Phone service: 5 ways to cut bills
Illustration by Bob Eckstein
When Clark Kent wants to slip into his cape and tights in the most recent Superman movie, he doesn’t bother to look for a
phone booth. That’s a good thing, since he probably wouldn’t find one, and even if he did, younger moviegoers might not know
what it was anyway. Telephone technology has undergone dramatic changes in recent years, and so have the bills we pay for
it. Competition among providers and the advent of new services have lowered costs in some cases and raised them in others.
They have also complicated the decisions we have to make to ensure reliable service at a reasonable price. Here are five ways
to lower your phone-service costs without sacrificing safety.
Switch to Internet phoning.
Voice over Internet Protocol, or VoIP, transmits phone calls via a high-speed Internet connection. VoIP providers include
phone and cable-TV companies and some, like Packet8 and Vonage, that specialize in the service.
What it costs: About $20 and up a month for unlimited local and long-distance calling plus another $40 or so a month for broadband Internet
service from a cable provider or $40 to $50 a month from a DSL provider. These prices exclude taxes and fees, although VoIP
has an added advantage: It’s not as heavily taxed as conventional phone services, at least not so far.
What you’ll save: About $400 a year, assuming you’re already paying for broadband. If not, you’ll about break even (and get broadband in the
Trade-offs: VoIP requires not only an Internet connection but AC power, so if your electricity goes out, you’re sunk. For safety, you
should keep a landline as a backup. Basic landline service should run about $20 a month. If you use VoIP as your sole telephone
at home, make sure that your provider has your address. That’s the only way a 911 operator will be able to locate you in an
Use your cell phone for everything.
Drop your landline and use wireless at home and on the go.
What it costs: You’ll need a cell plan that provides for an adequate number of national, anytime minutes. For 500 minutes a month, for example,
you’ll pay about $40 to $50.
What you’ll save: The cost of your current local and long-distance service.
Trade-offs: The voice quality of a cell phone still lags behind that of a landline, and it might not work from all rooms in your home.
Emergency operators must also have the enhanced technology known as E911 to get your location. E911 is now common in most
cities and suburbs, but not rural areas.
Trade down to a cheaper cell plan.
Some providers have less-costly plans than the ones they tend to push, but you might have to ask or poke around their Web
sites. If you don’t make a lot of cell calls, these can be a better deal. Also make sure that you are not paying for services
you don’t want or need, such as picture mail.
What it costs: $30 to $40 a month. When we surveyed cell providers in August 2006 for one New York City suburb, we found two plans priced
at $30. Sprint’s Fair & Flexible plan came with 200 monthly minutes and no activation fee. T-Mobile’s Basic Plus plan offered
300 minutes with a $35 activation fee.
What you’ll save: $10 to $20 a month, compared with aggressively pushed plans.
Trade-off: Talkative types who can’t make do with 200 to 450 minutes a month will end up paying another 10 cents to 45 cents a minute,
erasing any savings.
Take a local/long-distance bundle.
How it works: You buy unlimited long-distance and local service from the same landline company, such as AT&T or Verizon.
What it costs: About $35 to $55 a month, plus a wide assortment of taxes.
What you’ll save: If you normally spend that much on long-distance alone, you’ll basically be getting local service free.
Trade-off: If you don’t make many long-distance calls, you’d probably save money by buying phone services à la carte or using prepaid
Buy a phone card for long-distance.
A prepaid long-distance card can cut costs if you don’t make many long-distance landline calls. These cards are also handy
for avoiding long-distance gouging at hotels.
What it costs: About 4 to 15 cents a minute within the U.S. Some of the best deals we’ve seen are at warehouse club Web sites. Sam’s Club,
for example, was recently selling packs of seven 120-minute AT&T phone cards for $29.15, shipping included, which works out
to about 3 1/2 cents a minute.
What you’ll save: If you average, say, 50 minutes of long-distance calls each week, a card charging 3 1/2 cents a minute will save you about
$150 a year over a comparable plan.
Trade-offs: Phone cards require a lot of extra number punching. Your local phone company might change you a fee for dropping your long-distance
carrier. And some cards tack on connection fees and other charges.