Cell Phone or Home Phone Service?

Rock-bottom $10 price beats Internet phone service leader Vonage

While the major telecoms are busy focusing on grabbing your cell phone dollar, T-Mobile is now trying to snag what Sprint, AT&T, and Verizon so far have kept to themselves: home phone service.

T-Mobile @Home

Its new T-Mobile @Home service, which is advertised at the very low price of $10 per month, is an Internet phone service that offers unlimited local and long-distance calls at home with perhaps better call quality than you might hear on your cell phone.

“With T-Mobile @Home, we are addressing the remaining reasons [why] people have been reluctant to ‘cut the cord’ and ditch their home wireline service,” T-Mobile said.

T-Mobile added: “With our initial HotSpot @Home service, we found that nearly half of those signing up were new customers. [While they] were happy with the service’s general uptake, [they] wanted to remove the last stumbling block to bringing landline customers over to the service. Today approximately 80 percent of households still have a landline.”

Cell Phone or Landline?

The offering comes at a time when many U.S. consumers are ditching their home phone lines and manufacturers are touting the benefits of products that improve the experience of using a cell phone at home.

For example, Link to Cell from Panasonic uses short-range Bluetooth wireless technology so you can place calls on a cordless home phone while actually using your cell phone and its service. With Link to Cell, you can situate your cell phone in a spot at home with the strongest signal and talk on the cordless phone somewhere else. This could especially come in handy if where you want to talk at home is a cell phone dead zone.

There are solutions to boost your signal at home or on the road, too, such as the Freedom Blade. This device may give your cell phone a couple more bars of signal strength to help you improve call quality and prevent dropped calls.

T-Mobile @Home Complications

Not surprisingly, though, the T-Mobile @Home service does come with some complications to consider. We did some digging to find out exactly how the service works and whether it will really save you money. On the surface, T-Mobile’s new offering can simply be viewed as simple and compelling.

Though it’s not clearly advertised on its Web site, this home phone service isn’t landline service. It’s like traditional voice over Internet protocol (VoIP) service, but still a bit different from it. It’s better to think of T-Mobile @Home as GoIP service.

“It’s not advertised as VoIP because – [even though] T-Mobile’s solution utilizes an Internet broadband connection – the underlying technology is different than traditional VoIP. [This] uses a technology called UMA ( unlicensed mobile access) [that] preserves the characteristics of a traditional cell phone (or GSM) call. Some people [call] it ‘GSM over IP’.

Additional Fees

In addition to the $10 per month, you also have to buy a T-Mobile @Home HiPort router. It’s actually a Linksys router. That means you also have to have high-speed Internet service at home (such as DSL or high-speed cable). That’s a separate fee. While the HiPort has a retail sticker price of $149.99, it’s actually $49.99 after a $100 instant discount.

T-Mobile @Home also boasts the “best” international calling rates – that is, if you pay an extra $5 per month and then per-minute rates when you place the international calls. T-Mobile says these rates are the “best” as compared with other national wireless and landline carriers. They say, for example, a call to Mexico would typically cost 39 cents per minute or 7 cents per minute with the extra $5 service. That same call would cost 22 cents per minute on a T-Mobile cell phone.

To get your cash while they can, T-Mobile @Home will also accept $59.99 from you for a VTech cordless phone with two handsets. If you so desire, you could use your current home phone instead or buy another.

Cost Considerations

While T-Mobile is selling its new plan through the cost-saving allure of home phone service only, that’s still only half the battle (or perhaps even less for some consumers). The way to truly make a decision is to add in your cell phone and broadband bills and decide if you need all three or would be better served only having two.

At first glance, it would appear that most people would save money with T-Mobile @Home.
If your home phone bill is similar to the national average of $37.76 for local service (a figure T-Mobile is using based on an Aug. 2007 to March 2008 survey from Scarborough Research) plus $28.03 for long-distance service, that $65.78 bill would become $10. In that scenario, you’d save $55.78. 

Clearly, that’s a win. If your current combined home phone bill is, say, only $30 per month, that’d save you $240 per year. If it’s $90 per month, that’d save you $960 per year.

Competing Services

But T-Mobile isn’t the only major Internet phone player. When it comes to high-quality VoIP at compelling rates, Vonage is the company that often first comes to mind. T-Mobile @Home knows its new offering has come quite late in the Internet phone game and has purposefully priced itself lower than Vonage for this reason.

“With a clear trend toward people wanting to consolidate their landline and mobile phone into a single phone bill, VoIP solutions like Vonage fall short. Vonage doesn’t provide wireless service,” T-Mobile said.

Vonage runs as low as $14.99 per month for 500 local and long-distance minutes. Vonage then charges 3.9 cents per minute after the first 500 minutes.

T-Mobile @Home has that plan beat by $5 per month and comes with unlimited minutes instead of only 500. Vonage also has an unlimited local and long-distance VoIP plan at home that runs $24.99 per month (with various add-on options for international calling). T-Mobile @Home has that plan beat by $15 per month.

But remember: In order to have T-Mobile @Home, you also need high-speed cable or DSL. If you want to keep your cell phone, too, the initially diminutive $10 cost for T-Mobile @Home can easily become $100 per month when you conservatively figure in $30 for broadband service and $50 for cell phone service.

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