Internet Telephony - The Costs

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Another factor to consider is that hardware-based services have higher up-front costs when you first set up an internet telephony account with them. They all require a monthly subscription fee that can range from £5 to £11.
Both BT Broadband Voice and Freetalk require you to sign up for at least 12 months. You can cancel a Vonage account after just one month, but the company charges £24 to activate accounts, which is not refunded on cancellation.
Some people may be put off by these monthly subscriptions and fixed-term contracts. However, you do get a number of extra options from Vonage, Freetalk and BT Broadband Voice in return for the monthly fee. All these provide services such as voicemail and call waiting as part of the monthly subscription.
One further advantage of paying a monthly subscription for Vonage, Freetalk or BT Broadband Voice is that you also get proper technical support if anything goes wrong. If using the Skype, Callserve or BT Communicator software, your only technical support option is to send an email via the company's website or to hope that one of their online FAQs - lists of 'frequently asked questions' - can help you out.
The cost of calls
You may not be too worried about added extras such as voicemail, but the real reason that it's worth paying a monthly subscription for an internet telephony service is that you also have the potential for greater savings overall.
For instance, Vonage and Freetalk have relatively high up-front costs, but they provide unlimited calls to UK landlines at any time of day, so they could end up saving you more over the course of a year.
And that, of course, brings us to the nitty-gritty: deciding which internet telephony service provides the best value. As with mobile phone tariffs, this is very much a personal choice, and largely depends on the sort of calls you're most likely to make.
Let's get the bad news out of the way first: none of these services offers anything more than small savings when it comes to making calls to mobile phones. The good news is that you can make huge savings on international calls and calls to UK landlines.
The situation with international calls is very simple, as Skype is the cheapest option. Skype offers a standard 'global rate' of just 1.2 pence per minute that applies to dozens of the most popular countries, such as the US, Australia and most of Europe. That's a huge saving over BT's standard daytime rate of 15p per minute to the US, 24p for Australia and 22p for Spain.
All the other services charge 3p to 4p per minute for most countries, which is still pretty good, but there's no doubt that Skype comes out tops for international calls, although Freetalk and Vonage are also much cheaper than BT standard rates.
In fact, Skype is so popular around the world that it's spawned a mini-industry of accessories, with companies such as Logitech producing microphone headsets that are specifically designed for use with Skype, and include introductory vouchers for making an hour or more's worth of free calls.
You can even buy special telephone handsets with a USB plug so they can be plugged straight into a PC and numbers dialled in a more familiar way. These accessories range in price from about £20 to £50, and a big selection can be found on Skype's website.
Local rates
Skype may be the clear leader when it comes to saving money on international calls, but the situation is more complicated when it comes to working out the cost of calls within the UK. For instance, BT Communicator's international rates are pretty good, but its calls to UK landlines and mobile phones are charged at the standard BT rate (based on its residential 'BT Together' tariffs).
In contrast, Vonage and Freetalk apply no extra charges above the monthly subscription for calls to UK landlines at any time of day.
Even so, these subscription services can still offer some serious savings. Let's say that your normal phone bill is a relatively modest £50 per quarter, which adds up to an annual total of £200. That makes Freetalk's £80 annual subscription look like pretty good value, as long as you don't need to buy a new Ethernet modem to get started.
And, of course, a larger family could easily rack up much higher call costs, which makes the potential savings even greater.
BT's Broadband Voice service removes those extra hardware costs because, as we mentioned earlier, it provides an adapter that will work with any type of existing broadband equipment. However, its subscription rates and call costs are less competitive. Its £5 Evenings And Weekends monthly plan offers reasonable international rates, but its prices for UK calls really don't offer much in the way of savings at all.
To make real savings on UK calls with BT Broadband Voice you need to pay £11 per month for its Anytime plan, which is the highest monthly charge of any internet telephony service.
If you've already got a suitable Ethernet router then Freetalk's £80 per year is probably the cheapest option for people who want to make lots of calls within the UK. If you don't want to commit to a year-long contract, you could try Vonage for a few months or just go back to good-old Skype again.
Skype charges 1.2p per minute for UK calls at any time of day. That's less than half the 3p per minute charged by BT on its standard BT Together plan, so you still save money on all calls with no monthly subscription at all.