Should you ditch your landline for an Internet phone?
By Melanie Chambers • Bankrate.com

When Kathleen Hamilton's sister moved to Mexico, she turned to voice-over-Internet-protocol (VOIP) technology to keep in touch by phone and keep her long-distance bills low at the same time. "I paid nothing to receive her calls," says the Montreal-based Hamilton, who used Skype software for $2 a month.

Hamilton has joined the band of Canadians catching on to VOIP, a flexible and cheap way to make phone calls that uses an Internet connection instead of a traditional phone line. According to a study conducted for AOL Canada by Maritz Research, about one in 12 Canadians currently uses VOIP technology or is considering it.

It was the low cost that drew Hamilton in, but since Skype kept her chained to her desk during a call, since she has to use her computer, and the amount of static she hears during calls was increasing, she has gone back to using her old landline service after only six months.

But Skype is only one version of VOIP. To learn more about other VOIP services and decide if it's worth ditching your traditional landline, read on.

How it works
VOIP is a fancy name for technology that allows your Internet connection to act as a telephone line -- audio analog signals are transmitted into digital data over the Internet. Instead of a physical landline tower transmitting the call, your broadband becomes the carrier.

Just as it doesn't cost anything to send email, you can use VOIP software to make free calls using a computer equipped with a microphone and speakers or a headset. There are more and more free software packages available, including Skype, that are free to use as long as the receiver and sender use the same software.

However, if you're looking at getting ride of your landline all together, a more reliable option is to pay for VOIP service from a cable company or private distributor, which will send you an analog converter and/or a VOIP phone that removes the static often encountered when using free software and frees you from having to sit in front of your computer. Services you pay for also include customer support, which is typically not offered with free software.

Cheap and flexible
Price is the biggest allure to disconnecting your landline and using VOIP service. "I was paying hundreds of dollars each month in long-distance coverage," says Julia Rosien, of Kitchener, Ontario, who recently switched to VOIP pioneer Vonage for only $40 after rebates. "I (now) have unlimited North American calling for $35 a month."

In many cases, VOIP services let you enjoy your cheap rates even when you aren't at home. Many companies allow you to hook up your laptop or VOIP telephone into a high-speed outlet overseas and make calls back home at your local rate.

Emergency service a gamble
One of the big complaints about VOIP service is static. Free software, such as Skype and MSN Messenger, are often prone to bad reception, and Rosien says using VOIP on a cell phone can also produce some static.

A more important issue is the ability to dial 911 for emergency assistance. If users don't register their home addresses with their VOIP providers, their 911 calls are routed to a national switchboard. The operator then reroutes the call to the appropriate local 911 service -- a potentially long process when you're in an emergency. And, if there's a power outage, VOIP service, including the ability to dial 911, ceases to work. So, having a landline connection or a cellular phone in addition to your VOIP service is a smart idea.

Comparing packages
To use VOIP service, users must have a high-speed Internet connection and, in most cases, live near a major urban centre. Installation can be tricky depending on your level of technical know-how. Vonage customers have to set up their own systems, while Rogers, Videotron and Shaw send a technician to your house to set it up for you.

To avoid hours of installation frustration, Mark Evans, a senior technology reporter for the National Post, based in Toronto, suggests buying a cordless telephone with multiple handsets: "it gets you around [needing] multiple phone jacks."

There are a number of VOIP providers and packages to choose from these days. Industry veteran Vonage offers a basic unlimited North American package that costs $40 a month plus a $58 activation fee. At any time, you can go online and easily configure a number of special features, including choosing a phone number from multiple area codes, which allows you to register a Toronto area code even if you live in Calgary. This way, all Toronto calls are considered local.

Or, you can opt to send your voicemail to your email and check your messages online. Vonage also offers free calls between Vonage customers, so if you buy a second adapter and send it to a friend in Singapore, your calls are free; it's a service most cable companies do not offer. But, while Vonage offers a number of unique features, Evans warns that the company rates low on customer service and sound quality.

Primus Talkbroadband, one of Evans's top picks, offers an unlimited calling bundle for $29.95 a month, which includes 18 calling features and no activation fees. (The service is not available in Nunavut, the Yukon or the Northwest Territories.) Primus offers similar features as Vonage, but some will cost you. For instance, picking another area code is $4 a month.

New to the VOIP block, Bell has a $40 package for its Ontario customers, called digital voice lite, that offers 1,200 minutes of North American calls. Activation is free for existing Bell customers, while new ones will pay $55. Long-distance charges after the 1,200 minutes cost seven cents a minute, which sounds a lot like your old landline, doesn't it? For nationwide service, Bell digital voice offers unlimited North American calling for $43 a month.

Rogers Internet Phone Service's offerings are also reminiscent of a regular phone service: the first feature is $4 and another $2 for each additional feature. Five features and basic unlimited service costs $31.95 a month, plus an activation fee of $75 fee.

AOL Canada offers an easy to install service, but at $29.95 for the first three months then $39.95 for 1,000 minutes of long distance in North America, it's pricey. And if you want VOIP features such as optional area codes and international use when abroad, it will cost you extra.

The bottom line
At the end of the day, each customer must decide whether having no phone when the power goes out and putting up with static-filled calls is worth the cheap rates of most VOIP services. While they may not be worth giving up your landline for at this time, the free software VOIP services in particular may still be a useful way to cut your long-distance bills when chatting with friends or family, even if you aren't prepared to switch over completely.

Melanie Chambers is a freelance writer based in London, Ontario.