Thursday, September 30, 2010

Economic Considerations on Skype

Your regular and mobile phone bill is normally made up of two parts: cost of calls, and fixed charges and taxes. You can use Skype to reduce the overall cost of your phone calls, and reduce—in some cases even eliminate—your fixed charges and taxes.
The cost of an individual call is the duration of the call, measured in minutes (and sometimes fractions thereof), multiplied by the call rate. For example, a 7 minute call at a call rate of 5 cents per minute will cost you 35 cents. The lower the call rate for a given destination, the lower your cost of calls to that destination. You can use Skype’s very low per minute call rates to save money on your overall cost of calls.
Over the years, most people have seen their phone bills accumulate lots of fixed charges and taxes. Indeed, before I switched to Skype, fixed charges and taxes amounted to 56 percent of my regular telephone bill! Some taxes relate to your cost of calls and so decline as your cost of calls decrease. But most are truly fixed, in the sense that even if you don’t make a single call during any given month, you still have to pay them. To eliminate the fixed charges and taxes, you’d need to reduce the number of phone lines entering your home or eliminate them altogether. By using Skype you can do this and so avoid many fixed charges and taxes—and it’s all legal!

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