Net expands phone options
By Sean Hao
Advertiser Staff Writer
It isn't unusual for the phone in Wai'anae resident Jason Ward's home to log 100 minutes a month in international calls. What may sound unusual is the bill — $16.
Jeff Widener • The Honolulu Advertiser
"You can't beat that," said Ward, whose father lives in Kenya and in-laws live in Brazil.
Wai'anae resident Jason Ward uses an Internet calling plan to speak with his relatives in Kenya and Brazil. Demand for such calling plans is expected to grow, according to the FCC and others.
That relatively low rate comes because those long-distance calls are routed as data via the Internet, rather than as traditional calls. It's called voice over Internet protocol communications, and it uses standard telephones hooked up to the Internet.
Internet phones are attracting more consumers who are ditching their local phone company in favor of relatively new companies, such as Vonage, to shave their bills.
"Before, I could get up to $70 on my phone bill in a month," Ward said. "This way is definitely much better."
Ward isn't alone. Nationally, the number of Internet phone users is expected to jump more than six-fold to 682,000 this year, driven by the proliferation of broadband Internet services and the recent introduction of flat-rate Internet calling plans, according to technology research company In-StatMDR.
In Hawai'i, Time Warner Oceanic Cable announced last month that it would begin competing with Verizon Hawaii for local and long-distance phone customers with an Internet phone plan due out in November. Although the price in Hawai'i has not been set, Oceanic charges about $40 a month for cable users who add the phone service. That price buys unlimited long-distance and local calls.
Oceanic will be entering a competitive market. This summer, Verizon Communications introduced a flat-rate, long-distance Internet calling plan, joining Pacific LightNet Communications, iFreedom Communications, AT&T, Vonage and others.
Daryl Schoolar, a senior analyst with In-StatMDR, said the primary reason for the increasing popularity of Internet calling is cost. Prices start at around $14.99 a month, excluding the cost of a high-speed Internet connection, which can run another $30 or more a month.
"A lot of people talk about the features, but the cost is still what gets them in the door," Schoolar said.
Whether Internet phones are the best option for consumers depends on their calling patterns. Verizon Hawaii spokeswoman Ann Nishida said early technology adopters and those looking for a second line are among the niche market being targeted with its VoiceWing Internet calling service.
"Verizon's VoiceWing offering in Hawai'i will appeal to a niche market such as folks who recently moved here, have friends and family in another state and want to take advantage of the flat long-distance rate as well as make it cost-effective for their friends and family to call them," she said.
Just how much consumers can save depends in large part on whether they're willing to part with their traditional phone service, which locally has a basic rate of about $26 a month. Otherwise, adding another monthly phone service to their bills could offset the savings from flat-rate Internet calling.
Also, traditional long-distance rates already are dropping, in part because of billions of dollars spent laying new long-distance lines during the technology bubble. That surge in capacity has driven down rates.
Those and other factors have turned what once was a luxury into a commodity. For example, in 1920, a 10-minute call between Los Angeles and New York cost $26.17 — the equivalent of almost $250 in 2004 dollars. By 1998, the price of that same call had fallen to 50 cents, said A. Michael Noll, professor at the Annenberg School for Communication at the University at Southern California.
When comparing rates for international calls, the savings between Internet-based calls and regular long-distance rates vary. For example, under Verizon's basic international calling plan, calls to Tokyo cost 10 cents a minute and calls to Manila cost 16 cents a minute, excluding a $4 monthly charge and any basic and long-distance charges.
Calls made via Verizon's VoiceWing cost 4 cents a minute to Tokyo and 21 cents a minute to Manila, excluding a $39.95 charge that includes unlimited local and domestic long distance calls, and an added cost for a broadband connection.
For some, low-rate international Internet calls are allowing family members separated by continents to reconnect. That's what happened when Monika Bechert, a nurse in Kahului on Maui, started an iFreedom Internet calling plan in March that included flat-rate international calls to many nations, including Germany.
"My sister (in Germany) would always write me, and she would get mad at me because I didn't have time to write back," said Bechert who moved to Hawai'i 34 years ago. "I didn't talk to my sister for 20 years; now I talk to her once a week and she's coming to visit."
Still, switching to Internet calling also presents some drawbacks. Currently, few of the plans offered locally allow users to select an Internet-based phone number with a Hawai'i 808 area code, though several companies plan to add that feature. Without a local area code, local calls become toll calls for anyone in Hawai'i.
In addition, the cable-based and digital subscriber-based telephone system isn't as immune to power failures as the regular phone service provided to most homes. And enhanced emergency 911 service isn't always available, so while Internet callers may be able to call for help, their location may not be provided to responders.
Many of these issues are expected to be addressed as more competition enters the marketplace.
The Washington Post contributed to this report. Reach Sean Hao at 525-8093 or shao@honoluluadvertiser.com.
