Occam's Razor

The landline’s days appear to be numbered. Ten percent of landlines are disconnected every year. Many people see no reason to pay for a landline when they are also paying for a cell phone. It’s an easy expense to get rid of, particularly in tough economic times.

Yet landlines do have certain advantages:

• Cell phone coverage is still spotty in places
• Cell phone voice quality also tends to be poor and, depending on your provider, you may suffer from abrupt disconnects
• Cell phones require regular recharging, which renders them less useful
• Traditionally, landlines were on a completely separate system. Your power might go off but because Ma Bell’s system worked on low voltage DC power you could at least call the power company to complain.
• The landline had the virtue of being extremely reliable. In those days before Ma Bell was broken up, you may have paid too much for a phone but service problems were virtually nonexistent.
• Phones manufactured by Ma Bell were almost indestructible. They lasted forever.
• The freedom to be anywhere in your house and not carry a cell phone
• One consistent household phone number. We have had the same phone number since 1993.
• No per minute charges for local calls

What I call “land landlines” are getting hard to find. These are old twisted pair phone lines that come from an actual telephone wire from your local Bell spinoff into your house. Broadband Internet has transformed landlines. If you get your Internet from a Bell spinoff like Verizon, your landline is just a feature of your FiOS service. It occupies some tiny part of the spectrum on your fiber optic channel.

When we signed up for high speed Internet from Cox Communications, our cable provider, back in 1999, we were something of Internet pioneers. For the first few years, high speed Internet suffered from severe quality of service problems. We once spent a whole week without Internet until their overloaded staff finally got around to fixing our service. It took us years before we became confident enough to bundle our landline into our cable service. When we canceled our service with Verizon, our landline essentially morphed into a proprietary VOIP (voice over internet protocol) phone controlled by Cox. The only real difference was it was less reliable than our old service. Our cable modem has a battery backup but as we discovered, if your broadband is down your landline is also down. Which meant that you needed a cell phone as backup telephone service.

We weren’t really paying anything less for our landline with Cox than we were with Verizon. The only real savings came from $10 or so that we saved by bundling TV, Internet and phone into one service. We rarely dial long distance, but long distance was always extra. Cox’s long distance rates were a bit excessive, as much as 15 cents a minute without a package. With minimal long distance, adding in communications taxes we still paid between $25 and $35 a month for our landline.

The price grated on me. While I usually have my cell phone tethered to my belt, it’s not always there. Moreover, since I use Virgin Mobile, signal strength was somewhat problematical. Still, I had been scouring the market for years for a cheaper alternative. Skype is great, if you have ever tried it. Internet-to-Internet phone calls were free, but were really you with a headset on. Skype’s video feature is awesome; I have used it to chat with siblings and old friends in real-time. However, to reach someone with Skype on a landline or cell phone you had to buy minutes. In addition, lacking a Skype appliance, to get and receive calls you had to leave your computer on as well. This meant when someone called you on Skype, you have to dash to your computer and don your headset. MagicJack looked like an ideal solution, but it was not very reliable.

To work, the ideal landline VOIP solution needed the following attributes:

• High reliability, just like the old Ma Bell network if possible
• Be able connect to my existing twisted pair phone system
• Offer good or great call quality
• Be dirt cheap, with few or no local or long distance charges
• Work as an appliance, so I did not need my computer to be on

Since I got broadband, I did not understand why I should have to pay anything for long distance, since I don’t pay extra to get data from servers in Alaska compared to Herndon, Virginia where I live. So when Consumer Reports recommended Ooma as a good VOIP solution, it was only a few days before I shelled out $249.99 to purchase the device. Within a week it arrived on my doorstep.

Ooma met all my criteria. Consumer Reports said it was very reliable. It would work with my existing twisted pair phone network so I could just plug it in to a telephone jack. Voice quality was at least as good as a regular telephone, but could be improved if HD phones were used. Perhaps most importantly for a cheapskate like me, all long distance and local phone calls were essentially free. No monthly service fees, forever! No extra charges for long distance, at least within the United States. Ooma goes the last mile by working with local telephone exchanges. It can reach all landlines and cell phones. International calls were extra, but were dirt cheap (about a penny per minute). Since I don’t call internationally, it’s not an issue, but if it were I’d be unlikely to get a better rate.

Essentially, after buying the Ooma appliance, I had free local and long distance. The only recurring fee was for communications taxes, in my case $3.50 a month. So that’s $3.50 a month compared with $25 to $35 a month I am spending now was quite a bargain. Ooma’s purchase price would pay for itself in about a year and afterwards the saving would just keep piling up. (However, there may be termination fees if you cancel your landline, and if you bundle service you’re your Internet provider, that savings may go away as well.) Moreover, I did not need to leave my computer on. Instead, I use the Ooma Telo, an Internet appliance that usually sits between your broadband modem and your Internet router.  Its voice compression algorithms allow it low bandwidth utilization while maintaining high reliability and excellent voice quality.

Ooma must still pay fees to telephone companies to connect your call to a local exchange. How do they stay in business if they don’t charge you a fee? There probably is some profit from selling you their Ooma device, and I am sure that helps. Second, the phone can only be used for residential use, not business use, which means you do not tax its network that much. Third, they sell extras. They like to push their premier plan for $9.99 a month, which offers features like call blocking and call forwarding. (It comes bundled free for the first two months.) And they must make a bit of money from number porting. I also spent $39.99 to port my phone number to Ooma.

In truth, my actual cost is more than $249.99 plus the $39.99 to port my number. It turned out that our cable modem and router are located in our loft, where we don’t have a telephone jack and it would be inconvenient to move our computers elsewhere. Unless all your phones are wireless, a telephone jack is needed, which ours are not. The Ooma Telo requires a wired connection to your high speed Internet. For me the cheapest solution was to install a telephone jack in our loft. This meant fishing telephone cable, something I could have done myself but found it easier and faster to hire someone to do it. Once more, I used the power of Craigslist to find someone to do the work. I paid $85, including $5 for the cable the installer provided. So my total investment is about $375, which means it will take me about a year to recoup my investment.

My number port happens tomorrow, but we have already tested our Ooma with a temporary phone number. After a few small installation hiccups it is working reliably. (We did notice a little voice echoing and initially some clicking on the line.) $35 landline phone bills and paying for long distance will soon become a memory. What will not, at least for now, will be the convenience of a landline, which Ooma has smartly reincarnated for the 21^st century. Ooma has arguably transformed the landline and this customer is happy to pocket the savings.

My next task is to lower the cost of my Internet and cable. Let’s see how low Cox and Verizon are willing to go for my business. I am confident there are more savings to be had there as well.

http://c.brightcove.com/services/viewer/federated_f9?isVid=1&isUI=1