When you are next sitting on Skype with your friend in Canada think about this – the money you are saving is set to cost the world’s telcos almost $400 billion in revenue over the next six years.

A 10-minute Skype call from Australia to New Zealand was six times cheaper than Telstra

A new Ovum report revealed telecommunications companies were set to lose US$386 billion, with internet based phone calls to grow by 20 per cent reaching 1.7 trillion minutes by 2018. This is backed by Australian figures from CHOICE which found 51.2 per cent of people used VoIP to make calls.

The most popular services in Australia are Skype, Viber, Apple’s FaceTime, Google Hangout and PennyMobile Pro.

CHOICE’s Tom Godfrey said telcos had been slugging customers with high installation and connection fees for too long. It found the price of a 10-minute Skype call from Australia to New Zealand was six times cheaper than a Telstra service.

“VoIP offers people relief from the potentially unnecessary fixed line services that have seen consumers ringing up big bills before they have even made a call,” Godfrey said.

“While there are a number of variables that can compromise reception including internet congestion, call quality for users of VoIP has improved, with the Australian Communication and Media Authority claiming VoIP reception can now be superior to landlines.”

The popularity of VoIP is being pushed by a rise in the availability and speed of the internet. In Australia, whatever the end result of the NBN, the faster broadband will foster an increase in VoIP services.

Ovum analyst Emeka Obiodu said moves to block or out-compete OTT services were unlikely to work, instead they should move to neutralise the price difference.

“Unfortunately, telcos must learn to live with this reality; the use of VoIP will grow increasingly over the next five years to become the underlying technology for delivering voice over telecoms infrastructure.”

From a consumer perspective VoIP is a must use for affordable international, and local, communication. Here’s how to get the most out of it.

What is Voice over Internet Protocol?

VoIP stands for Voice over Internet Protocol and uses an Internet connection to make and receive telephone calls. Once the National Broadband Network is rolled out, all landlines will effectively become VoIP phones.

It can be used on a landline if there is a connection installed.

The other option are “Over the top (OTT)” services which include apps on mobile devices like Skype, Viber and Microsoft Lync.

Why telcos will lose

Telecommunications companies currently charge based on metered voice rather than metered data. In North America, where mobile services are considerably cheaper than Australia, telcos have moved to secure revenues by offering unlimited/abundance voice bundles.

Australia, Western Europe and developed Asia will all lose revenues for VoIP calls that originate from their fixed broadband infrastructure.

How it benefits you

You’ll benefit from better and faster internet based communication because it will cost you less, plus an increase in services like Skype and Viber will also drive competition to create better apps.

You could ditch your land line. With the NBN all landlines will become VoIP by default – but if you have Naked DSL now you can switch to an internet based service already. Check out how by using the Australian Communications Consumer Action Network (ACCAN) guidelines here.

What to watch out for

There are several issues to look for when using VoIP.

The most important thing to recognise is that if there’s a power blackout or you lose internet connections you also lose your phone connection (this won’t be an issue with the NBN based services).

The app or service you use may experience technical issues like echo, delay, and volume.

Not all VoIP services allow you to make an emergency calls. Check out the Australian Communications and Media Authority guidelines here.

Also to note if making an emergency call, emergency services are unable to identify your physical location which has led to some call outs going to the wrong location.

ACCAN also warn to make sure the VoIP service you are using is really the cheapest option with some service providers now offering cheap international calls.

Which apps to use

Skype

Pros: Cheap, popular and easy to use; you can call regular phone numbers. Skype Number is a paid service that provides you with a normal landline phone number that people can dial, which is diverted to your Skype account.

Cons: Group video calls cost extra, credit expires after 180 days of inactivity, plans charge a one-off connection fee every time a call is made, which can make Skype more expensive to use and you must be online to use it.

Viber

Pros: Free, convenient and available for most platforms and operating systems, plus it allows free group calls.

Cons: You can only call other people on Viber, storage of your contacts, without your express permission or that of the third parties, is a privacy concern and you must be online to use it.