KEY POINTS:
It used to be that the average Telecom customer paid around $40 a month for a standard home phone line. Thanks to annual price hikes which Telecom is allowed to make in line with the rate of inflation, that figure is now edging closer to $45, something that seems slightly perverse given the downward trend in calling charges in general around the world.
From May, a customer on Telecom's standard HomeLine package will pay $44.85 per month for phone rental, an increase of around a dollar. Those living in range of TelstraClear's cable network in Wellington and Christchurch will face a similar price increase, but are in a better position, they'll pay only around $37 a month for home phone rental. That's competition for you.
Whenever these price hikes are announced, and they've been as regular as clockwork from Telecom in recent years, people start talking to me about how great it would be if they could ditch their home line rental and just receive broadband over the same line, using a mobile phone or a VoIP service to make calls more cheaply. Well there's a term for that dream scenario - it is called naked DSL.
A few internet providers are now offering naked DSL ? Slingshot and WorldxChange are the two main proponents of the technology, which became available late last year (if you are an early convert to naked DSL drop me a line in the comments below to let us know what your experience of it has been like).
The idea of naked DSL is that if you are comfortable using a VoIP service to make calls over your broadband connection and are willing to invest in the right hardware to make that happen, you can save money on your overall phone and broadband spend.
How much money? Well, let's do some comparisons. If you're a Telecom customer in Auckland from May you'll be paying $44.85 for standard HomeLine rental per month with unlimited free local calling.
A 6GB (gigabyte) full-speed broadband plan will cost you $49.95 (adding up to a total package of $94.80 per month) before any discounts Telecom might throw your way.
Slingshot offers its iTalk VoIP service with free local calling (for up to 2000 minutes each month) and a 6GB broadband plan for $79.95. That's a saving of $14.80 a month on the equivalent Telecom package.
But you'll need to buy an iTalk Voice Box ($140) or a VoIP phone ($100) to use the service. That means it will take 9 months to recoup the cost of setting up with hardware on Slingshot before you start reaping the savings.
A similar comparison can be made between Telecom and WorldxChange's Xnet Fusion package which costs $69.95 ($80 for rural customers) with data charges on top charges at .01c per megabyte.
So 6GB of data will cost $6, bringing the price to $75.95. You'll also need to invest in some hardware, at the very least, an analogue telephone adapter to make your existing phone work with the service - you're looking at about $120 for one of those. You'll also have to pay a fee (around $20) to take your phone number to the new service. Installation charges are extra ($150) if you need help setting the service up.
So in the case of Slingshot and WorldxChange, you're going to start saving money through leaving Telecom after around 9 - 10 months. But what about the calling component, which can add significantly to a monthly phone spend?
All three operators offer free local calling. The VoIP players charge national calls and calls to a handful of popular calling destinations (eg: Australia, USA, Britain) at 5c per minute and calls to mobiles at 30c per minute.
The picture is a bit murkier with Telecom because it offers a range of capped deals that make a comparison difficult ? for instance, under the Talk It Up deal, you call make unlimited calls up to 2 hours in duration to a neighbouring calling zone for $2 a month (there's a 6000 minute per month limit). The $3 weeknights and weekends plans and Telecom Anytime make national and overseas calling more affordable.
Bottom line, it would seem to me that if you're not making a large volume of toll calls every month and have some basic knowledge about broadband routers and how a VoIP service works, naked DSL is an attractive alternative to Telecom.
I should say that both Slingshot and WorldxChange offer services like voice mail included in the price while Telecom charges extra for them. In the VoIP world you also have much more flexibility over your calling preferences which can be configured over the internet through a web-based management console.
I trialled WorldxChange's VFX VoIP service in 2005 after it launched and was pretty impressed with the quality and ease of use. Most of the time you just pick up your regular phone and get the same dial tone you would with Telecom.
It is when your broadband connection plays up or your router needs resetting or the power goes out, that VoIP services run into problems and many users just can't be bothered dealing with those sorts of issues.
Naked DSL is still a pretty nebulous concept to the average phone and broadband user, but I think there's a sizeable chunk of the market who could handle the extra complexity and would appreciate both the savings and the extra call management features.
