Saving with VoIP

If you’ve read the  chapter up to this  point, you’re  a much more  savvy POTS- PSTN customer. You now know exactly how your  carrier makes money at your  expense. You also  know how the  five regulated service categories can combine to increase your  monthly and  annual telephony costs and  therefore reduce your  revenue. Something that increases costs and  reduces revenue is something you need to control or change. VoIP can help  you do exactly that. So, how will you fare under a VoIP system?

Good news for the family budget

Most carriers no longer apply service charges to residential accounts for local calls,  beyond the  monthly recurring costs of the  access line. All other rate categories are billed  on a per-minute basis. If you convert to VoIP for your  home phone, you typically have  no recurring service charges for any of the  other services categories for calls outside your local area.  This, in itself, is a tremendous savings for anybody who does even  a moderate amount of nonlocal calling.

Because you must use broadband to get VoIP in your  home, I suggest that you pay the  additional fee to keep  your  POTS phone connected to your broadband service. Use the  POTS phone for local calls and  911. When the older PSTN catches up with the  newer VoIP technology and  can support E911 (enhanced 911) calling,  you can drop  the  POTS connection. (With E911, your  contact and  address information is transmitted along  with your call to the
911 emergency center.)

Taking savings to the office

If you run a business, local-area calling-plan charges average about $.05 per  minute. Under  a VoIP model, the  cost of calls to the  local calling  area are the  only significant recurring usage charges you won’t get rid of — at least not until the  rest of the  world adopts VoIP.

Even local carrier charges can be reduced under a VoIP model, however. You can do this  if you leverage volume by total minutes and  make a contractual commitment to the  local carrier. Tell them you are going VoIP, and  see  how quickly  they  will accommodate you. If most of your local calls are to other offices on your  company’s network, VoIP eliminates any recurring service charges for those calls because this traffic is on-net.

It’s in the  other service categories — intralata, intrastate, interstate, and international — where your  company can save  the  bulk of the  usual monthly service charges by using  VoIP. Keep in mind  that these monthly charges can be huge.  One of my clients had  367 locations across the country and  17 inter- national locations, and  a combined computer and telephone network billing of $4.2 million per  month. And 75 percent of the billings  were telephony car- rier  services charges. That’s  about $3.78 million per  month for POTS-PSTN telephone services. VoIP would eliminate more  than 90 percent of these tele- phony charges because the company is already paying  for its computer net- work. Under  a VoIP telephony model, any company with substantial intralata, intrastate, interstate, or international calling  service requirements saves a bundle of cash.

Toll-bypass: Saving with calls at a distance

The same VoIP cost-savings rationale for the  international company described in the  preceding section applies to intralata, intrastate, and inter- state calling  carried on-net over  a company’s VoIP network. Although the  costs on a per-minute basis for interstate have  come down significantly since the  Telecommunications Act of 1996, a company with many  locations across many  states can accumulate millions of minutes per month just  to support the  communication that goes  on among all its locations.

Did you ever  take  a plane trip  only to find out  you paid  $500 more  for your ticket than the  person next  to you? Interstate per-minute charges for busi- nesses today make airline ticket pricing policies look downright logical: These charges run the  gamut from less  than $.01 to $.10 per minute. Interstate charge plans for companies using  the  PSTN vary so much because the  plans depend on the  minute-volume commitment and the  plan’s  term. The longer the  term a company agrees to, the  better the current rate pro- vided by the  carrier.

However, under a VoIP approach, your  on-net calls have  no carrier service charges. Therefore, you have  no need for a telephony carrier services price-  term plan.  Also, on-net calls eliminate the  toll charges that come with all the  various calls to areas outside the  local calling  area. Because the  calls travel over  your  VoIP network, you don’t  use the  LEC’s facilities. A company’s monthly carrier service charges for all on-net interstate calls made on the  company’s VoIP network total nada, nothing, zip, zero. You get the  idea! This benefit has  become known  as toll-bypass.

POTS-PSTN per-minute calling  costs remain highest for international calling.  These costs can be eliminated or greatly reduced if international calls are carried over  your  company’s private VoIP network. Much of the cost of an international call comes from the  huge  regulatory fees that pile up as the  call moves along  from country to country. But a VoIP network eliminates all those fees. In addition, VoIP makes these recurring charges your  favorite number and  mine: $0.