VoIP: Not The Cheapest Calling Option?

Posted by: Olga Kharif on December 26, 2006

I just read Jon Arnold’s blog on Skype. And — surprise! — Arnold thinks that since Skype recently raised its rates, the service, allowing for Web-based calls, is no longer the cheapest way for people to make all types of international calls. Traditional telcos’ services can, in fact, prove to be cheaper when calling countries like Israel, he says. My personal experience shows that using prepaid calling cards is still cheaper when dialing Russia, meanwhile.

Indeed, as services like Skype, owned by eBay, start to desperately search for ways to make money, the notion that Voice over Internet Protocol (VoIP) calling is the cheapest way to make international calls may not hold true for much longer.

Just to be clear, I don’t think that’s going to stop users’ migration to VoIP — a migration that, according to In-Stat, is accelerating in the U.S. Still, higher prices could cramp VoIP’s image as the cheapest phone service around. And, ultimately, this could slow landline-to-VoIP migration down a bit. After all, most people move to VoIP because of its low price. And if VoIP prices keep on creeping up, some consumers may stick with their traditional telcos longer than some analysts expect today.

Reader Comments

Rob Roberts

December 26, 2006 8:18 PM

After being concerned about security issues and countries tending to ban Skype my associates and I went to Gizmo Project (http://gizmoproject.com). We've found it to be more reliable and based on standards that exist today...none of that proprietary stuff. Of course, there are other alternatives. But, not having tried every one of them I can neither say "yay" or "nay" on their abilities to be viable.

jason kibbe

December 27, 2006 4:34 PM

i still think free pc-to-pc is a good deal, and i already signed up for $14.95 unlimted calls for '07. standards-based would be nice, but the average user doesn't know or care...

Brian Stegner

December 31, 2006 1:34 PM

So, telcos can offer better rates to Israel and russia? Gee, that's great, I'll never need to call either place in this lifetime. Meanwhile, with my Vonage account, I can call the UK, Spain, Ireland, France, Italy, and Germany for zero cents, twenty-four hours a day, seven days a week. How are your telco buddies doing versus those 'rates'...?

That's what I thought. Next. Nice try though, but shilling for the monopolists is so Reagan-era.

Regards,
Brian Stegner
Minneapolis

Mike

December 31, 2006 5:33 PM

Tomatovine is a piece of crap company. I signed with them due to advertising on Stern show. They about put me out of business.

Moshe Maeir

January 4, 2007 4:12 AM

In this case - the saying "money isn't everything" is true! Minutes are so cheap that it really doesn't matter anymore to the average person.
What does matter is how my phone system allows me to communicate and collaborate efficiently with my workgroup, family and friends.
That is the reason for companies such as iotum.com and the Flat Planet Phone Co. For more on this read http://flatplanetphone.com/wordpress/?p=19

vic

March 20, 2007 1:02 AM

I don't think the rising prices of just one company, in this case Skype, to a couple specific countries can lead to the conclusion that VoIP is not cheaper than traditional landlines. Vonage, who granted seems to be a sinking ship, is offering pennies per minute. Once more competitors come into play, pricing will lower. Supply and demand.

http://nationwideLD.com

SB

May 3, 2007 5:25 PM

VoIP can be an effective solution for many companies, but service & reliability are always important. Vonage learned this the hard way with their QoS issues and lack of 911 capabilites. IMO, businesses will benefit more from VoIP than household users.

John

May 8, 2007 2:02 PM

I use skype for international and domestic calls. The quality has improved since they started charging for the service, it's still cheaper than any other service. Personally I use a voip cell phone, with few acceptable glitches, skype works fine for me.

patrick

May 25, 2007 5:06 PM

I use 'VOIPBUSTER' for all my needs with dozens of FREE destinations etc: to boot.
It has been around for some time now & no problems to date.
I have a 'fritzbox' 7140 International ATA, allows me all the options I desire.
The house line is connected to the fritzbox + DECT phones. I can call POTS or VOIP.

john

November 8, 2007 12:27 AM

No matter the cost of VOIP i think it is well worth the investment for business owners if they want to increase revenue. High speed internet providers are happy that more people are wanting broadband. http://getoc3.com

Maria Johnson

March 28, 2008 3:19 AM

VOIP is still doing good for business companies and individials like me :)
I am using the pay as you go plan of axvoice and saving few bucks of money

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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