Using Skype to Save on Long Distance

Written by Nickel - 9 Comments

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Several months ago, I put together a list of options for reducing our long distance phone expenses. Since we get crappy cell service at home, we needed to consider other options. In the end, we decided to: (1) switch our landline to a cheaper long distance plan, and (2) add a Skype phone to the mix.

Considering our alternatives

As noted above, our first step was to change our regular long distance service from Sprint to Uni-Tel. This gives use long distance service for $0.025/minute for out-of-state calls and $0.042/minute for in-state calls. There’s not monthly fees or minimums, so that move was a no-brainer.

But could we do better? After listening to reader feedback, it seemed that our best option for saving even more was Skype.

What is Skype?

Simply stated, Skype is software that allows people to communicate over the internet. It supports instant messaging, voice chat, and video chat. On top of that, they offer services known as Skype Out and Skype In. The former lets you place calls over the Skype network to a real phone number, whereas the latter provides you with a phone number for receiving calls over the Skype network.

After poking around a bit, I was impressed with what I saw. Free computer-to-computer calling anywhere in the world, and both the Skype Out and Skype In services were quite cheap.

Settling on Skype

While many Skype users rely on a headset attached to their computer, we didn’t want to be tethered to a computer. Fortunately, there are a number of options out there when it comes to going wireless. For example, you can get a cordless phone that connects to your computer, a cordless phone that plugs straight into your router, or even a wifi-enabled portable phone.

Since we don’t have a desktop computer in the house, we didn’t want to be forced to plug the phone into a computer. Also, while the wifi-enabled phones are undeniably cool, they’ve received somewhat mixed reviews, so we shied away from them. In the end, we settled on the Philip VOIP841.

While this thing is astronomically expensive right now ($399 through 3rd party sellers on Amazon), it’s actually quite affordable when Amazon themselves have it in stock. In fact, we paid around $120 for ours, and I expect to earn that back in terms of “free” long distance in a relatively short period of time. If you’re willing to route the calls through you computer, you can get started for even less.

Our Skype experience thus far

All in all, we’ve been thrilled with our decision. We bought a year’s worth of Skype Out service back in June for around $20 (they were running a 33% off special at the time) and it’s been great. Voice quality is somewhere between that of a cell phone and a “real” landline. Honestly, if we didn’t need a landline for other reasons (e.g., 911 service, our alarm system, etc.) I’d be happy to add Skype In and drop our phone service altogether.

That being said, I have enjoyed having a second outgoing phone line in the house. We have pretty crappy cell coverage at our house, and we sometimes run into situations where more than one person needs the phone at that same time. Given that Skype Out can be used for both local and long distance calls, this is no longer an issue for us. If the regular phone is tied up, we just make a Skype Out call instead.

Published on September 11th, 2008 - 9 Comments
Filed under: Frugality, Online
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About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

Comments (scroll down to add your own):

I haven’t used Skype since about 2004, but at that time conversations were difficult because only one person could be speaking at any given moment- if the other person spoke, it would cut you off and vice versa. It made natural conversation difficult. Has this aspect improved in the current version of Skype?
Comment by MoneyGrubbingLawyer — Sep 11th 2008 @ 1:44 pm
MGL: Yeah, like I said above, it’s just like a regular phone conversation. You can also do conference calls, though I’m not sure how that works with Skype In/Out.

Comment by nickel — Sep 11th 2008 @ 1:47 pm
I have not had landline for about five years. I have been using Skype In/Out for past three years along with my cell phone and before that, just cell phone service. Before disconnecting my landline, I had my landline number ported to my cell phone as I did not want to contact everyone with my new number. I also programmed my cell phone to forward unanswered cell calls to my skypein number so I can use home phone through skypein when I am home, and not have to deal with cell phone which has sketchy reception. Now people can reach me all the time!

As for the equipment, instead of buying expensive Skype-ready phones, I bought a UBS-RJ11 adapter. Basically, the box enables you to hook up your regular phone line into the USB port. With the $20 investment, I was able to use my regular cordless phone to make and receive calls. Between Skypein and phone number, I pay around $50 year for unlimited calling in US for home. Generally the voice quality is excellent and only time I had problems is when I am streaming videos or downloading something and talking on skype at the same time.
Comment by Joe — Sep 11th 2008 @ 3:55 pm
I would recommend VoipBuster. You have at the moment free calls to Australia, Austria, Canada, France, Japan, Spain, Switzerland, United States (+mobile) and more
Comment by MultifolDream$ — Sep 11th 2008 @ 8:41 pm
Skype is the best when you want to talk with mic.
Comment by Tim — Sep 12th 2008 @ 5:53 am
While it won’t work for alarm service, 911 service is still available to phones that don’t have local service. Just leave a standard corded (or I guess cordless, but we use corded so it works when the power goes out) phone plugged into the standard phone jack. Phone companies are required by law to leave enough service to connect a 911 emergency call.
Comment by Matthew — Sep 12th 2008 @ 9:02 am
I have had Skype since Feb, first using an RJ11 adapter/computer, and then using the Philips VOIP841, and am satisfied with the service (not happy, but satisfied). The service is so cheap compared to everything else though that the issues I have now are minor enough to stick with it. However to get to this point, here are the issues I found:

RJ11
The one I got was the Eforcity phone adapter. Really crappy software – the phone connection would stop working every few days, requiring me to unplug the adapter from the computer and plug it back in. Furthermore, whatever chipset they use to determine whether sounds are actually dialpad sounds is too sensitive – my wife and my mother-in-law’s voices are right on the border of that sound recognition, so sometimes when they would say certain things, you would end up hearing a dialpad sound instead. Extremely annoying.

Philips VOIP841
This has been pretty good. Clear connection, fewer mix ups with wife’s voice and dialpad sound. Although occasionally when my wife calls my work number, I hear a clicking sound throughout the conversation. There appears to be very little development with the software on this phone, so this issue will probably not get resolved. What’s more, the software on this phone appears to be the same software that the Linksys and Netgear phones use, so even if I switched to those phones, I’d most likely still have those problems.

Skype Customer Service
Absolutely horrible. You can only contact them via a form on their website – no customer support email address to send issues to, no number to call. What’s more, their response time is really bad, took over two weeks to respond to my question. Furthermore, if the question is something that is not answered in their FAQ, their response is to cut and paste an answer from the FAQ that closely resembles the question, but doesn’t actually answer it. If you want to respond to that answer, guess what? You need to fill out the form on the website again, as any emails to their email response will not be returned, and instead you’ll get an automated reply directing you to the webform. Considering I am paying for Skype, this is pretty bad. Just pray you never have an issue with Skype.

Now the good:
- Cheap service
- clear connection (once you set-up your router to prioritize Skype connections over all other traffic, you are good)
- Unlimited calls to US and Canada

If you can live with the minor issues I listed above, go with Skype.
Comment by Chris — Sep 12th 2008 @ 2:48 pm
Did you consider ooma (ooma.com)? You buy the hardware, plug it in, then plug in your existing phones. You can call anywhere in the US for free. There’s no monthly service fee, and they have cheap international rates as well. We’ve had ours about a month (only had cell phones before then) and it works very well. I went with this instead of Skype due to the annual cost of getting a SkypeIn phone number, in addition to the $2.99/month for unlimited US calling via SkypeOut. Ooma can also be used for E911 calls – in most cases your name and address is sent when dialing 911 using ooma.
Comment by Matt — Sep 13th 2008 @ 12:13 am
@nickel – you can include landlines and mobiles in Skype conference calls just like you would other Skype users; add them to your Skype contact list and add them to the call as normal Likewise, if someone calls your online number, you can add Skype users to the call.

@Chris sorry to hear that you’ve had bad experiences with Customer Support – drop me a line on Skype (peterparkes) and I’ll be able to take a look into any outstanding issues.
Comment by Peter Parkes (Skype Blogger) — Sep 15th 2008 @ 6:26 am

Type of rates
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Up to 1 year
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