broadband connection. To get set up, you connect either hardware type to the router on your home network (via ethernet) or to your PC (via USB). Unlike the USB devices, the ethernet devices don't require that your computer be turned on before you can make a call. The purely software services, such as Skype and MediaRing, rely on a software program to handle the call.

The latest breed of hardware adapters delivers better audio quality than the software-based services do. That's because they're dedicated devices and don't share processing time with PC programs. Since the quality of some of the software services can be poor, we decided not to test them.

Setup Setbacks

In our tests, getting set up was occasionally problematic. Some providers' sites make setup seem as though it will be a simple plug-and-play scenario. But when we tested the services with the Speedstream 5100 modem/router supplied with our SBC Yahoo Standard Plus DSL Service, none of the Internet phones worked. We learned that the Speedstream 5100 will not support the DHCP (Dynamic Host Configuration Protocol), which automatically assigns different IP addresses to the devices on our home network.

We then upgraded to the 2Wire HomePortal, a four-port router that supports DHCP, and had no further installation or firewall problems. (Note: If your network is running a firewall, you may need to grant the phone adapter access to certain Internet ports. Your Net-phone vendor should provide details on how to do this.) Bottom Line: If you're thinking about using an Internet-phone service, first confirm with your router manufacturer that your hardware is up to the task.

When you're ready to make a call, most services let you simply dial your number, and off you go. Some units, however, require you to press one or more keys before dialing. With the InternetTalker, for instance, you press the # key to activate the dial tone. The most laborious dialing sequence belongs to Earthphone, which forces you to complete a 17-key sequence before dialing a landline or cell number. For example, when we used the Earthphone 502 to call the PC World offices, we had to dial *799 001 124*2345*914152430500. Try memorizing that!

Clear Calls, Some Snags

Once our equipment was up and running, we were pleasantly surprised by the audio clarity overall. The quality was quite good in most instances, despite an occasional clipped syllable, echo, or muffled voice. Only a few people complained about the audio quality, which often was better than that of cell phones.

The glitches? In some Dialpad conversations, we couldn't hear the person we called. For unknown reasons, some Earthphone and TalkPro calls didn't connect. In fact, a handful of Earthphone calls were very choppy. Sy Richardson, Earthphone's president and founder, told us that we could address the problem by updating the Earthphone's firmware. But after we installed the update, the audio quality of our calls didn't noticeably improve.

Since Internet phones, unlike their landline cousins, aren't bound by geographical constraints, you can choose any area code. A homesick New Yorker living in Omaha, say, may opt for a 212 prefix.

Power outages are the bane of the Net-phone customer. Traditional phone networks provide their own power and deliver service during blackouts. But with Net phones, you're out of luck. One option is an auxiliary power source, such as a UPS, to run the phone adapter during an emergency; but that arrangement doesn't address broadband outages, which twice disrupted service in the midst of our tests.

Plans and Taxes

Net-phone providers generally offer service plans at about half the price of the Baby Bells. VoicePulse provides unlimited local and long-distance calls, with voice mail, for $25 per month. By comparison, SBC Communications charges nearly twice as much for a comparable landline-based plan. VoIP subscribers must pay federal and state taxes, but far less than the average landline customer, who faces a monthly barrage of nickel-and-dime fees and surcharges (see the chart "The Price Is Right: Cut Your Phone Bill in Half"). Most Net-phone companies do charge you for the required phone adapter; Vonage, however, provides its adapters for free.

Internet taxation is a hot topic in Congress, which is debating whether to continue its moratorium on taxing online commerce. For Internet-phone users, this translates into lower taxes than those paid by traditional-phone customers--at least for now. Will the party last? "[For] the next couple of years, [Congress] will take a hands-off approach" and allow the IP telephony industry to develop, predicts Daryl Schoolar, In-Stat/MDR senior analyst.

"The FCC is supportive of continuing the moratorium," says Jeff Carlisle, codirector of the Federal Communications Commission's Internet policy working group. At press time, the FCC had approved a proceeding inviting comments on how to regulate VoIP.

Net telephony isn't flawless, but the future looks bright. According to Charles Golvin, Forrester Research senior analyst, fewer than 150,000 of 106 million U.S. homes currently use Net phones. "By 2006 we'll have about 5 million VoIP lines in households," he predicts.

Someday Internet phones may deliver crystal-clear phone conversations that far exceed the standard set by today's regular phones. "On a network with [a speed of] 100 megabits per second [roughly 20 times that of a DSL connection], you can have voice calls that are better than CD quality," says Brian Willingham, a consultant with Long & Associates, a telecommunications consulting firm.

Take that, Alexander Graham Bell.

Jeff Bertolucci is a California-based freelance writer. Michael Reagan is a staff reporter for the Times Record in Brunswick, Maine.

Internet Phone-Calling Plans: Choose Your Provider Carefully

Vonage and VoicePulse steal the show with top ratings in audio quality, but other services lag behind.

The Price Is Right: Cut Your Phone Bill in Half

Depending on your calling plan, your state, and your long-distance company, you can save a significant amount of cash by switching to an Internet-phone service. Our comparison here offers one example of the potential cost savings; your mileage may vary.

¹The charges listed come from actual bills. ²Includes California state taxes. Chart Note: In this chart, we chose VoicePulse because it is one of our Best Buys; SBC's (comparable) landline plan is the author's current phone service.

Is A Net Phone Right for You?

You should consider an Internet phone if you...

...rely exclusively on your cell phone but still want a fixed phone line in your home or office. Cell phones are convenient, but they can be quite expensive, especially if you use them to make international calls.

...are comfortable troubleshooting your home network. Net phones sometimes require power cycling--you unplug the adapter, wait 10 seconds, and reconnect. You also may need to tweak IP addresses to activate the adapter.

...don't have a security system or satellite TV decoder that requires a connection to a telephone line. Internet phones don't work with such devices. If you own either one or both, you might consider retaining a regular phone line just to use with them, despite the added cost.

...are willing to sacrifice audio quality for dollar savings. On one hand, clipped and garbled words aren't uncommon; but on the other hand, Net-phone quality is typically superior to that of cellular calls.

Best Buy: VoicePulse

VoicePulse, which uses the Sipura SPA-2000 phone adapter (right), and Vonage, which uses the Motorola VT1000 adapter (left)

VoicePulse (which uses the Sipura SPA-2000 phone adapter, shown on the right) and Vonage (which uses the Motorola VT1000 adapter, on the left) deliver excellent audio clarity that's a notch above what the competition provides. Both of these phone services offer directory assistance (for a small fee), and their service plans can cost half as much as landline alternatives. Vonage throws in the benefit of 911 service.

Service From the Big Dogs: AT&T and Time Warner Cable

Note: California-based PC World was not able to test either AT&T's or Time Warner Cable's services for the main part of the story; both companies are rolling out services on the East Coast.

AT&T and Time Warner Cable now offer their own Internet-phone services. AT&T plans to roll out its service by the second quarter. Unfortunately, a trial service wasn't available in time for testing. The company has not finalized its pricing plans yet.

Time Warner Cable currently offers its Digital Phone service to customers in Portland, Maine, and Raleigh, North Carolina. The company plans to provide service in 27 states by the end of the year.

As a Portland resident, I tested Digital Phone for a few weeks. When you sign up, Time Warner, unlike other Net-phone companies, sends a technician to your home or office to install the free equipment. The setup: A vertical modem connects to a splitter, which hooks up to the same cord that delivers my cable and Internet service. My telephone connects to the jack at the back of the modem. Installation took about an hour. When it was done, I just picked up the receiver, heard a dial tone, and started to make some phone calls. I made local, long-distance, and international calls, and I was very impressed with the audio quality of all of them.

If you're an existing Time Warner customer, you pay $45 per month for unlimited local and long-distance calls; otherwise you pay $50 per month. Digital Phone lets you transfer your existing telephone number to the new service. Plus, it supports 911 calls and caller ID.

I have decided to switch to Digital Phone. Its call quality matches that of my landline phone, and I will save between $10 and $20 a month on phone charges.

Michael Reagan