Skype vs. Vonage

Skype and Vonage are similar VoIP services which offer telephone service through the internet.

In a way, the Internet is a paradox. Getting access to it in your home almost always requires you to spend some money. But once you have that access, you can use the Internet to save money. You can shop around for lower prices on everything from electronics to airline tickets. You can also send e-mail messages, pictures, music and videos without paying for any type of postage. With Voice over IP (VoIP) services, you can make phone calls -- even long distance or international ones -- for free.

Currently, there are several VoIP services on the market. The two most well-known ones are Skype and Vonage. Although both of these services use VoIP technology, they're quite different from one another. In this article, we'll explore how each of these services works, and we'll give you the information you need to decide if one of them is right for you.


­ Skype and Vonage are similar in that they're both VoIP services. When you make a VoIP call, you use your computer's built-in microphone and speakers, a headset, an IP phone or a phone plugged into an analog telephone adapter in place of an ordinary phone. This equipment and your computer translate the analog signal of your voice into a digital signal. The digital signal travels over the Internet. Once it reaches its destination, the telephone or computer that answers the call translates it back into analog sound. Check out How Voice over IP Works to learn about this process and how it's different from plain old telephone service (POTS).

Voice over IP uses a technique called packet switching to send a call over the Internet.

Skype and Vonage are also similar in that they can be significantly less expensive than traditional phone service. This is especially true if you make a lot of long-distance calls. Depending on how you use it, Skype can even be completely free. But the two services have more differences than similarities, starting with the steps you need to take to open an account.


Opening a Skype Account

To start an account with Skype, all you have to do is go to the Skype homepage and click "Download Now" to download a free program. This program is the Skype soft phone client, which includes an on-screen keypad you can use to make calls.

After you install the program, the Skype Getting Started wizard shows you how to add contacts, make calls and import contact information from your address book. If you haven't already signed up for an account at the Skype Web page, you can also follow a link from the program to create your username and password.


The Skype application looks and works a lot like an instant messaging(IM) client. As with an IM client, you can change your online status, look at your contact list and decide who you want to talk to. In order to use these functions and to make calls, your computer has to be on and connected to the Internet, and your Skype application has to be running.

Calls to other Skype users are free, as are outbound calls to traditional numbers until the end of 2006. As of January 1, 2007, using Skype to call land lines and cell phones will cost $29.95 per year (Skype-to-Skype calls will still be free). To receive incoming calls from traditional phones, you must purchase Skype Credit and use the add-on SkypeIn service.

This process is significantly different from what you need to do to get started with Vonage. While opening a Skype account is a lot like starting an IM account, opening a Vonage account is more like getting set up with a new ISP. You sign up for the service at the Vonage Web page. But rather than downloading a program, you fill out forms online to establish your account. Unlike Skype,

the service is not provided for free.

Signing up with Vonage is a multi-step process involving:

  • Selecting a service plan (prices start at around $14.99 a month)
  • Choosing whether to keep your existing phone number or get a new one
  • Choosing the equipment that will allow you to use the service
  • Entering your name, address and phone number for 911 calling purposes


Vonage Service

The Vonage dashboard.

Unlike Skype, which you can often use without buying any additional equipment, Vonage requires special hardware in order to work. You can chose an Ethernet router with built-in telephone adapter, which is free after a rebate, or you can chose from a variety of other adapters, routers and phones. Another option is to change the phone wiring in your home so that you can use your regular phones plugged into your phone jacks. This is only a good option if you own your home and do not share walls or wiring with neighbors. Finally, you can make calls with a soft phone client similar to the one used for Skype, but this is an add-on service rather than part of the basic package.

Once you sign up for a Vonage account, you can use a Web interface to view your call history and change your account settings. This online guided tour can give you a good idea of the options you can add or change online.


After you sign up for your account, Vonage will ship your adapter or other equipment to you. Unless you pay for professional installation, it's up to you to install it and set it up. Exactly what you'll need to do depends on the equipment you choose and the existing equipment in your home. Complete instructions are provided, and setup is usually pretty simple. You'll need to write down the settings you use to connect to your Internet service provider (ISP) before you begin.

The author used a Linksys WRTP54G wireless router for Vonage service.
The Linksys WRTP54G has a port for connection to the Internet, two phone ports and four Ethernet ports.

Skype and Vonage are very different in the equipment required to use them and the cost involved. They also use different methods to make and receive calls, which we'll look at in the next section.


Calling with Skype and Vonage

Making a call with Skype.

­After we installed and set up Skype and Vonage, we made a few test calls. The Skype soft phone includes a contact called "echo1234" just for this purpose. After installing Skype and signing in to your account, you can call echo1234 to make sure everything's set up properly. If everything is correct, you'll hear a recording prompting you to leave a brief message that will be played back to you.

Receiving a Skype call is a lot like receiving an instant message. The program plays a ring tone and flashes an icon to let you know someone is trying to reach you. If the call is from another Skype user, the program tells you who is calling. You then decide whether to accept the call.


To compare how the two services work, we called the same number using both Skype and Vonage. We decided to take advantage of the ability to make free long-distance calls and called They Might Be Giants' Dial-a-Song line. To do this using Skype, we entered the character "+" (required to make a call to a traditional phone), then we entered the rest of the number the same way we would on a land line.

Our setup worked, but Dial-a-Song was broken -- we heard a screech rather than a song. Also, since we were using the built-in speaker and microphone on a laptop, the audio was a little distorted. Using a headset, a WiFi phone or a phone adapter can improve call quality substantially.

Making and receiving phone calls using Vonage is just like making and receiving phone calls on a cell phone or land line. When we called Dial-a-Song using Vonage, our setup worked, but Dial-a-Song was still broken.

One common concern about VoIP service is whether the sound quality matches that of traditional phone service. In the Vonage calls we made, the difference was about the same as the difference between MP3s and CDs. Our Skype calls suffered from using a built-in speaker and microphone, but it was still pretty good for free service.

The quality of a person's Internet connection and the equipment used to make and receive calls can make a tremendous difference in quality for any VoIP service. If the data packets containing the call are lost or slowed down in transit, the call can become distorted or pieces of the conversation can disappear entirely. In addition, some people experience echoes in their VoIP calls, although we did not experience this in our test calls.

Whether VoIP is right for you depends largely on whether you need a traditional phone line too and how many long-distance calls you make. Whether Skype or Vonage is right for you depends on what you hope to use the service to do. If you hope to replace your home phone service, Vonage, or another full-service VoIP plan, can be a good choice. Skype, on the other hand, can let you make free calls to friends and family as a supplement to your regular phone service. It's especially convenient if the people you wish to call are Skype users as well.

For more information on VoIP, the Internet and related topics, see the links on the next page.


Lots More Information

Related HowStuffWorks Articles

More Great Links

  • Vonage
  • Skype
  • Tom's Networking: Two Approaches to VoIP - Skype vs. Vonage


  • Bennahum, David S. "Can They Hear You Now?" Slate, February 19, 2004.
  • Faultline. "VoIP Suffers Identity Crisis." The Register, June 15, 2004.
  • Fisher, Ken. "Skype's Net Neutrality Gamble." Ars Technica. May 18, 2006.
  • Gough, Michael. "The Top 5 Skype 'Gotchas'". Information Week, May 15, 2006.
  • Nuttall, Chris. "Skype in US Free Calls Scheme." MSNBC, May 15, 2006.
  • Vonage
  • Skype