Unlimited Long Distance, $9.95/Month, No PC

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A small company will ship next month a tiny device that clips onto any phone line, offering unlimited long-distance calls to any number in the U.S. and Canada for only $9.95 per month. Best of all, the device uses VoIP (Voice over Internet Protocol), but doesn’t require broadband access — or any kind of computer at all.

You might say, “So what? I can download Skype software and make calls for nothing per month.”

The advantages of the new device, however, will make it an attractive choice for many consumers and businesses. Allow me to explain.

Not for hipsters, just regular phone users

The gizmo is called the Chatter Bug. It’s a product of Lagunawave.com, a company in Tucson, Ariz., that previously sold high-speed Internet access through Sam’s Club and other retail outlets.

If your only telephone is a cell phone, and it provides all the long-distance minutes you ever need, you won’t want a Chatter Bug. If you have a local phone line, however, the device represents a new way to think about long-distance, which I call “VoIP over dialup.”

In an interview, Sean Ryan, the CEO of Lagunawave, told me that there are “43 million households in this country that are not currently connected with a long-distance provider.” Many of these consumers have opted out to guard against the possible financial burdens of long-distance service.

These households might well enjoy the ability to make interstate calls if the price was fixed at only $9.95 per month. A son or daughter who wants to get calls from Mom might even put the monthly tab on their own credit card. This would totally eliminate the parent’s costs while allowing an unlimited number of outgoing calls.

The pluses of VoIP over dialup

Beyond the down-market consumer angle, however, I feel small and medium businesses can also find benefits in using the Chatter Bug. The advantages are more numerous than you might initially think:

• Skype doesn’t reach most numbers. Someone who installs long-distance software from Skype, a Luxembourg company, can make free calls only to other Skype users. To call ordinary telephones using Skype, you must purchase SkypeOut, a separate service. This costs about 2.2 U.S. cents per minute to dial numbers in the U.S. and Canada. Plus, you need broadband Internet access and a PC. Chatter Bug’s flat rate of $9.95 per month can look pretty good by comparison.

• No computer or Internet access required. The Chatter Bug is the shape of a plastic tube about the size of your finger (photo, left). It plugs into an analog phone line between your handset and the wall jack. Once you dial a toll-free number and press a few buttons on a Touch-Tone phone, the service immediately starts to work. There is no software to install, nothing to configure.

• No headphone or microphone needed. Since most PCs don’t come configured with a headset and a microphone, using VoIP through a PC means purchasing a set and putting it on for each call. The Chatter Bug, by contrast, uses any ordinary Touch-Tone phone and its own handset.

• Works with extension phones. If you attach a Chatter Bug to the base station of a cordless phone system, all the extension cordless phones can receive and make long-distance calls for the same flat rate.

• Works in any two locations. If you have primary and secondary offices, or a primary and vacation residence, you simply register both phone lines where you want the Chatter Bug to work. “Snowbirds today can register two phone numbers that the device will work on,” Ryan says. Switching the gizmo from one line to the other requires a quick notification to the central office. “In future generations, you’ll be able to take the Chatter Bug with you and use it” in a variety of different locations, Ryan promises.

• Works during power outages. If electricity fails, and you don’t have a diesel generator to provide you with backup power, VoIP via your PC will be useless. Telephone companies, however, provide separate circuits for phone power, which often remains working during a blackout. Since the Chatter Bug draws power solely from the phone line, it keeps working, too.

• 911 service is always there. PC-based VoIP services are getting better about connecting you to the correct emergency line when you dial 911 from a U.S. phone. (Skype, however, offers no connections to emergency services in any country.) Since the Chatter Bug attaches to an ordinary land line, you get exactly the same 911 connectivity as you did before the device was installed.

• No security concerns. The attack vectors that may be opened up when you allow remote digital voice traffic into a corporate network, most of which can be defended against using technical means, are beyond the scope of this article. I think I can safely say, however, that adding a Chatter Bug to a voice line poses no hacking risk to users.

The Chatter Bug will go on sale in the U.S. in March for a list price of $19.95, which includes the first month of service. The version found in U.S. retail stores, Ryan says, will work only within the U.S. but will be able to call all U.S. and Canadian numbers for the same flat rate. A version that works within Canada to reach the same numbers will show up in Canadian stores by the end of March, he adds.

Countries outside the U.S. and Canada impose per-minute tariffs that make flat-rate calling to phones there impractical, Ryan indicates. But he expects to release a future version of the Chatter Bug that will make low, per-minute rates available to countries such as Mexico and Great Britain. Calls to the U.S. and Canada would continue to be included in the company’s original flat fee, Ryan says.

The version I reviewed was the consumer and small-business edition. A version for larger businesses, which will work behind corporate PBX telephone systems, will be released later this year, the company says.

How the Chatter Bug works

VoIP is an inexpensive way to provide calls because there’s an abundance of high-speed bandwidth in North America. Moving voice traffic over the Internet and on private networks is now well understood. Previous methods to provide VoIP to customers, however, required them to connect via a broadband Internet access point.

The Chatter Bug, once it’s installed on a phone line, simply watches for the telltale “1” that begins all long-distance calls from the U.S. to American and Canadian numbers. The device then routes such calls through a local POP (point of presence) that Lagunawave has set up. In remote areas without a Lagunawave POP, the call is routed instead through a toll-free, “1-800” number.

Once a call is on Lagunawave’s network, it’s VoIP all the way to the other end. Then the call is converted back to analog at the nearest station to the destination. Finally, the phone of the party you’re calling rings and the call proceeds like any other long-distance conversation.

The company’s literature suggests that Chatter Bug users can “cancel your existing long-distance service and keep your current local phone service.” Once the device is installed, however, you don’t need to cancel any other long-distance service you may have. The Chatter Bug will automatically take control of long-distance calls that start with a “1.” Other calls that it can’t handle, such as international calls, will go through your alternate service just as though the Chatter Bug wasn’t there.

Conclusion

The Chatter Bug raises all kinds of intriguing questions about the extent to which VoIP can change the game for voice traffic and how low rates can ultimately go. The emergence of this kind of device shows that the days when voice traffic will be “too cheap to meter” aren’t far off.

I’ve switched the cordless phone system in my small office over to Chatter Bug for my long-distance service. You might find that this approach saves money for your business or residence. too.