Cheap/Free Options to Replace Home Phone

Home phone costs us way too much (about $40 including taxes – If we switch to a more basic phone plan, our DSL price goes up 10$ making it a wash) for the amount we use it. But getting rid of the phone is not an option because we do still use it some. Our Home security system and Dish Network box both need to be connected to a phone line.

Since naked DSL has fewer taxes, assuming we pay $15 more for DSL after we get rid of our phone line, that still leaves us $25/month extra. Now if we can find home phone service for free or nearly free, that would be nice. If we can call long distance and internationally for less than an arm and a leg and without extra fees, that would be even better.

The goal here is not saving money but to put the money saved to better use – faster DSL and/or HD on Dish without an increase in the monthly budget.

Here is what I came up with from my hunt:

  1. Ooma
  2. VOIP Adapter + Sipgate
  3. Google Voice + Gizmo
  4. Magic Jack
  5. Skype


The first option Ooma has an upfront cost of $229 (this deal might be a limited time offer because the Handset + Base is cheaper than the Base alone) plus an additional cost of $40 to port your own number. Calling is free inside US and international calling rates are posted on Ooma’s website. Calling India, which is where I call most often is 10-17c/minute depending on where you call, which is relatively expensive. Also it seems Ooma adds a fee to the international rate so you have to pay more than the rate mentioned. After one year Ooma charges $11.75/yr for regulatory fees. That’s it. It’s free otherwise until you need to replace your unit.

The upfront cost is high but acceptable considering calling is virtually free. But I’m always wary that electronics fail the day their warranty ends. So even if this thing lasts two years splitting the cost (not including the number porting) over two years gives about $10/month.

Not bad. If the device lasts more than two years, well thats just a bonus.

VOIP Adapter + Sipgate (or other provider) provides you with one free phone number (no number porting yet) and may not be a local number until they rollout nationwide. To use Sipgate with your regular phone, all you need is a VOIP adapter. These things are cheap and can be bought for under $50. charges $1.90/month as an E911 fee and gives you 60 free minutes each month. Beyond the 60 minutes, calling costs 1.9c/minute inside US (calling toll free numbers is free) and international rates vary. Calling India is about 7c/minute, which is reasonable.

In our case, I’m not sure how often and how long the Dish Box stays connected but it seems it is less than a minute every night. Counting our own phone use I’d say we would probably never cross 500 minutes/month maybe not even that much. But lets say we do use 500, that would give us monthly costs of $9.50 + $1.90 = 11.40 and adding the VOIP adapter brings the total to $13.50, just a little more than the Ooma. Considering our usage, it is probably going to be less than this.

There are other VOIP call provers including free ones like ipkall (Washington state numbers only) and you may want to check those out too.

Google Voice + Gizmo5 + VOIP Adapter

Google recently acquired Gizmo and new signups are temporarily unavailable. Google Voice is a great option for incoming only calls. Gizmo lets you make outgoing calls and lets you use your google voice number. Since I don’t have a Gizmo account already, I can’t tell you much but calls under 3 minutes are free from Gizmo. Beyond that rates are 1.9c/min inside US and outside varies by country. India is 7c. Of course if you are online, you can login to google voice and have them make the call, which would make calling free.

Also with some hacks –  you can have free incoming and outgoing for a slight inconvenience. Also you can use other services instead of Gizmo5 and searching online will give you many different setup options and tricks. But since Gizmo has been acquired, I’d just wait a little for everything to settle because Google does have the habit of making things free and easy.

As far as cost goes, Gizmo + Google Voice, when it becomes available again will cost less than both the options above but I’m not sure you’ll get E911 service. Gizmo did recently make a deal with a company to provide E911 service but the cost was mentioned at $5.95/month. No idea what will happen when they relaunch.

Magic Jack

I don’t know why I put magic jack here because it is not even a viable option unless you already have a computer on full time. Magic Jack software is not easy to uninstall and pops up ads every time you make a call. It is by far the cheapest option. Magic jack costs $40 and includes one year of service. The second year costs $20. That makes it about $2.50/month. Calling India is 5c/minute.


Skype is a more interesting option than magic jack, but a little more expensive. As far as using the service goes there are many plans and options including pay as you go or unlimited for a monthly fee etc. Getting your own phone number is $60/year without a subscription or $30/year with a subscription. Subscriptions start at $3/month for unlimited US and Canada calling to $12.95/month for unlimited calling anywhere. You have two options to use Skype as your home phone. Buy a Skype handset or buy a skype USB adapter for your computer. With the USB adapter, you will need your computer on all the time like magicjack but that is not necessary with a skype handset.

So assuming the $3/month plan, Skype costs  $66/yr = $6.50/month. Adding the USB adapter makes it $8.50. Adding a handset makes it $11.50/month. Calling India costs 10c/min.

Ooma vs Sipgate vs GV + Gizmo vs Magic Jack vs Skype

So now for the final verdict. I’m in no hurry to decide so I’ll wait until Gizmo relaunches but in the current state here are the comparisons:

Cost (assumes all devices last two years)
Ooma – ~$10/month ($12 if port your number)
Sipgate – ~$13.50/month (assuming 500 minutes outgoing calls)
GV + Gizmo – ~$10/month (assuming 500 minutes outgoing)
Magic Jack – ~$2.50/month
Skype – $6.50 – $11.50/month

Pros and Cons

Ooma, Sipgate, GV + Gizmo do not require a computer to be on and you can use your existing phone with a VOIP adapter. Skype does not require a computer to be on if you get a Skype phone. If you don’t mind having your computer on always you can use either Skype or Magic Jack. If Ooma disappears, you will end up with an expensive brick. If Magic Jack disappears, a cheap brick. I doubt Skype will go anywhere but if it did, you’d have bricks too. Your VOIP equipment for the other two however will work with any VOIP provider.

What we ended up with finally

6 thoughts on “Cheap/Free Options to Replace Home Phone

  1. Naked DSL says:

    It’s interesting to see what other Naked DSL services and options are available throughout the world – thanks for the article. In Australia many Naked DSL providers now provide a free VoIP service and most have a “local phone number”, for incoming and outgoing calls. iinet even has number porting as well as unlimited free calls to landlines in Australia. Understandably it’s pretty popular!

  2. Daniel Ocean says:

    skype is nice as every one knows it is one of best voip service provider. At present it has launched group video calling, in its new version 5.0. skype 5.0 only work on windows.

  3. Dan Lee says:

    Skype and ooma are still around. My ooma paid for itself about 18 months ago. They will probably be around next year. The quality has been very good. BTW, Skype 5.0 is great!

  4. Selvin George says:

    Same experience as Dan above. We got the Ooma for a $199 deal and it has paid itself off. I’m valuing fixed-line phones at $10/month. In addition to that, we got the $10/month for 1000 minutes to India – we use upwards of 500/month and that makes it cheaper than Google Voice also.

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