Talk is cheap — at least, it is until the phone bills arrive.
On average, consumers shell out a little more than $1,300 a year for phone services (roughly $70 a month for wireless plans and $40 a month for a landline), according to Nielsen, a market researcher. And while many phone customers have grown accustomed to paying such sums, they could easily be paying half as much — without affecting their ability to stay in touch.
“We are a society of over-phoned,” says Sam Simon, chairman of the Telecommunications Research and Action Center, a consumer advocate. If you pay for a landline and a wireless plan, for instance, you’re probably paying for duplicate services that can easily be cut.
To help you determine where to scale back, assess your calling patterns — who you call, what time of day and from where — and determine which services you use the least. If you only make long-distance calls from your cellphone on the weekends, for example, you could eliminate the pricey national wireless plan on your home phone.
Here are nine ways you can save on your monthly phone bills:
Landlines
Bundle services
Combine your cable, Internet and phone services and pay significantly less for your landline (in some cases, you’re practically paying nothing for the phone). In New Jersey, Comcast (CMCSA: 16.28*, -0.17, -1.03%) subscribers pay $115 a month for the first year with a Triple Play package of phone, Internet and basic cable. Compared with individual rates over that same time period, you’d save $446 — slightly more than the cost for a year of unlimited national phone service.
Switch to a measured telephone service
If the only time you use your home phone is to order takeout, check up on the babysitter or place a (hopefully) very rare emergency call, then you could save significantly by signing up for a measured use service. These cheap plans charge a small monthly fee for a limited number of local outgoing calls. (Incoming calls are free.) AT&T (ATT: 23.92*, -0.04, -0.16%), for example, charges California residents $7.28 per month for about 364 minutes of phone time. Thereafter, you’ll pay two cents per minute.
Cut the wires
If you haven’t picked up that home phone in weeks or months, it’s time to start thinking about cutting the cord altogether. About 16% of households have ditched their landlines, reports CTIA – The Wireless Association, a trade group. While you’ll need to switch to a pricier cellphone plan, the savings are substantial. In a September 2008 study, Nielsen found that although wireless-only households used 332 more cellphone minutes per month than those with a landline, they still spent $33 less a month on phone service.
Before you ditch the landline, however, check that you have good wireless reception inside your home. That same Nielsen study found that 10% of households that return to landline service do so because they had no reception bars, poor call quality or too many dropped cellphone calls at home. (One solution: in-home boosters, which plug in to your Internet connection to improve reception. T-Mobile (DT: 15.65*, -0.24, -1.51%) offers HotSpot @Home for $10 per month, while AT&T is testing a similar product for release in 2009.)
Turn to the web
Voiceover Internet Protocol, or VoIP, allows you to use your high-speed Internet connection as a phone line. VoIP novices should try Vonage, which has a plug-in adaptor that joins your Internet cable with your existing phones. It’s no different than making a normal phone call, says Simon. Plans start at $17.99 per month for 500 nationwide minutes. Those comfortable chatting at the computer might try Skype, a free software download. Plug in any headset, and you can call other Skype users world-wide for free. (You can also purchase specially-designed cordless phones so you aren’t tethered to the computer.) Unlimited nationwide calling to cellphones and landlines costs just $2.95 per month; $9.95 for world-wide coverage. To accept incoming calls, it costs another $6 per month.
One word of caution regarding VoIP services: Many still can’t be used for emergency calls, or they require you to fill out extra forms after signup so that your location is accurately relayed to the 911 operator.
Cellphones
Re-assess services
Paying for services you don’t need or rarely use is a common mistake among cellphone owners. “Why pay for unlimited texting when you’re only sending 10 a month?” says Michael Gartenberg, research director for market researcher Jupiter Research. Upload your latest bill to free site Billshrink.com, and it will analyze more than 200 plan combinations — even factoring in reception and the cost to switch providers — to help you find the best deal.
Prepay for talk time
If you talk on your cellphone fewer than 200 minutes per month, switch to pay-as-you-go service. Nearly one-third of consumers would save money by going this route, says Allen Hepner, who sits on the advisory board of the New Millennium Research Council, a technology-focused think tank. Crunch the numbers to see which offerings work best with your phone habits. Alltel, for example, offers one plan that charges 15 cents a minute on all calls and another that charges 75 cents a day for unlimited mobile-to-mobile and nights and weekend calls (all other calls cost 10 cents per minute).
Seek group discounts
Many employers, unions, alumni associations and other membership groups offer deals on cellphone service. For example, employees of University of California, Berkeley get 15% off Verizon (VZ: 33.30*, -0.20, -0.59%) voice plans, 20% off data plans and 25% off phones and accessories. Account holders with the Michigan Credit Union League get a 10% discount on Sprint (S: 1.95*, -0.03, -1.51%) and Nextel plans.
Skip cellphone insurance
Just say no to cellphone insurance. Over the course of the standard two-year contract, you’d save enough to re-purchase a lost or damaged phone several times over, says Simon. Best Buy (BBY: 27.95*, +0.27, +0.97%), for example, charges $7 to $10 per month. Another reason to skip out on insurance? The fine print. Verizon charges a $50 deductible, and reserves the right to replace your phone with a refurbished unit or even a different model.
Try not to succumb to gadget lust
Don’t give in to gadget lust unless you’re really going to make the most of a phone with web access and other bells and whistles, says Gartenberg. Many of the latest smartphones require pricier plans. T-Mobile’s data plans start at $20 a month for most phones, but if you’re buying the new HTC Dream T-Mobile G1 (a.k.a. the Google (GOOG) phone), the cheapest plan option is $25. (That’s on top of your monthly voice plan, which starts at $30 per month for 300 minutes.)