The Economics of VoIP
Most Americans pay a flat monthly fee for local telephone calls and a per-minute charge for long-distance calls.
VoIP calls can be placed across the Internet. Most Internet connections are charged using a flat monthly fee structure.
Using the Internet connection for both data traffic and voice calls can allow consumers to get rid of one monthly payment. In addition, VoIP plans do not charge a per-minute fee for long distance.
For International calling, the monetary savings to the consumer from switching to VoIP technology can be enormous.
There are three methods of connecting to a VoIP network:
- Using a VoIP telephone
- Using a normal telephone with a VoIP adapter
- Using a computer with speakers and a microphone
Types of VoIP Calls
VoIP telephone calls can be placed either to other VoIP devices, or to normal telephones on the PSTN (Public Switched Telephone Network).
Calls from a VoIP device to a PSTN device are commonly called PC-to-Phone calls, even though the VoIP device may not be a PC.
Calls from a VoIP device to another VoIP device are commonly called PC-to-PC calls, even though neither device may be a PC.
What VOIP Can't Do
Along with its many advantages, VOIP also has some limitations. For example, most VOIP companies don't have 911 services. With the money you save, you may decide it's worth keeping a stripped-down conventional phone line for that purpose.
For those who get Internet from a satellite provider, VOIP isn't an option, since a satellite receives data faster than it can send it. When used in large numbers, VOIP phone lines can begin to weaken your Internet signal, which may degrade sound quality and slow down your web surfing, but it's unlikely to be a problem with a basic household setup. In terms of residential applications, one line seems for the most part stable, says Stu Shulman, managing partner at SS Interconnect, a telephone network installer in New York City. The voice quality is pretty good.
With conventional phone service, you don't necessarily lose contact when the power goes out. Not so with VOIP. If you don't have a battery backup on your cable modem and you lose power, you'll lose your phone, he says.
Those drawbacks aside, the VOIP trend is gaining rapid momentum-and everyone may benefit. Phone companies are going to have to become more competitive with pricing, says Shulman. You can spend twice as much money with the phone companies as you will with VOIP.