Tips for dialing up phone expense cuts

Your Money

April 25, 2004|By Gregory Karp

Reducing your long-distance telephone bill gets attention because of the many choices available. But other expenses associated with your home phone might be ripe for savings, too.

Regular phone service, excluding long-distance charges, accounts for two-thirds of the average $36 monthly phone bill, government statistics show.

Here are some tips:

Shop around

The first rule of cost-cutting is always to compare prices. There are several ways to get your phone service.

In your region, you might have a choice of several traditional phone-service companies that provide local, regional and long-distance service. And some cable TV companies across the country also offer phone service. So check out the fees and rates.

One question to ask is whether the company charges an optional fee that can run up to $6.50 a month. It's called a "federal access charge," "subscriber line charge" or "interstate access charge," among other names, said David Wood, editor of CheapTelephone

The Federal Communications Commission allows local companies to charge the optional flat fee to recoup the costs of constructing and maintaining a local phone network, namely the phone wires to your house and wires that connect homes and businesses. It's a product of the AT&T breakup in 1984.

Not all companies charge that fee, and switching could save $78 a year.

"A lot of people are paying too much because they don't shop around," Wood said.

Bye-bye landline

The most radical way to reduce costs is to cancel your landline home-phone service. Instead, use your mobile phone for all your calls.

This isn't a strategy for everyone, but it's especially good for single people who aren't home often. And it avoids the hassle of splitting the phone bill with roommates.

Switching to wireless-only is especially convenient now that new number portability rules allow you to transfer your old home-phone number to your wireless phone. However, this isn't a good idea for those who need a phone line for things other than typical phone calls, such as for dial-up Internet access.

Make sure you have good wireless phone reception in your home before you cut the cord.

Internet phone

Another alternative to traditional phone service is your high-speed Internet connection. With "voice over Internet protocol" (VOIP), you attach a small box to your high-speed Internet connection and plug a regular phone into the box. Calls to regular phone numbers are transmitted over the Internet, and the call quality is quite good, experts say.

Prices are significantly lower than those for traditional phone service.

The major catch is that Internet phone calls require a high-speed Internet connection, usually via a cable or DSL modem.

And remember, a VOIP phone won't work when the electrical power is out or when your Internet service goes down. So have a backup phone service, such as a mobile phone. Be aware that VOIP also can lead to problems when dialing the 911 emergency number.

Add-ons add up

Examine your add-on services, such as call-waiting, caller ID, three-way calling, call forwarding and voice mail. They can cost several dollars apiece.

"Take the last three months of bills and figure out what you're actually using, as opposed to what you're paying for," said John Breyault, spokesman for Telecommunications Research & Action Center. "Then decide what you want to keep."

Wire insurance

Most people can cancel the "wire maintenance" service, a several-dollar monthly charge that is a kind of insurance for problems with inside phone wiring and jacks. If you have wire maintenance coverage, wiring repair inside your house is free. However, those repairs are rare.

"We have seen very few instances where people have a problem with their phone that can be traced back to their inside wiring," Breyault said. "We find that most of the time, it's not worth it."

0 isn't zero

Avoid using per-call services, such as directory assistance, which can cost more than $1 per use. Instead, use a phone book or Internet look-up service, and maintain a good list of regularly called numbers.

Also, avoid operator-placed calls and collect calls. Heavily advertised 800-CallATT and 800-COLLECT, for example, charge outrageous fees of about $5 per call and $1 per minute. Instead, keep a calling card with you and save about 90 percent, Wood said.

Exploring your options takes time, but you can reap the savings year after year. Good advice and rate comparisons are available at, and

Gregory Karp is a personal finance writer for The Morning Call in Allentown, Pa., a Tribune Publishing newspaper. E-mail him at

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