VoIP (Voice over Internet Protocol) technology has been available to Canadians from various providers for well over a decade. The best-known example is Skype, the popular voice and video chat software that lets people to communicate across the world for free. VoIP is challenging the entrenched landline business model, but do most consumers even make that connection?
My parents have had the same landline for almost 30 years. Despite better technology and infrastructure from the provider (Bell), the price for service certainly hasn't gone down. At $30 per month, plus whatever extras Bell tacks on the final bill, the expense seems ridiculous when there are worthy alternatives.
I had talked to them about switching from Bell to Ooma, a VoIP manufacturer and provider that entered the Canadian market in November 2011. Ooma was particularly attractive, because it offered number-porting for a one-time fee of $39.99. My parents could keep their old phone number, then pay a flat monthly rate for long distance calls to over 60 countries and save $40 to $50 per month.
The move wasn't smooth, by any means. My parents' landline account had to be cancelled, and their number ported to Ooma. Ooma handled the intricacies of the process (they were great at keeping my parents abreast of the progress). Because my parents have DSL Internet access with Bell, it took over day to establish a "dry loop" connection after the landline went dead. Part of this was due to the porting, but a lot was due to incompetence on the part Bell customer service.
After all was said and done, a monthly bill that used to amount to over $50 per month was now reduced to just $15.77. Call quality was excellent and callers had no idea a switch had even been made.
This has actually been the message of vendors like, Vonage, Primus and others for several years. But longstanding landline users might not know about the alternatives or may not trust how VoIP technology works. Indeed, a power outage renders a VoIP line useless, but then again, cell phones are good backups for that. And yes, 911 service has to be set up properly to ensure emergency personnel aren't being called in some other jurisdiction.
These are surmountable hurdles, but clearly, the message hasn't quite resonated enough to get consumers to figure it out. It's also hard to understand how people can't make the correlation that what's possible through a program like Skype is also possible through a piece hardware that sits between a network router and an actual phone.
VoiP also offers more flexibility than landline service, because certain units can travel with you (MagicJack, NetTalk Duo); and service extends to smartphone apps,. Home-based or small businesses can benefit greatly from reduced costs without any real tradeoffs. It's also not surprising that larger businesses look to replace traditional copper lines with VoIP-based PBX systems.
Younger consumers might have little need for a landline because their mobile phones do it all. But a a VoIP line for a student living on residence in university could come in handy as a way to keep in touch with friends and family back home. For them, it's a local call, and for the student, the call is free.
I wasn't able to find any empirical data to highlight how many landlines are being replaced by VoIP lines, but what is clear is that there's a considerable price discrepancy. True, Ooma's Telo unit costs $229.99, and you have another $39.99 to port the number over, but you can recoup those costs in just six months. For example, Ooma's Basic service amounts to just $3.78 per month, which is made up of government taxes and fees. The catch is that Basic alone doesn't offer any long distance outside of Canada. Pay $11.99 per month, and you get 1,000 minutes that work with over 60 countries, including the U.S.
The likely long-term trend is that landlines will either evolve into the mobile networks we use today, or that VoIP will be what actually bridges landline and mobile together. For now, though, there is a great chance to save money by making use of the broadband infrastructure in a home.