Cut phone costs with Skype

Saving money with internet telephony with Skype.
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  • Updated:3 Apr 2007

01 .Cut phone costs with skype

Using Skype

Long-distance phone calls can keep you in touch with far flung friends and loved ones, but you don’t want to have to mortgage your house to pay for them. Enter Skype, a cost-cutting way to make phone calls over the internet.

Skype software uses Voice over Internet Protocol (VoIP) to help you make free calls to another Skype user, almost anywhere in the world, using your internet connection.

As well as talking directly PC-to-PC, you can also call non-Skype users on their landline or mobile phone at cheap, per minute rates. Skype is free to download and there’s no setup or subscription fee. It’s also free from annoying advertising banners and pop-ups.

Although just one of many VoIP providers, Skype has more than 100 million accounts worldwide and was named Best Buy in tests by our sister publication in the UK, Computing Which?

You can use Skype to chat with a person or group of people in a similar way to using an instant messaging program. The software lets you add people to your personal contact list and you can see when they’re online, offline or busy. You can organise your contacts in groups, such as friends, family or work. If you share a group, everybody in the group can see when a new person joins.

Security is a big concern for many internet users so Skype encrypts all calls, chats and file transfers to keep them private.

Please note: this information was current as of April 2007 but is still a useful guide to today's market.

What you can do

Once you have an internet connection and the Skype software, here’s what you can do for free with other Skype users:

  • Voice calls
  • Video calls
  • One-to-one and group chats
  • Conference calls
  • Send files and photos
  • Forward calls to other users.


Skype isn't a replacement for your ordinary telephone and can't be used for emergency calls or in a power outage.


Other features

Some other Skype features come with a price, but it can still be cheap compared to landline and mobile costs.

  • SkypeIn gives you a number that your friends can call from any phone. You answer the call on your Skype system, see What you need.
  • SkypeOut lets you call from Skype to landlines and mobile phones.
  • Skype Voicemail takes messages for you when you’re offline or busy.
  • Skype SMS lets you send SMS messages to mobile phones.




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To start using Skype you need at least a speaker and microphone on your PC, but preferably a telephony-style headset with built in microphone.

For greater convenience and sound quality, rather than have to use your PC and a headset for Skype, you can buy a dedicated Skype-compatible handset that looks and works just like a standard phone. You can even buy a dual purpose handset that works like a standard telephone as well as a Skype phone.

Before you download and set up Skype you also need to make sure you have the following:

  • A computer running Windows XP or Mac OS X 10.3.9 or later. Skype will also run on some Linux distributions.
  • Speakers and a microphone (they can be either built-in or separate).
  • A webcam (if you want to make video calls).
  • A broadband internet connection is highly recommended.
  • Skype names to add to your contact list.
  • Skype software.

How to start

Go to Skype’s main page at and click Download in the menu at the top of the page. The site will detect whether you’re on a Mac or PC and take you to the appropriate download page.

  • Click the Download now button, and once again on the next page.
  • Save the installation application SkypeSetup.exe to your hard drive.
  • Open the saved setup file and double click it to install Skype. The program will install the Google Toolbar by default if you don’t have it, so untick the option unless you’d like the extra software.
  • You can also chose not install an Internet Explorer add-on and Mozilla Firefox extension that lets you call phone numbers listed on web pages. When you’ve finished, click Start Skype.
  • The setup wizard takes you through the steps to set up a new user account, including choosing a unique Skype name and password and entering some personal information. If your chosen Skype name is already in use, you’ll see a list of alternatives — pick one or try another name and click Sign In.
  • Once this process is complete you’ll see a Getting Started guide, which steps you through checking that your sound works, letting you make a test call to check your microphone and speakers.
  • Before you can call other users, you need to add them to your contact list.
    Go to Contacts and click Add a Contact.
    Type your contact’s Skype name, full name or the email address then click Find. Skype will locate your contact or present a list of possibilities to choose from.
    Select the contact then click Add Skype contact.
  • Once you add a contact to your list, you can make a voice call by clicking the contact name, then the green Call button (which looks like a telephone handset). When your friend answers, just start talking. You can also begin a text conversation by clicking the blue Chat button. Chat works like most instant messaging programs, letting you type and receive messages and files.
  • When you finish using Skype you can sign out from the File menu. Next time you want to use the program, double click the Skype icon on the desktop or in your System Tray.

03.Calling landlines


Calls to other Skype users are free, but if your contact doesn’t have Skype you can use SkypeOut to ring their landline or mobile phone. The service costs money, however, and you’ll first need to buy Skype Credit.


  • Go to the Help menu and select Skype Help, then Buy Skype Credit.
  • This presents you with another Wizard that steps you through buying Skype Credit online (minimum $16). The credit expires after 180 days of inactivity — which means 180 days after your last successfully connected PSTN (see Dictionary) call.

As with Skype-to-Skype calls, you can set up a list of contacts for SkypeOut. It will show up as a separate list.

You can use Skype Credit to call a contact or, in the case of a mobile number, send an SMS text message of up to 160 characters directly from the Skype window.

To check out the list of SkypeOut rates to destinations all over the world go to and select Rates from the left-hand panel.

If you want others to be able to call you from normal landline and mobile phones, you need a SkypeIn number. SkypeIn costs $16 for three months and $50 for 12 months and includes voicemail.

You need to install Skype before you can buy a SkypeIn number, then in Skype go to the Tools menu and select SkypeIn. This will take you to a web page where you log in with your Skype name and password and can purchase a SkypeIn number online.

New services coming

If you’re on a Skype user on the move, the new Skype Zones service will let you access Skype and make calls for a fee from around 20,000 Skype-friendly wireless hotspots around the world, including around 400 in Australia.

The software is still in its trial stage, so it’s not quite finished and isn’t yet available to everyone. A list of Australian Skype Zones is available at Click on Find Skype Zones and select Australia from the list of countries.

Skype has also announced that Australia will be one of 24 countries to get Skype Pro, an all-in-one, low cost domestic call plan from Skype to regular landline and mobile phones.

The service will include a connection fee of a few cents per call, but no per-minute charges. It’s also expected to include free voicemail and a discounted SkypeIn number. Exact pricing wasn’t available at the time of writing, but monthly fees are expected to be less than $10. Skype Pro, is expected to be launched in Australia around mid-year.

Meanwhile, in version 3.1 for Windows, Skype has three major new features. Send Money lets users transfer funds to each other, while Skype Prime Beta lets you earn money by charging other Skype users for advice. Both features work by linking your Skype account to an account with PayPal, an online money transfer service.

Skype Find lets you search for local businesses and recommend your favourites to the Skype community.

The Search for Skype Users feature lets you look for other Skype users using the Skype directory.

Finding friends

  • Click Search in the main Skype window to bring up a form that lets you list their Skype name, full name, email address or simply geographical area. You can also select gender and age options.
  • A checkbox lets you restrict your search to people who are in Skype Me mode. This mode is set by users to let people know they’re available and interested in talking or chatting.
  • A note of caution: the Skype Me mode includes people you don’t know and haven’t authorised to be in your contact list. It also temporarily disables your privacy settings, so anybody can contact you. Your privacy settings are restored when you leave Skype Me mode.
  • To enable or disable Skype Me mode go to the File menu and select Change Online Status - Skype Me.
  • You can use the same menu to set your status to Offline, Away, Not Available, Do Not Disturb or Invisible.

Join the "party line"

You don’t have to talk to just one contact at a time. You can create your own "party line" with Skype’s conference call feature.

Go to the Tools menu and select Create a Conference Call.

Conference calls can include both free Skype contacts as well as SkypeOut contacts. You can add up to nine contacts to your Conference participants list.

Click Start to begin the call. You can use the same options as a normal Skype call, such as view a contact’s profile or send them a file.

If you want to talk to more people at once, you can start or join a Skypecast — a large, hosted call with up to 100 people. Skypecasts are listed ahead of time in the Skype directory so others can find them and make themselves available to join.

If you try Skype but run into problems, or just want to know more, check out the user guides on its website.

Click on Help in the top menu and User Guides in the left-hand panel. There’s also an online guide and searchable Knowledgebase for troubleshooting.


  • PSTN: Public Switched Telephone Network - the international telephone system based on copper wires carrying analogue voice data.
  • VoIP: Voice over IP, also known as Voice over Internet Protocol uses the internet for sending voice rather than a telephone network.