As part of our intial work, we conducted months of research examining local phone service options. From the perspective of the local phone companies, landline (also called wireline) phone service is a dying business. Verizon, for example, divested a piece of these operations last year, to focus on “fastest growing” parts of its business. What does this approach mean for millions of consumers and businesses?
Our analysis suggests that this perspective is bad news for consumers and businesses. It appears to mean these companies have effectively stopped trying to offer a price competitive local phone service to consumers or small businesses. Instead, they are relying on bundled offerings, prices that are often associated with lock-in contracts, and years of pre-existing consumer trust, to maintain their existing business base. In effect, they have chosen to allow consumers and small businesses to overspend until this customer base eventually dissolves.
The problem is that millions of regional phone company users—ranging from home owners to smallbusinesses don’t know that equal or superior service exists at far lower costs. They trust the regional phone companies to provide competitive services. This trust is now misplaced.

Our blind nationwide survey also found that the alternative phone providers have done a poor job in communicating that switching to these new services can involve no hassle and no risk effort, as explained below.

Finally, we found that many Web-based so-called comparison or savings sites provided shockingly poor guidance. These sites often recommended over-priced services; or lower-priced services based on long-term contracts or short-term promotional prices, with the full details of these offers hidden in the fine print.

Full disclosure: In the second half of this post I discuss the service that we concluded provided the highest value and the best terms for consumers and small businesses. After reaching this conclusion, we developed an economic relationship with this company. So, yes, I have a business interest in the information and service discussed below.

But, a key aspect of economic theory is full information for buyers. It took us months to figure out the details summarized below, because we had the economic incentive to dive below misleading reports, test the quality of alternative systems, repeatedly stress the customer service centers at different companies and perform all kinds of other due diligence. No reporter can invest this kind of time. So, two alternatives ultimately exist: Either the information goes undiscovered (as has happened thus far) or it gets reported here under the mantle of full disclosure. And yes, I hope this report causes you to decide that, as a trustworthy source of information, The Cost Savings Guy is worth visiting to realize substantial phone savings. If ultimately this kind of invetigative work does not pay for itself in some way, we will be forced to stop—and I strongly believe our society will be worse off.

In our detailed analysis we found a surprising lack of accurate or reliable information on the full range of consumer and small business landline phone options. In addition, despite the difficult economic climate, we found a high lack of awareness of among consumers and small businesses on the available, easy options for reducing landline expenses. As a consequence:

• With all surcharges and taxes included, millions of consumers and small businesses are often paying between $65 per month ($780 per year) for and $90 or more per month l ($1180) for a single home or office phone lines, offering unlimited local and long distance service with voice mail and call waiting.
• In fact, landline service through the Internet with equal sound quality and many more features is available nationwide, for about $25 per month ($300 per year), including all taxes and surcharges, with no contract or activation fee and many more valuable features. For struggling families and small businesses this annaul savings of $500 to $900 per phone line is significant, and more “cash in their pocket” than they will receive through new propoese federal programs.

• The requirement to beeligible for these lower cost services are a high speed Internet connection, which is widely deployed; and a working credit card.
• Our work reinforced a finding that has been discussed in other places. The ultimate monthly fees for landline sericves with no contract or bundle, is often substantially higher than the prominent advertised price—because of surcharges, essential add-on features, advertising of prices based on promorions or lock-in contracts of one-year or more and, state and local taxes.
• Over 50% of consumers and small businesses in our national survey were either unaware of far lower cost VOIP (Internet based phone alternatives) or believed the sound quality or reliability of such services was poor. All of our analysis shows this is entirely incorrect.
• In addition, the small businesses and consumers who were aware of these lower cost servics perceived the process of switching to a lower cost based Internet service as a difficult or high risk activity. As dicussed below, this is also a mistaken belief.
• Finally, in today’s difficult economy many individuals are looking to establish home offices for a job search, contract work, or a new solo business. A large proprotion of these indviduals were unaware that options other than the traditional landline phone companies were almost always the most cost effective, easiest, and best means of establishing a dedicated home office line.
In this difficult economy, many consumers are opting out of landline service altogether. However, for the majority of small businesses and families this may not be a viable or desirable option. Here’s the alternative based on our analysis:
• The right Internet based service (VOIP) combined with the right phone equipment consistently yields sound quality that is indistinguishable from landlines.

We conducted blind tests with users across the country, and these users were unable to distinguish which type of phone or service we were using. As the author of a new book, I also conducted live on air radio interviews where I was interviewed on air from our offices using VOIP service. To date, no radio show has suggested there are any issues with sound quality.

• After extensive analysis, we concluded that the best phone service for homes, homes offices and small businesses was Nextiva in talk for one or two lines, and without a hosted PBX, is Nextiva . (For small busineses with multiple lines that want a hosted PBX, we also concluded tha Nextiva’s .. service provided the best value, but that is not the focus of this discussion). There were eight aspects of the Nextiva service that we considered meaningful. We did not find this combination of customer oriented services anywhere else. Nonetheless, any other company with these same eight features would be equally attractive.

• In general we found that these eight factors, combined with numerous hypothetical situations we put to the company, showed a company that (unfortunately) increasingly rare in America: A service that is built on building and maintaing a customer base through superb service and happy customers as opposed to “gotacha capitalism.”

• Specifially, here’s what we like about Nextiva:

1.) Nextiva is a “bring your own phone” company.VOIP requires that users either employ a special dedicated phone or use an adapter for sue with current phone. While Nextiva does provide Internet phones as a service to customers, it’s not central to their business. This is important as we discovered economical and cordless Internet-dedicated phones that were not typically offered by VOIP services but often provided the best quality and price combination for particular types of customers. It also means that users have the ability to purchase the same phones offered by Nextiva at a better price if one is offered elsewhwere.
2.) Second, as demonstrated by our nationwide blind tests, The sound quality and service reliability, in combination with the right phone equipment was excellent. For businesses, VOIP is now ready for prime time.
3.) Nextiva offers straightforward, high value, no gimmick pricing. With no monthly contract, the price for unlimited local and long-distance calling (including all surcharges and state taxes) is about $25 per month with inTalk for each phone line. Althought the service is advertised as a business product, it’s a great residential service offering as well. No long term contracts, activation, installation or other hidden surchagres exist. In contrast, I received a quote from Verizon in New York’s Hudson Valley for a business line with fewer features that was $78 before surcharges and taxes which would certainly have made it over $90 per year—A difference of $900.
4.) Nextiva offers a 30 day no risk, no questions asked, unconditional money-back gaurantee. So if you are not happy with the servie there’s never any charge and no cancellation, activation or installation charges exist. This gaurantee extends to any equiment you purchase through Nextiva as well.
5.) Nexitava’s US based support customer team is simply among the best we have seen anywhere. Since phone service is such an important tool for business, and essential to consumers, good customer service is particularly important in this arena.
We tested several providers with invented customer service problems, and Nextiva always handled them efficiently and easily. In addition, after ordering the service, we received mulitple contacts from Nxtiva to esnure everything was in order. In responding to thes contacts, the custemer service agent was ready and able to assist with any issues we encountered. Sadly, this dedication to customer satisfaction is often missing from businesses today.
6.) The flat rate $25 a month service automaticaly includes over 25 high value features, such as voice-mail, follow me/find me settings, voice mail to email, and a host of other services that make it easier to manage your personal or business life.
7.) Finally, Iti s possible to order and easily install the service—with no hassle in two ten minute efforts (one to order the service, and the other to install the phone when it arrives in the mail). Then, you can test the service, and only switch over your home phonenumber once you are satisfied you want to keep the service. If you are not happy, you can simply cancel the service and send back the phone. As compared to the potential savings, this is a minimal risk and a good use of time.
Instructions for choosing the right phones to accompany your Nextiva inTalk service, and how to precisely manage the order, test and shift of your existing phone line with no hassle or risk are on our Web site.
As American consumers and businesses look for painless cost-savings opportunities, Internet based phones have arrived as perhaps the number one opportunity. The technology, relaibility, and quality of the service combined with the phone hardware now create the opportunity for higher productivity and lower costs: Let’s get the right information into the hands of the people that will benefit from it.