Save with VoIP and naked DSL

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

01 .VoIP

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.

 
 

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Sample VoIP only plans

 

Light phone usage plans
Provider Plan Name Total Cost ($) Excl Data Two Min Local Call Costs Contract Term months Calls incl. in plan ($) MinMonthly Charge Total Contract Cost Local Rates InterCaptialRates NationalRates Mobile Rates(per minute) Local Number
( area prefix)
Voicemail
PennyTel Free Access Untimed Plan 11.9 8c 1 0 0 0 8c Untimed 8c Untimed 8c Untimed 10.5c 5
GOtalk goVoIP Aussie pack 14.95 - - 0 14.95 14.95 Untimed Untimed Untimed Untimed
PennyTel Talk Till You Drop Plan 16.9 8c 1 0 5 0 8c Untimed 8c Untimed 8c Untimed 10.5c 5
PennyTel Untimed Plan 16.9 8c 1 0 5 0 8c Untimed 8c Untimed 8c Untimed 10.5c 5
Exetel Residential and Small Business Plan 20.2 10c 1 0 0 0 10c Untimed 10c Untimed 10c Untimed 22c
GOtalk goVoIP value pack 20.31 14.9c - 5 4.95 4.95 14.9c Untimed Untimed 14.9c Untimed 24.9c Untimed
FoneBox Standard Call Rates 23.2 10c - 0 0 29.95 10c Untimed 10c Untimed 10c Untimed 27c 4.9
TPG Internet Softphone VoIP Plan 23.8 10c 1 0 0 0 10c Untimed 10c Untimed 10c Untimed 28c
 

* Information provided by phonechoice.com.au
Call details Local Calls: 60 calls for 300 minutes and 0 seconds; Long Distance Calls: 10 calls for 120 minutes and 0 seconds;' Mobile Calls: 20 calls for 60 minutes and 0 seconds.

  Average phone usage plans (with more mobile calls made)
Provider Plan Name Total Cost ($) Excl Data Two Min Local Call costs Contract Termmonths Calls incl. inplan ($) Min MonthlyCharge Total ContractCost Local Rates InterCaptial Rates National Rates Mobile Rates(per minute) Local Number(area prefix) Voice Mail
GOtalk goVoIP Aussie pack 14.95 - - 0 14.95 14.95 Untimed Untimed Untimed Untimed
PennyTel Free Access Untimed Plan 18.2 8c 1 0 0 0 8c Untimed 8c Untimed 8c Untimed 10.5c 5.00
PennyTel Talk Till You Drop Plan 23.2 8c 1 0 5 0 8c Untimed 8c Untimed 8c Untimed 10.5c 5.00
PennyTel Untimed Plan 23.2 8c 1 0 5 0 8c Untimed 8c Untimed 8c Untimed 10.5c 5.00
GOtalk goVoIP Aussie pack with world pack upgrade 24.9 - - 0 24.9 24.9 =- Untimed Untimed Untimed Untimed
GOtalk goVoIP value pack 25.29 14.9c - 5 4.95 4.95 14.9c Untimed Untimed 14.9c Untimed 24.9c Untimed
 

* Information provided by phonechoice.com.auCall
Call details Local Calls: 60 calls for 300 minutes and 0 seconds; Long Distance Calls: 10 calls for 120 minutes and 0 seconds; Mobile Calls: 40 calls for 120 minutes and 0 seconds.

Sample naked DSL plans plus VoIP

  iiNet
Usage Plans Down/Up Speed Peak/ Monthly Cost
Low Naked Home 1 ADSL2+ (20Mbps/802Kbps) 2GB + 2GB 49.95
Low Naked Home 2 ADSL2+ (20Mbps/802Kbps) 8GB + 8GB 59.95
Med Naked Home 3 ADSL2+ (20Mbps/802Kbps) 15GB + 20GB 69.95
Med Naked Home 4 ADSL2+ (20Mbps/802Kbps) 30GB + 30GB 79.95
High Naked Home 5 ADSL2+ (20Mbps/802Kbps) 40GB + 60GB 89.95
High Naked Home 6 ADSL2+ (20Mbps/802Kbps) 65GB + 65GB 119.95
 

  • Naked DSL plans have flat rate monthly fees. If you do reach your limit, your down/up broadband speed will be slowed to 64k/128k for the rest of your billing month. On Naked DSL, both uploads and downloads are counted towards your monthly quota.
  • iiNet’s peak period for downloads is 12 noon to 2am and the off-peak period is 2am to 12 noon.
  • Setup fee is $150 for no term contract $80 for a 24 month contract.

  Internode
Usage Plans Down/Up Speed Peak/ Monthly Cost
Low Home-Naked-1 ADSL2+ (20Mbps/802Kbps) 1GB 49.95
Low Home-Naked-5 ADSL2+ (20Mbps/802Kbps) 5GB 59.95
Med Home-Naked-10 ADSL2+ (20Mbps/802Kbps) 10GB 64.95
Med Home-Naked-25 ADSL2+ (20Mbps/802Kbps) 25GB 74.95
High Home-Naked-40 ADSL2+ (20Mbps/802Kbps) 40GB 89.95
High Home-Naked-55 ADSL2+ (20Mbps/802Kbps) 55GB 104.95
High Home-Naked-80 ADSL2+ (20Mbps/802Kbps) 80GB 134.95
High Home-Naked-100 ADSL2+ (20Mbps/802Kbps) 100GB 164.95
 

Free uploads, only charge you for downloads.
* Source iiNet and Internode websites December 2008 

03.Dictionary and costs

 

Dictionary

  • Asymmetric Digital Subscriber Line (ADSL) is a form of communications technology that allows fast data transmissions over copper telephone lines. The data performance speeds are faster for downloads to the user compared to the uploading of data. ADSL2 and ADSL2+ provide faster data rates.
  • Plain Old Telephone System (POTS) or Public Switched Telephone Network (PSTN) describes the traditional method of telephony with voice traveling along copper wire without any digital conversion.
  • Analog telephone adapter (ATA) a device that is plugged into a router equipped computer network that allows a standard home phone to make VoIP calls.
    Softphones only require a PC with an Internet connection and VoIP software, a microphone and a set of speakers. Services such as Skype or MSN Messenger are examples of softphones.
  • IP phones plug directly into your router equipped computer network and can be thought of as a phone with an ATA built-in. Like ATAs, IP Phones do not require a PC to be on.
  • Digital Subscriber Line Access Multiplexer (DSLAM) a network device, usually installed at the local telephone exchange that allows telephone lines to make faster connections to the internet and achieve up to ADSL2+ speeds.

How much for Naked DSL and VoIP?

Opting for Naked DSL can save you around $30 a month straight up. However, aside from your broadband connection, you may also have ongoing charges with a VoIP provider, ranging from a standard cost per call to a cost plan similar in nature to a Mobile plan with a set value per month.

Also keep in mind that VoIP calls take up data so it is important to have enough capacity in your internet plan to accommodate your phone calls as well as your general web downloads. Talking non-stop for one minute over the internet takes up about 180 to 600 KB. Fast connection speeds for VoIP are not particularly crucial; with anything faster than a 512 (download)/128 (upload) Kbps connection enough for satisfactory performance. Any lower and the quality may drop, particularly when surfing the web or downloading large files while making a call.

Companies such as Telstra and Optus often advertise a compelling bundled deal for landline, mobile phone, and broadband to attract new customers and discourage existing customers from looking elsewhere. Often this practice is very successful as the effort needed to break any of these chains is too much to offset the savings to be made by using VOIP with another ISP.

DIY VoIP

If you’re not sure if you want to make the VoIP commitment or give up your landline, software based options such as Skype or MS Messenger allow you to try VoIP without any major investment, though they can be limited in their abilities.

Skype is currently the most popular VoIP service. As well as talking directly from one computer user to another, you can also call landline or mobile phones at cheap, per minute rates. Skype is free to download and there’s no setup or subscription fee. While most Skype calls are made from a computer using a Skype application, a dual mode phone with Skype support gives you a normal landline connection plus VoIP on a single handset. The major advantage with a dual mode phone is that the handset is not physically connected to the computer.

While Skype to Skype calls are free, additional Skype features such as SkypeIn and SkypeOut where people can contact you on an eight digit number with an area code, costs money. But the savings can add up.

MS Windows Live Messenger is a popular online chat application that comes with every copy of Windows XP and Vista. You can also download it for free from www.microsoft.com.au. Once you register, you can use your email address as a voice contact. However, the number of users operating live messenger as a voice calling solution are unknown, and there is little use getting a MS Live Messenger phone if all your friends overseas use Skype.

Counting the cost

Although both Telstra and Optus offer a range of landline plans, the Telstra Homeline Plus and Optus Home Comfort Classic, with a monthly rental of $29.95, could be seen as an average phone use plan.

By way of comparison, looking at just the call cost, with line rental plus calls you could expect to get a bill of around $120 using Telstra or $127 using Optus based on usage shown in the VoIP-only plans for an average user. If you removed the mobile calls from the equation, you will still pay around $60 to $66 using either Telstra or Optus for making just 60 local and 10 long distance calls every month. See theTables.

A naked DSL plan such as iiNet includes free local and national calls and discounted international and mobile calls. The monthly cost for using the phone feature and making the same amount and types calls as our average phone user is around $34.80, a saving of $85 compared to the Telstra scenario above. This doesn’t include the cost of the broadband plan, but if you also add a broadband plan to the Telstra scenario for comparison, the savings are comparable.

Internode has a different price structure for its NodePhone2-Special service available to all NakedDSL users. A charge of 29 cents per minute with no connection fee applies for mobile phone calls, however a flat rate of 18 cents is also charged for a call made to any landline, whether it is a local or an STD call. To further confuse the matter, a $10 monthly credit is also included. This means our ‘average’ user would end up paying $37.40 per month when using Internode, a saving of $80 a month compared to Telstra or Optus.

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.