Alternatives to a Landline: VoIP Roundup - MagicJack, Ooma, VOIPo

This article assumes you are ready to make the plunge into VoIP as a cost-effective alternative to residential telephone service. Not sure what VoIP is? Here is a good article (voipreview.org) that sums up general questions.

I am rounding up 3 residential VoIP options for U.S. residents out of my own research. There are certainly many other options, but these were the most prominent or well-regarded options I found. As long as you have reliable Internet service, any of the options below will work for you. Call quality is generally comparable as it is the quality of your Internet connection that determines call quality with VoIP.

Unlimited local and long-distance calling anywhere in North America for $19.95/year. Magicjack is a USB device with a built-in phone jack compatible with any phone or headset. It requires a personal computer or laptop that must always be powered on, meaning you should factor in utility costs (average $5-6 per month in electricity bills if you leave a PC running 24/7 for an entire year). You can opt for the MagicJack Plus which costs $30 more but does not require an actively running PC, so it pays itself off in utility bills in just 6 months compared to the standard MagicJack.

Initial (equipment) cost: $40 for MagicJack; $70 for MagicJack Plus
Annual or monthly rates: $19.95/yr (unlimited calling in US, Canada, Puerto Rico and US Virgin Islands)
Number porting fee: $19.95 one-time fee, then $9.95/yr fee for having landline or mobile number ported to MagicJack

The heavily advertised $19.95/yr rate for unlimited calls across US/Canada is appealing, but as the adage goes, you get what you pay for. There are lots of online forums deriding MagicJack for its poor customer service. There is no published customer support phone number on their website; you are directed to go through the online chat.

One benefit of Magicjack is, as a USB tethered device, you can easily take it with you on the road to hotels, airports, and business trips. As long as you have a wired connection to the Internet, your phone service is always running. The portability and convenience may be worth the negatives in needing a powered computer and poor customer service.

Website:
http://www.magicjack.com

Detailed reviews:
http://online.wsj.com/article/SB10001424052748703444804575071582715212268.html
http://www.timeatlas.com/reviews/reviews/magicjack_phone_not_quite_ready
http://the-gadgeteer.com/2011/07/22/magicjack-plus-review/
http://www.financefoodie.com/2012/06/magic-jack-plus-it-really-is-magic.html

Ooma has received a strong backing from Consumer Reports, which as of May 2011 rated it the #1 VoIP solution). Costco sells the Ooma for $150, but retailers like Office Max and Sears have been selling the Ooma for as low as $110.

Initial (equipment) cost: $200 retail ($150 at Costco, but has been on sale for as low as $110)
Annual or monthly rate: varies by taxes (generally $4-6/mo), Ooma Premium is $9.95/mo in addition to monthly taxes (unlimited calling in US only)
Number porting fee: $40 (waived if you pre-pay one year of Premium service)

Ooma's monthly fees are only in taxes. You can specify your zip code here to find the exact monthly rate you will pay.

There are two tiers of service - Standard (Telo) and Premier. Ooma Telo should suffice for most individuals, as the Premium tier includes a slew of advanced features that most callers never use. You can review the Ooma Telo (Standard) and Premier features. There are two features lacking in the Standard tier that I think are inexcusable, however - Caller ID Names and Blacklist numbers.

Ooma's customer service is based in the Philippines.

For international callers, Ooma offers a standard per minute rate (which can be outrageously high) or a monthly 1000-minute package for $11.95 (2 cents a minute). See Ooma's International Rates here.

Website:
http://www.ooma.com

Detailed reviews:
http://www.epinions.com/review/Telo_Free_Home_Phone_Service/content_554967273092?sb=1

This is the VOIP provider I currently subscribe to, so I have thorough experiences on which to base my review. VOIPo is owned by Host Gator, so there's the added confidence of a reputable company behind its business model compared to Ooma. I have used VOIPo for 13 months, and I have appreciated its prompt customer service and no junk fees.


Initial (equipment) cost: none, but factored into prepaid 2-year service
Annual or monthly rate: $185 for 24 months ($7.12/mo)
Number porting fee: $0

There is just one tier of service, which I appreciate. Review VOIPo's feature set here.

VOIPo's customer service is based in Southern California, so it's US-based.

For international callers, VOIPo offers 60 minutes of free international calls to "eligible" countries on any package. The standard per minute rate after that is better than the other VOIP providers. For international-heavy callers, you can buy the optional monthly 1200-minute add-on for $7.95 (less than a cent per minute). In terms of international calling packages, VOIPo has the best rate I could find. See VOIPo's International Rates here.

You can try VOIPo completely free for the first 30 days (no junk return fees), and if you use coupon code 6082747460 you will get a free month of service should you agree to keep your subscription.

Website:
http://www.voipo.com

Detailed reviews:
http://www.whichvoip.com/voip/user_reviews/voipo-voip-review.php?page=all&mode=

I excluded Vonage from consideration because their overall prices have been inching closer to telecom prices and many of my peers have jumped off of the Vonage bandwagon for several years and have never looked back. I only did preliminary research of Vonage and was convinced their international calling rates were too high to warrant my consideration.

For international callers, the Vonage World Plan is the best option, but it is only a $15.99/mo introductory rate for the first 6 months (no taxes or fees), after that it is $25.99/mo. Given the more cost effective options in Ooma and VOIPo, Vonage isn't really a good deal.

Closing Thoughts - Ooma for US Callers, VOIPo for International

Ooma and VOIPo are the two options I would strongly suggest you look into. The bottom line - if you are strictly intending to make unlimited calls within the US, then Ooma is the more cost-effective option after 24 months. The initial equipment cost will pay itself off in under 2 years, and from there you will literally only be paying for monthly taxes (which as of writing should be under $4/mo in most areas of the US) to continue unlimited service. There have been concerns with Ooma's business model and whether they can sustain themselves in the intense VoIP market but they seem to be proving this over the last few years.


If you are heavy on international calls, VOIPo offers a more generous international calling package (200 more minutes than Ooma for $4 less/mo. VOIPo requires less in up-front cost (no equipment fee) and includes free number porting. VOIPo also provides free unlimited calling to US/Canada, wheras Ooma only covers calls within the US. I like that VOIPo does not push for tiered service plans so most of the features you would possibly want are included, with no obvious omissions such as Caller ID names and blacklists.


I found VOIPo combines an impressive feature set, very responsive customer service, and a more valued international calling package that it was the better choice for me.

Please share your experiences with any of these (or other) VOIP solutions.

Notable but not mentioned: Nettalk Duo, PhonePower, skype (softphone) and GizmoProject (softphone)