WASHINGTON, D.C. - Increased competition in the Voice over Internet Protocol (VoIP) telephone market continues to drive down prices for residential consumers, but public safety and survivability concerns should keep most consumers from using VoIP telephones as their only means of communication. The entry of telecommunications and cable companies into the residential VoIP market has produced significant downward pressure on VoIP service prices over the past nine months, according to an updated report released today by the Telecommunications Research and Action Center, the nation’s premier residential telecommunications consumer information and advocacy organization.

TRAC’s report, the second edition of the popular TeleTips Consumer Guide to Telephone Service Over the Internet, shows that while prices have dropped, 911 service and survivability should continue to be a consideration for prospective residential VoIP customers. VoIP’s cost decrease makes it more attractive from a money saving perspective than in the past. In particular, subscribers to the popular unlimited local and long distance plans have been the biggest beneficiaries of this change. AT&T’s CallVantage, Net2Phone’s VoiceLine US/Canada Unlimited, Verizon’s VoiceWing Unlimited, and Vonage’s Residential Premium Unlimited calling plans all reduced their monthly plan fee by $5.00 over the past nine months to a low of $24.99 (Vonage) and a high of $34.95 (Verizon). Prospective buyers of VoIP service should be sure to factor in the cost of their broadband Internet connection when comparing VoIP service to traditional wireline telephone service. There is little cost savings in paying for broadband for the sole purpose of using VoIP for all but the heaviest long distance users. Consumers who are already using their broadband connection for other applications, however, may find that VoIP compares favorably to their traditional telephone service plan on price, especially when weighed against the bundled local and long distance packages offered by most major telephone companies.

The Federal Communications Commission’s decision this week to require VoIP providers who terminate calls to or accept calls from the local telephone network to provide E911 service is a welcome development. However, serious technical issues remain for many VoIP service providers who wish to connect their subscribers’ calls to the 911 network. Also, VoIP service continues to be vulnerable to electrical power and broadband service outages. Due to these factors, TRAC continues to recommend that consumers who use VoIP exclusively for their residential telephone service also have a cellular telephone or a traditional wireline telephone account that they can use to call 911 in an emergency. Consumers should be sure to check that their cellular phones function in all areas of the residence where VoIP service will be used, especially in interior rooms and basements. Additionally, E911 service on cellular phones is still not available nationwide. Consumers without cellular E911 service in their calling area should consider keeping their wireline telephone service and using their VoIP phone as a second line.

"VoIP is an exciting new technology that can help some consumers save money on monthly phone bills," said TRAC Research Associate John Breyault. "However, it’s important to understand VoIP’s limitations and not get carried away by the marketing hype."

The TeleTips Consumer Guide to Telephone Service Over the Internet compares ten of the nation’s leading residential VoIP services on price, features, and "fine print." The service providers listed includes cable and telephone companies who are increasingly offering VoIP calling service, as well as established third-party carriers. Call quality and service reliability of the different carriers were not tested. The guide may be purchased for $3.00 ($4.00 for a hard copy) on TRAC’s website (www.trac.org) or by sending a self-addressed stamped envelope to TRAC, P.O. Box 27279 Washington, DC 20005.

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