Save with VoIP and naked DSL

Can using VoIP with Naked DSL cut your phone bill in half?
Learn more
  • Updated:21 Jan 2009


Girl talking on phone

In brief

  • Internet Service Providers (ISPs) are now offering VoIP as part of an overall package with internet access as well as calls to landline and mobile phones.
  • Some ISPs also provide the added saving of free phone calls without paying for landline rental, called Naked DSL.

Please note: this information was current as of January 2009 but is still a useful guide to today's market.

How VoIP works

VoIP stands for Voice over Internet Protocol and uses an Internet connection to make and receive telephone calls. VoIP systems carry voice as digital packets of data, typically reduced in data rate through the use of speech compression techniques to optimise bandwidth. While a standard phone handset can be used to make VoIP phone calls, a special piece of equipment needs to sit between the phone and your connection to the internet.

In fact, you may be using a form of VoIP right now without knowing it — Telstra and Optus have been utilising this technology for several years internally, using the technology to deal with voice calls as just another stream of data. Often the only time a call will travel the traditional POTS route is from the handset to the local telephone exchange and again from the exchange closest to the receivers’ phone. Also, if you have bought a discount telephone card at the local store to make an overseas call, you have been using VoIP. Companies purchase data blocks from ISPs and use this capacity to carry voice calls as data at a much cheaper rate.

However, you can now take advantage of this at home using specialised VoIP hardware that allows you to send and receive calls with your internet connection through your ISP. See our VoIP modem routers test.

Naked DSL VoIP without a landline

Broadband connections based on an Asymmetric Digital Subscriber Line (ADSL) are the most commonly used in Australia. This system operates by allocating the frequencies not used for voice communication on the copper for broadband data transfers. A splitter or filter allows a single line to operate both as a POTS telephone as well as a broadband line. Therefore as part of the ADSL service, a telephone line service is supplied and has to be paid for by the user.

A Naked DSL service removes the switch function from the telephone line and removes the dial tone; and in the process also removes the requirement to pay for a line rental. The Naked DSL customer can use VoIP and an existing analog phone and have a phone number to make and receive calls like a normal landline phone. However the telephone conversation on a Naked DSL line is completely digital as it is delivered as a VoIP call, with packets of data sent back and forth representing a phone conversation.

In addition to the savings of using VoIP, going over to Naked DSL could save you around $30 per month if you use ADSL to connect to the Internet and cancel your home telephone connection.

While Cable and wireless broadband users have been able to abandon their landline and make cheap VoIP calls for some time this portion of the overall broadband market is small compared to ADSL.

ADSL users have only recently been able to adopt VoIP services without the need to pay an additional rental for a PSTN landline phone and there are a few issues to consider before you switch off your landline for good.

  • Not every ISP offers Naked DSL. In technical terms, this is because Naked DSL can only be offered by ISPs who install their own DSLAMs in Telstra or Optus exchanges. This upgrading of the local telephone exchange effectively increases the capabilities of the exchange to deliver higher speeds to the surrounding homes. So before you commit, make sure your ISP can deliver what you want at your address. Another issue to consider before you pull the plug on your home phone is to ensure that your phone service isn’t needed in other areas of your house.
  • If you own a fax machine, using Naked DSL could be a challenge as the fax relies on a dial tone to work. While solutions do exist to make a fax machine work on a Naked DSL setup, it can be complex and may be easier to keep the line just for the fax. Also, if a subscription TV service such as Foxtel or Optusvision is part of your home entertainment equation, Naked DSL might not be the solution you need as a phone line with a dial tone may be required to send information for updates and subscription purchases for ‘pay per view’ broadcasts.
  • Some critics of Naked DSL have put forward the argument for not having Naked DSL based on concerns for safety with regards to support for emergency services. However an emergency call can always be made (either 112 or 000), with a mobile phone – even if it's without a SIM card.

VoIP while keeping the landline

While only a limited number of ISPs offer a Naked DSL service, most can incorporate VoIP as part of a broadband package. Although this means you still need to pay for line rental, the benefits include a wider range of ISPs to choose from and fewer compromises when your connection is not working.

Most ISPs are able to confirm whether your address is ADSL supported by providing either your postcode or address on their website. Once you confirm that you can get ADSL, the process should be fairly easy to get up and running. The installation procedure can vary depending on whether an existing modem is used or whether a ‘plug and play’ modem router is supplied by the ISP.

Some users with little knowledge of how modem routers work may become confused over the numerous settings required to set up an ADSL and VoIP connection. While ISPs often provide simple setup procedures and supply a modem that is virtually plug and play, the price to pay for this ease of use can be a longer term contract or an additional setup fee.

A potential issue with the exclusive use of VoIP is the problems that can arise if the internet connection fails. However many new VoIP modems include a PSTN failover port which allows the handset connected to the VoIP modem to continue to operate and take calls on the normal landline if internet access is not available.

A power failure, though, will almost certainly render your internet modem and VoIP device inoperable. This is also true of a cordless phone so it might be a good idea to keep a corded phone in the cupboard for emergencies or use your mobile phone.

If you want to combine the cost savings of VoIP with the security of a landline, look at the cheapest line rental plans available. Distribute the POTS landline number as your phone number and receive calls on it while using the VoIP line to make calls.

Did you know?

VoIP services that receive a call from the Public Switched Telephone Network (PSTN) need a real telephone number to enable calls to be routed correctly.

However, some VoIP users have phone numbers that give no information of their geographic position as the number is based on an IP address rather than a fixed address. For example, you may live in Sydney and move to Melbourne whilst keeping your Sydney phone number. This might be handy if most of the people you talk to live in Sydney and can call you for the cost of a local call. However the downside is that it can be difficult to determine where the call originates from in case of an emergency.

There have been examples of VoIP calls made where emergency services were sent to a completely different city due to the VoIP number used. The Australian Communications and Media Authority has raised these concerns and have proposed amendments to the telecommunications determination for VoIP providers to only release geographically accurate phone numbers or provide for an a incoming call to be flagged as a VoIP number so the caller will be asked for their location. The 0550 number range is used where the telephone service is not fixed to a particular location, such as a fully nomadic IP-based service.



Sign up to our free

Receive FREE email updates of our latest tests, consumer news and CHOICE marketing promotions.