Sometimes it's hard enough to keep track of where your family and friends are living or travelling let alone figure out the most affordable way to keep in touch. Sure, technology is supposed to make it easier to stay connected, but anyone looking at the variety of phone plans, calling cards and communications options might think otherwise. We're all looking to trim our bills -- but not at the expense of those we care about.

One money-saving option you may have heard of is Skype, a Voice over Internet Protocol service (or VoIP for short). If you're not familiar with VoIP, it's the general term for technologies that let you talk over the internet rather than a traditional phone line.

Specifically, Skype is a software application that you can download for free onto your computer. You can then use the software to make calls to other computers or cell phones with Skype, and even to land lines. Skype also includes features that would cost you extra on a landline (or you might not get at all) like video and conferencing.

Why would you want to try it?

The biggest draw is the potential to save money by dodging long distances charges. How? All "Skype-to-Skype" calls are free. In other words, you can place a call from your computer to another computer with Skype anywhere in the world and not have to pay any long distance fees. For example, talk to your kids who are away at university, or touch base with those at home while you're on the road. Hook up a web camera and wave to your grandchildren across the country.

It's not just for individuals -- these calls are free for businesses too. Many budget-conscious companies are using this service to connect with clients, suppliers, telecommuters and travelling employees.

Another advantage: you can also use it to talk more than one person at once -- in fact, up to 150 in a group instant message chat, or a conference call of up to 25. It's an alternative way for businesses to conduct a meeting, or for individuals to plan events with friends and relatives.

Show me the money

It sounds simple enough, but making the free calls is going to take some coordination. It's not like a regular phone line where you can spontaneously pick up the phone and someone will answer at the other end. If you're calling computer to computer, you want to make sure someone is at the other computer to answer.

Unless, of course, you're willing to pay. Here's the up-sell: Skype has a variety of other features available for a fee. You can send text messages from Skype, set up voice mail, forward calls to your cell phone, make calls to landlines and even set up an online phone number so people can call you from a regular phone.

You have a couple of choices for payment options: Either set up a subscription plan to pay for these services, or pay-as-you-go with "Skype Credit" (which you buy with a credit card, PayPal account, vouchers, etc). Calling features like voicemail cost about $20 CDN a year, and receiving calls from a regular phone or cell phone can cost $70 CDN. Subscriptions run between $2.95 USD per month for the Unlimited North American plan and $12.95 USD per month for the Unlimited World plan, depending on the country and services.

You can even invest in a Skype-enabled phone, cell phone or device that will let you call other Skype computers and devices for free. However, options are limited depending on where you live. For example, the new 3 Skypephone isn't available in Canada or the U.S. (yet). Applications for the iPhone and iPod Touch still aren't available here but Blackberry smart phone users can download a "lite" version of Skype and other communications providers offer it too.

There's been a lot of talk in the news lately about various companies expanding their offerings to include Skype (or not), so it's a good idea to check the latest news to see what's available. If you're living or travelling abroad you may find more options available for free.

What you'll need

The software is free, but you might find yourself making an initial investment in some hardware. Here's what you'll need to get going.

- A computer that isn't a dinosaur. Depending on your operating system, you'll need Microsoft Windows, 2000, XP or Vista, Mac OS X or later or Linux. You'll also need a certain amount of space and available system resources too (like 256 MB of RAM and 1GHz processor).

- Broadband internet connection. Don't try it with dial-up; high speed is required.

- Skype-enabled cordless phone (optional). Models are available in Canada starting around $80 and up, with extra handsets available for $20.

- Web camera (built in or external) if you plan to use the video features. Webcams are relatively cheap (they can go as low as $30), but better quality cameras and video cards will yield a better quality video. If you want high-definition, you'll need HD-quality devices.

- Microphone (built in or external). Chances are your computer has a mic built in -- but take a look at where it is. Depending on its placement, your ergonomic computer set-up might not be ideal for clear communications.

- Head phones. Keep the other half of the conversation to yourself by plugging in. Many users solve the problem of microphones and ear phones by purchasing a head set for their computer. Headsets can start as low as about $30 for ones that sit in your ear, and range up over $100 for speciality sets.

These accessories aren't hard to find -- most electronics stores carry them -- but if you add up the costs, you may find it takes several months before you start to see some real savings.

The cons?

Don't get too excited just yet -- there are some disadvantages to Skype. First of all, you can't use it to make emergency calls. Also, because Skype is a software application that runs on your computer and your modem/router, you won't be able to use it if there's a disruption to your internet service or if the power goes out. Skype's website is quick to point out that the service isn't meant to replace a home phone.

In addition, if you need accessibility features you won't find them on the latest release (June 3). The company recommends that people with disabilities download an earlier version instead. If instant messaging is all you're looking for, there are other commonly used applications like Facebook, Windows Live Messenger and Yahoo! Messenger.

And what about privacy issues? Critics of VoIP systems claim that calls are about as secure as everything else that goes over the internet (in other words, the information could be compromised). In the past few years, various privacy concerns with Skype have been identified and addressed, but it's still a good idea to be careful. Sensitive details like business or personal information should always be handled with caution.

Customer service may be an issue as well. Skype's support website is basically a self-help system: It has documentation to answer the most common questions and provide information for a variety of topics, but don't expect much personal attention. There's a place to submit a support request online only if you didn't find the answer you were looking for. However, you're out of luck if you want to call and talk to a real person because the company doesn't have a call centre. Some online sources like the Consumerist.com have criticized Skype's lack of customer service.

Overall, Skype isn't for everyone. Like other services of its kind (such as Google voice and chat), it can be a big money-saver if you're mainly talking to other people who have the service as well. However, it's free to try and you can cancel it and uninstall the service anytime.

If you're thinking of paying for services, do some number crunching first. There have been a lot of changes lately with home phone and cell phone plans, so make sure to check that you're getting the best deal.

ON THE WEB
For more information about Skype, visit its website at www.skype.com

Additional sources: The Toronto Star, TheConsumerist.com

Photo ©iStockphoto.com/ studiovancaspel

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by:
Elizabeth Rogers