Internet phone service is a judgment call

You've probably heard about the benefits of Voice over Internet Protocol (VoIP), the technology that transmits your phone calls over the same Internet lines that carry your e-mail.

Perhaps the biggest plus is cost: Some providers offer unlimited local and long-distance plans for just $25 to $40 a month. Most of the VoIP users we surveyed who lowered their phone bills with the new service did so by at least $20 a month. About a third saved $40 or more. Some said they were paying less even though they were making more long-distance calls.

What's more, most VoIP plans include typical phone features — voice mail, caller ID, call waiting and call forwarding — along with others you can't get with a landline, such as the ability to make local calls using your home number even if you're thousands of miles away. (Since VoIP works off any broadband connection, your "home" phone service can travel with you, provided it's accompanied by the analog telephone adapter that links you — via a modem or router — to the Internet.)

Depending on the provider, you may also be able to have voice messages e-mailed to you as sound files, which you click on to hear.

Of the 201 VoIP users we surveyed (a nationally representative sample, consisting mostly of consumers who had the technology for a year or less), more than half said they were very or completely satisfied with VoIP in light of costs, service and problems.

But while this combination of price, features and performance may sound unbeatable, VoIP does have its drawbacks and may not be suitable for everyone. For example:

• If you don't already have a cable or DSL broadband Internet connection, getting one specifically for VoIP will typically cancel out the monthly savings.

• Your VoIP phone won't work if you lose power or Internet access. You can buy a battery (for about $45) that provides four to six hours of talk time if the electricity goes out, but there's no way you can restore phone service if your cable or DSL broadband access is disrupted.

For that reason and more (e.g., your location might not be reported automatically to a 911 operator), VoIP isn't yet a reliable replacement for land-line emergency service.

• Because VoIP is Internet-based, it's potentially vulnerable to viruses, hackers and denial of service.

• VoIP may not work as well as traditional service with TiVo and satellite TV, which use phone lines for program-guide updates and other functions.

• In theory, you could run into problems using your broadband connection for both a phone and a computer. Internet access could slow or voice quality on calls could degrade if you're on the phone while someone uses the computer for bandwidth-intensive applications such as gaming, uploading photos or downloading video.

Then there's the service's uncertain regulatory future. One reason VoIP costs so much less than standard phone service is that it's not subject to all the taxes, surcharges and other fees that jack up your landline and cell-phone bills. The Federal Communications Commission and Congress may change that.

If you can deal with the technology's current and potential problems — and already have a broadband connection — VoIP may save you money on your local and long-distance calling.

2006, Consumers Union