Time to ditch your land-line phone for VoIP?

"Another nice feature is that for $5 a month, we have a virtual number in another state that allows some of our out-of-town friends and family in Arizona to call us as a local call . . . saving them long-distance charges as well," Mack said. "As for the clarity of the phone, I promise that I could give anyone a land line and the VoIP line and you could not tell the difference."

Such was not always the case. Allen Tsong of Brooklyn tried an earlier version of VoIP and wasn't impressed. Outages and poor phone quality were common. But Tsong said problems have been few since he switched to Vonage in 2002. Now he uses the service both at home and at his Brooklyn wholesale handbag business, Yans NY.

Tsong said he makes lots of calls to Hong Kong and China, so Vonage's low international rates save him money.

The rates "are comparable to prepaid calling cards," Tsong said, but he doesn't have to worry about running out of minutes or buying new cards.

A few challenges

So why isn't everyone rushing to sign up for Internet calling? There are still some barriers and drawbacks, including:

The need for broadband. You need high-speed Internet access to have these services. If you're still on dial-up, the cost for DSL or a cable modem can add $20 to more than $50 a month to your telecommunications bill. If you're a very heavy phone user, you may still save enough to offset the cost, plus you'll get speedy Internet access. If you're an infrequent caller on a tight budget, though, the math may not work.

The possibility of outages. Your service may be only as good as your high-speed connection. If your cable modem or DSL goes on the fritz, you won't be able to make VoIP calls. Also, the services themselves can have problems; Vonage recently experienced a 45-minute outage thanks to a software upgrade that went awry.

Dead jacks. The services typically only work on one or two phone jacks. If you have extensions in other rooms, you may need to buy an adapter or get a new phone -- the kind that has a base station that broadcasts to extra handsets. Also, if you have other things plugged into that line -- like your TiVo, for example, or a home alarm system -- you may need a wireless adapter, or you may need to keep a land line active.

Emergency calls. The independent Internet calling services typically aren't hooked in with city 911 locator systems, so the operator wouldn't be able to see your home address if you make an emergency call and can't talk or get cut off. (This typically isn't a problem with the cable companies' networks, which are tied in with cities' enhanced 911 services.) Some users of independent Internet services keep a land line or use a cell phone with enhanced 911 locator services to deal with the issue.

Louis Holder, Vonage executive vice president, said the company is working on solutions. Right now, Vonage routes 911 calls from registered users to the nearest available emergency facility, and it recently introduced enhanced 911 with address locator capabilities in Rhode Island.

"We're where the phone companies were in the mid-1990s," when 911 locators were far from universal, Holder said.

Liz Pulliam Weston's new book, "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life," is now available. Columns by Weston, the Web's most-read personal-finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

Published April 1, 2007

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