7 ways to get cheap calls

By BusinessWeek

If you wanted to call a friend back in the oldest days of the telecom business, you had one option: You made a call over the line AT&T wired into your house, using the phone that you rented from Ma Bell.

How times have changed. Today, choices abound. In addition to standard wire-line service, consumers can make calls wirelessly, over cable networks, or DSL broadband lines.

And prices are plummeting. On May 17, CVC, a relatively new entrant into the telephone business, announced it would offer international calls to any country in the world for 4 cents a minute. Skype, which lets users make phone calls over the Internet with their computers, announced on May 15 that calls to standard phones in the U.S. and Canada would be free, instead of the 2 cents a minute it previously charged (see BW Online, 5/16/06, "Skype Goes for Broke").

The change is profound. Almost any company can get into the telecom business these days, a far cry from the days of Ma Bell's monopoly. The result is a free-for-all. Talk is getting cheaper or even free. And the extra bells and whistles are getting too numerous to count.

"With all the alternatives around, everyone including the established telecom companies have had to drop prices because of the competitive pressure," says Jan Dawson, a telecom analyst with Ovum RHK.

So what choices do you have if you want to make a call on the cheap? Here at BusinessWeek Online we've put together seven ways to reach out and touch someone without reaching too deep into your wallet:

Bargain-basement Internet phone calls

It doesn't get much cheaper than Skype. Under the company's new plan, all outbound calls to the U.S. and Canada are free of charge, whether it's to a regular landline, a cell phone, or another Skype user. For a fee of about $40 a year, the Skype service also lets you have your own phone number that anyone can dial into.

Services like Skype are not for everyone, however. Typical users communicate sitting in front of a computer with a headset and microphone, or with a USB handset that plugs into your computer (although it looks like a typical phone, you might not hear a dial tone, and it won't plug into a normal phone jack). Headsets on the Skype site retail for about $85, and the USB phone for $37. Skype also offers a videoconferencing feature, and sells Webcams for video calls for about $35.

Wi-Fi phones

These nifty handsets look just like cell phones. But rather than connecting through the network of a wireless provider like Verizon or T-Mobile, these phones tap into any Wi-Fi wireless hotspot. They route calls through a VOIP (Voice Over Internet Protocol) provider like Skype or Vonage, meaning you can use them on the go with an existing VOIP account.

It's still early days for these models, and there are nowhere near enough free wireless hotspots to make the Wi-Fi sets as dependable as a cell phone. You need to pay for a Wi-Fi service, like the $30-a-month plan from T-Mobile and Starbucks, to really be able to use your phone out and about. While the phones retail for as much as $250, and the service is dependent on reasonable Wi-Fi coverage, it could make a nice extension for a VOIP subscriber in the near future.

Instant-messenger click-to-call

An even simpler way to make phone calls is with an instant-message service like Google Talk or AOL Instant Messenger. As with Skype, you'll need a microphone or headset that plugs into a computer, and most of the services only work with other users of the software who happen to be online.

AOL recently made it possible to receive incoming calls from regular phones for free. But for quick chats with your friends, the voice feature on these IM programs is free and easy, and probably already installed on your computer and ready to use.

Continued: 4 more money-saving ideals

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