We purchased an Ooma from Costco 2-3 years ago. We paid less than $200 (including tax, it was $180-something). We never paid another cent. All calls are free within the U.S. It replaced our entire landline bill once we canceled the landline service (after a few weeks of trying Ooma). Our landline bill was down to $22/month because we had already dropped long-distance and used our cell phones for that, so it took 8 months for the initial cost to be mitigated by the savings. Our mobile phones don't work well in our home, though, so we would have to be out and about to make long-distance calls. Dropping the landline and only using our mobile phones was not an option for us (for several reasons, but mostly because they are not reliable in our home and we have obligations that require reliable phone service).
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Starting next month (Jan 2012), we have to pay the government taxes of $3/month.
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Our Ooma works with our existing phones, so it is just like using a regular phone. We pick up a regular phone, dial, talk, hang up. The Ooma device (about the size of a router) connects to our incoming cable after the cable modem and before our home wireless router. We don't need a computer to use it, like we did when we trialed the MagicJack. The call quality of Ooma is awesome for us! Far superior to MagicJack. Some folks find MagicJack good quality, so your mileage may vary.
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Ooma has a website with many free and paid services. You can pay very reasonable prices for calls to other countries, for example. Voicemail is free, for example. We only use the free services and it is great for our family! There are no service contracts, but you do buy the unit upfront. It has worked very well for us and has saved us a lot of money (and has greatly increased convenience and joy with telephone communication).
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Check it out for yourself.
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(I don't work for Ooma nor would I personally gain from anyone buying one in any way. I am just a very satisfied customer!)