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Gadget Report [Net Phone Zone: Hidden Costs of IP Phone Service - 04/07/2005]

Discussion in 'PC Hardware' started by Ablang, Apr 8, 2005.

  1. Ablang

    Ablang Guest

    April 7th, 2005

    Net Phone Zone: Hidden Costs of IP Phone Service

    Senior Ed. Aoife McEvoy

    I am a huge fan of all-you-can-eat buffets. Quite shamelessly, I'll
    pile up my plate with an embarrassing mound of various foods--talk
    about heaven. (Hey, I need to know what to grab when I go back to the
    buffet table for rounds two and three.) Over the years, I've become
    immune to onlookers' stares.

    However, I do get ticked off when I find that I'm being charged for
    things I wasn't expecting--soft drinks, multiple mugs of coffee, and
    dessert, for example. It's not that I mind paying for these extras; I
    just like to know what's included and what isn't.

    In the world of Voice over IP phones, you'll face a similar situation.
    You'll find lots of terrific all-you-can-eat monthly plans, but almost
    all have hidden extra charges.

    Itemized Charges

    To avoid annoying surprises on your bill, here are some of the key
    things you need to consider when shopping for a VoIP service.

    All You Can Eat: Find out exactly what is included in the monthly flat
    fee; you may not be able to eat as much as you thought. And if you go
    outside the plan's limits, what happens then? Prices and features are
    all over the map. For example, BroadVoice offers a $10 Unlimited
    In-State plan in which you can make unlimited calls to numbers in the
    state your phone's area code is located in; you pay 3.9 per minute for
    out-of-state calls.

    BroadVoice's $20 Unlimited World plan allows you to call landline
    numbers in 21 countries, including the U.S., Australia, Canada, Chile,
    Taiwan, and Western European nations. The comparable $20 Unlimited
    Lingo plan from Primus Telecommunications does not include calls to
    landline numbers outside of the U.S., Canada, and Western Europe. (See
    last month's column for a hands-on review of Lingo.) AT&T's $30
    CallVantage gives you unlimited calling to U.S. numbers only, and
    Verizon's $35 VoiceWing plan includes unlimited calling to U.S. and
    Puerto Rico numbers only.

    AT&T's CallVantage


    Verizon's VoiceWing

    My review of Primus Telecommunications' Lingo

    Hardware: If you sign up with an IP phone company over the Web, you'll
    receive a telephony adapter, which you connect to your broadband modem
    or router. Some companies charge you for this hardware; others do not.
    For example, AT&T, Broadvox, and Vonage provide the hardware for free;
    VoicePulse charges you $80 for the equipment if you choose the
    company's $25-per-month America Unlimited plan.

    Activation Fees: Rather than having you pay for the hardware, some
    companies charge a one-time activation fee instead. For example,
    BroadVoice charges you $40, while AT&T and Primus charge $30.

    Shipping Charges: More than likely, you'll have to factor in shipping
    and handling costs. Vonage ships its hardware to you for free, whereas
    Broadvox Direct charges $12, and Primus and VoicePulse charge $10.

    Extra Features: Avoid paying for premium services you may not need.
    Some IP phone companies, such as Primus and VoicePulse, set you up
    with a "virtual" number--a Canadian or international number. That way,
    friends, relatives, or colleagues overseas can dial a local (for them)
    number any time they want to call you. Primus, for example, charges $5
    a month for a Canadian phone number, and $10 a month for an
    international number. VoicePulse charges $8 to activate the virtual
    number service initially; after that, you pay $5.14 per month.

    Calls to Cell Phones: The all-you-can-eat plans for international
    numbers are all very appealing, but these plans do not include calls
    to mobile phones overseas. For those calls, you'll be charged a
    per-minute rate. IP phone companies' international rates vary
    considerably, but expect to pay at least 20 cents a minute--or a lot
    higher, depending on the country you're calling. Unless you're
    familiar with cell phone prefixes abroad, it's often hard to tell
    whether a number is a landline or a cell phone number. IP phone
    companies usually do a decent job of identifying which is which. See
    Vonage's list of international rates for a good example:

    The Government's Share

    Because the Federal Communications Commission views Internet telephony
    as new technology that needs protection from state taxes in order to
    flourish, generally speaking, you won't find state taxes tacked onto
    VoIP phone bills. But you can expect to pay federal fees amounting to
    a dollar or two per month.

    Read "FCC Takes VoIP Regulation Out of State's Hands" for background:

    There are exceptions to the state tax issue, however. If you sign up
    for Vonage's $24.99 plan, for example, every month you'll pay an
    additional 3 percent federal excise tax, plus a $1.50 regulatory
    recovery fee, bringing the total to $27.24. This company is located in
    New Jersey, and it charges subscribers in that state a further 6
    percent sales tax; the total bill there would come to $28.78. Vonage
    says that it is complying with the state governor's requirements,
    which are unique to New Jersey in this regard. New Jersey-based
    VoicePulse also charges its in-state subscribers the same sales tax.

    Note: The tax situation for VoIP services could change if outgoing FCC
    Chairman Michael Powell, who has been a big supporter of deregulation,
    is replaced by someone who wants to level the playing field by
    regulating VoIP providers the same way traditional land-line companies
    are regulated. For more on Powell, read "FCC Chairman Powell to

    The Good-Bye Gift

    All the broadband phone companies I looked at offer a money-back
    guarantee, but the ins and outs of each company's policy differ.

    Primus and VoicePulse, for instance, offer a full refund if you cancel
    within 30 days; if you go over 300 minutes of call time (in the case
    of VoicePulse) or 500 minutes (with Primus), you'll be charged for the

    Vonage's money-back period is more limited: You need to cancel within
    14 days and not exceed 250 minutes of call time.

    In all cases, the refunds do not cover charges for calls made to cell
    phone numbers overseas, or other international calls not included in
    your plan, or directory assistance (75 cents a pop in most cases). If
    you want to cancel your service after the money-back timeframe, you'll
    be charged a month's service or a specific deactivation fee of at
    least $30. Oh, and you'll have to pay return shipping for the hardware
    as well.

    Have a question or comment? Write to Aoife McEvoy:
    NetPhoneZone at pcworld.com

    Read Aoife McEvoy's regularly published "Net Phone Zone" columns:

    "This became a credo of mine... attempt the impossible in order to improve your work."
    -- Bette Davis
    Ablang, Apr 8, 2005
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