More Broadband: Free Phones

So the thing is… I really haven’t left my computer since I installed my cable modem connection a couple of weeks ago. I mean, why bother?

I can now listen to National Public Radio through Sonicbox, my Internet radio device. CDs? I download them from Napster (just the legal stuff, of course – good thing I like 1920s music). Instead of watching TV, I now spend my couch potato time at AtomFilms, checking out the latest in independent films. And starting this weekend, I’m getting my phone service for free, or nearly free, by dialing into the Internet.

I looked at four different services: Net2Phone, deltathree.com, Dialpad, and PhoneFree.com. In general, the services provided similar quality in phone service – i.e., about what a cell phone provides: a little garbled with a slight delay. But all in all, not bad for a free phone service. Certainly good enough for long drunken personal calls to old college chums whom I would never think of calling if I had to actually fork over hard cash for the privilege. And it works well in picking up voice mail, where quality is not important.

No, the sound was more or less the same. But there were substantial differences when it came to pricing, usability, and especially customer service.

The big dog in this space is Dialpad, with over nine million users. Dialpad, like most of these services, supports its free phone service through advertising revenue. As a result, all these services require a boatload of personal data including income, hobbies, and marital status before you can get dialing and saving all that money. All of which I was happy to give up in exchange for stemming the flow of blood AT&T and Bell Atlantic squeeze out of this turnip each month.

But no one, including Sarah Hofstetter (vice president of corporate communications at Net2Phone) and Mark Marrone (director of marketing at deltathree.com), believes that the advertising model is sustainable in the long run.

Marrone believes that deltathree.com’s path to profitability lies in “nurturing” the database of customers it amassed by up-selling them to other products, including standard phone cards.

Net2Phone, on the other hand, is currently the only one of the services I tried that charges for domestic calls, about $.01 per minute – or so they say. Hofstetter said that Net2Phone (which recently lost its president, Jonathan Fram, to another start-up) is most likely heading toward a free model. Most of its business comes from overseas call fees, which are lucrative enough to support a free domestic service. But its true future lies in diversifying to other voice IP services such as voice chat and audio-based web page enhancements (move over, HearMe and AudioBase).

Unfortunately, Net2Phone has some serious customer service problems that it needs to overcome first. For instance, although it advertises $.01 a minute, I was actually charged $.039 a minute for my first few calls. When I called to inquire, the customer service rep informed me that it was only $.01 a minute if I called to request it, even though that is the advertised price on the site (you figure that one out).

The next day, I noticed my account had been charged $9.95 for “shipping.” Shipping what I wasn’t sure since customer support hung up on me after first making me wait 30 minutes on hold. Later, I found out that “shipping” was for headphones that I never ordered and didn’t want. In addition, the software client interferes with my Outlook program, causing an error message every time I try checking my email. Hofstetter said she would check out all these issues and get back to me. I’m still waiting to hear from her.

The other two programs I tried, Phonefree.com and Dialpad, were simply inconvenient. Dialpad requires you to go to its web site to use the service, and I found the quality of the reception slightly inferior to that of both Net2Phone and deltathree.com.

Phonefree.com did a couple of things that freaked me out. First it dug out a list of emails from my address book and then asked if I wanted to send an email to them all. I suddenly had a nightmare vision of everyone in the Rich Media SIG mailing list getting spam – under my name – that extolled the virtues of Phonefree.com! And the interface didn’t provide a “dialpad” interface, so I couldn’t figure out how to dial phone extensions to get my voice mail messages at work.

The bottom line is that free phone service is very cool and very inexpensive, but probably not destined for a long life. Enjoy it while you can. And remember… customer service and usability are still important. And oh so difficult to get right.

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