Ooma Telo Review – Save Hundreds on Your Telephone Bill

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Ooma tax calculator - how much will you pay?You only pay taxes and fees.
Update: I have now been an Ooma customer for five years. I have left this review in its original format, but I have updated several aspects of it based on my personal experience. Overall, Ooma has been a great value and I have no plans to move my business elsewhere. I’ve been an extremely satisfied…

Update: I have now been an Ooma customer for five years. I have left this review in its original format, but I have updated several aspects of it based on my personal experience. Overall, Ooma has been a great value and I have no plans to move my business elsewhere. I’ve been an extremely satisfied customer and Ooma has saved me well over $1,000 compared to using our local telephone provider!

Not long ago, I bought an Ooma Telo, which is an inexpensive Internet phone system. I thought I would share a review with you to share what it is, how much you can save with it, and why it’s a great option for many people. But let me start at the beginning.

Last week I received my most recent Internet and telephone and I noticed a small price increase. It was only about $8 higher, but I wanted to see what the difference was, so I called the customer service rep. She informed me that the teaser intro rate on my cable telephone service was increasing and that was the prorated amount for the coming month. $8 didn’t seem too bad, until I noticed it only covered a small portion of the month. It turns out my telephone rate was ballooning to $40 per month! I knew the $5 a month I had been paying for the last year was too good to be true, but I didn’t realize that the normal rate was $40 a month. That’s simply too much for how little I use my phone, and for the basic features I was receiving. (and yes, I tried negotiating, but to no avail!).

Ooma Telo ReviewI know several people who have different Internet phone services, so I asked around and the reviews on the Ooma were overwhelmingly positive. There are dozens of VoIP options (Voice over Internet Protocol) available, but the prices, features, and quality vary. After reading a couple dozen articles and reviews, and speaking with a few people, I settled on the Ooma Telo.

Ooma Telo – How it Works

Ooma is an Internet telephone system that plugs in directly to your modem. It works with virtually any phone, and you can also add other features, such as Bluetooth to work with your cell phone (premium feature), voicemail to text, and other features. It’s incredibly versatile, and more importantly – it’s dirt cheap.

Here is the most important thing: you don’t need to connect it to a computer for it to function. All you need is a high speed Internet connection. Several other VoIP products require you to be logged on to your computer while using it, which is a pain (this is one complaint about MagiJack). The Ooma Telo only requires a high speed internet connection and a telephone, and you are good to go.

How Much You Can Save with Ooma?

Ooma advertises itself as a free home phone service. All you do is buy the unit and pay applicable monthly taxes and regulatory fees. That’s it, no monthly payments or other recurring fees unless you choose to purchase add-ons like the Ooma Premier, or any of their other tools. Some of them are useful though, so don’t discount the idea without looking at your needs first. Here is the Ooma page to determine your taxes by location. Here is how much I would pay, based on my location:

You only pay taxes and regulatory fees.

Based on a monthly cost of $4.77, I would pay a total of $57.24 a year in taxes and fees. Add the $40 fee to port my old number, and the cost of the unit ($132.40), and my first year will cost me a total of about $230. Or just less than 6 months of telephone service from my current provider. Here are my total costs for an Ooma compared to my current provider:

  • Ooma year one: $230
  • Ooma year and two: $288
  • Current provider year one: $480
  • Current provider year one and two: $960

My savings for two years of service will be $672. (it will actually likely be more, considering I am not accounting for the applicable taxes with my current provider; if the tax rates are the same, then my savings over two years will actually be closer to $785 – the cost of my current provider minus the cost of the unit and the cost to port my number).

Any way you slice it – this adds up to serious savings!

Save with Ooma for Business

Ooma works great for individuals and small businesses. You can probably just use the personal plan if you are a solopreneur or run a small business from your home. But the small business plans have many additional features that may be worth your while. You can set up the Ooma business plan with a virtual receptionist, add extensions, conferencing lines, on-hold music, a virtual fax extension, call forwarding to your cell phone, and much more.

Ooma has great customer support, and setting up your system should be fairly easy to do.

You Can Keep Your Old Number (or get a new one)

One of the best features of the Ooma Telo (besides saving money!) is the ability to keep your current telephone number. It’s a pain to get your new number to your family, friends, business associates, or anyone else who needs to get in contact with you. The cool thing is that once you get your number into the Ooma system, you can keep it there as long as you are an Ooma customer. That means you can take your number with you whenever you move, regardless of whether you move across town or across the country. Keep in mind if you wish to choose this method and cancel your current phone provider, you may get hit with early termination fees if you are still within contract.

You also have the option of choosing a telephone number outside of your current area code when you sign up for your account. When you register your Telo, you are asked to choose an area code and city, and you will be given a selection of numbers to choose from. This can be a good way to choose a number for an area where you have a lot of family or friends so they won’t have to call you long distance, or if you are planning on relocating in the near future.

How is the Ooma Telo Call Quality?

I didn’t notice any difference in the call quality based on calls from my current landline, and the quality is much better than my cell phone – though that isn’t saying much because I get poor cell phone reception in my house. I haven’t used any of the premium features, so I can’t say much about those. The one I am most interested in checking out is the voicemail to text feature. But I rarely get voicemail, so it isn’t a feature I would use frequently, so it isn’t something I am interested in paying for at the moment.

Over all the ease of use, the quality, and the monthly and annual savings made this a no-brainer for me. After I ran the numbers, there was no way I could convince myself not to buy it.

Where to Buy It

Ooma Telo Review - free home phone serviceOoma is available online and at a variety of brick and mortar stores. The list price is $149.99 for the Ooma Telo, which is the model I bought. You can shop around to see if you can find low prices at different stores, or you can just buy it directly from Ooma. Costco also carries it sometimes, and usually has good deals if it is in stocl (unfortunately, their online deal was sold out when I tried to buy it there). Keep in mind you need a Costco membership to buy it there.

How to Set Up Your Ooma Telo Device

Step 1 and 2: Activate Your Ooma & Choose a Phone Number:

You will need to activate your Ooma before you can use it. This is done with an activation code found on the bottom of the device. After you enter your activation code, you are required to choose a phone number. Here is the cool thing: you can choose a new phone number in any US area code, regardless of where you live. There is no additional charge for choosing any available number in those area codes, and what is even better is that you can keep this number as long as you own your Ooma. I like this feature, because it means that I can keep a number indefinitely, regardless of where I live. I am not planning on moving any time soon, but it is nice to know that I won’t have to deal with getting a new phone number wherever I end up, and I won’t have to deal with contacting everyone and giving them my new information.

How to activate and set up your Ooma Telo
Input your activation code to procede.

What if you want to keep your old number? You can do that to. Ooma makes it easy to port your old number, which is what I will be doing. There is an associated cost, which is approximately $40 at the time of writing. however, it is free when you buy the premium service for the first year, which is approximately $120/yr.

The only downside is that it can take up to three or four weeks for the transfer to occur. From what I understand, much of the time delay is associated with how quickly your former phone provider takes to make the transfer. You would think it could be done overnight, but I guess some things take longer. It is important that you do not cancel your current phone service until you receive a notice from Ooma that your number has been ported and the process is complete. Canceling your phone service early could release your old number back into your former provider’s pool of numbers and you may not be able to get it back.

Note: you must choose a number during step 2, even if you plan on porting your number later. This is necessary to set up your account.

When you choose your number, you are required to select an area code, then a city in that area code. My town wasn’t available, so I chose a nearby town, and was given about 25 numbers to choose from. Since I am planning on porting my number, I chose one at random.

Step 3. Enter your Contact Information

Filling out your contact info is pretty standard stuff, but there were a couple interesting notes: it is required that you have another phone number on file. I have a cell phone, so that is no big deal. The other note is that you need to maintain your current physical address in your account because that is the address that is used for 911 purposes (911 calls from a traditional landline are traced, but since this is from an Internet connection, the process is different).

Step 4. Billing Information

You need to keep a credit card on file so they can charge your account. The only payment options they accept are Visa, MasterCard, and American Express. I was disappointed with this because I wanted to use my Discover Card. Thankfully I have more than one credit card, otherwise I would have been very disappointed since they don’t accept automatic bill pay from banks, PayPal, or other forms of payment.

Step 5. Account Registration

Your user name is the new phone number you just created, so be sure to write that down or memorize it. This is also where you create your password, enter your security questions, and agree to the terms and conditions.

Next steps:

Install device. From here you are ready to install your Ooma. You may need to reboot your device if you already plugged it in prior to registration. Some devices may also need to download and install the latest version of the software or firmware, which will take place automatically in the background, and you may not be able to use the device until this has completed. It can take up to 30 minutes, so plan accordingly. It’s not a huge deal for me since I am porting my number and my main phone service is still running.

Port number if you wish. I am porting my number, so I started this process. The first part only takes s a few minutes, then you are stuck in a waiting game until the process has completed. I don’t know why it takes a couple weeks when cell phone companies can do it in minutes over the phone when you are moving to a new provider. My guess is that it has more to do with the traditional phone service providers dragging their feet because they are losing business. Cell phone providers have more incentive to play nice since it is a two-way street. Here is more info on porting your number.

Set up Ooma Premier features. New customers get 60 days of Ooma Premier for free. There are a few nice to have features, such as caller blacklists, voicemail forwarding, the ability to make and receive two calls at once, virtual numbers, multi-ring, voicemail to email, and more. It’s worth it for many people, so make your own call there.

My Thoughts on Ooma

Overall, I am very happy with this purchase. $40 a month for a landline is an obscene price to pay considering the numerous options out there. Had my Internet provider simply raised my monthly subscription to $10 or maybe even $15 a month, I wouldn’t have bought an Ooma and moved my business elsewhere. But there is no way I can justify paying $40 a month when I can get a very similar service for less than $5 per month, or around $15 a month if I want to go with the Ooma Premier.

Set up and installation were top-notch. Set-up, including the writing and screenshots of this article, took 45 minutes. (I wrote this in a text file as I was setting up my Ooma). Had I not been going back and forth between screens and typing on the side, the setup would have taken around 20 minutes. That’s not bad at all.

I didn’t notice a difference in the call quality between my regular landline and the Ooma, and the quality was much better than the cell phone reception I get in my home. Overall, I give Ooma two thumbs up, and recommend it to anyone looking for a no-hassle, low cost, landline solution.

For more information check out their website.

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About Ryan Guina

Ryan Guina is the founder and editor of Cash Money Life. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started Cash Money Life in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about military money topics and military and veterans benefits at The Military Wallet.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free account here.

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  1. Jarhead says

    I use Majic Jack for my home phone. If you get the majic Jack plus there is no need to hook it to a computer however you have the option of taking it with you and using it with a computer. A good option if you are going to be travelling and want to carry your home or office number with you.

    • Ryan Guina says

      The ability to take your number with you is a great option for those who travel a lot. That would work well for me, since I travel a little bit. I should have looked into that option a little more! (though the Ooma does have call forwarding as one of the Premier features, so I can always pay for the Ooma Premier and forward calls to my cell phone when I leave home).

  2. Lena @ WhatMommyDoes says

    I’ve been waiting on your Ooma review! The cost breakdown is extremely helpful for me because that’s exactly how I analyze the pros and cons of changing services. I’m convinced Ooma is the way to go; however, I just need to figure out what I’ll need to do to keep my security system working (it currently runs off our home phone). Not sure I can hook it up through Ooma, but I haven’t had a chance to look into it yet.

    • Ryan Guina says

      From what I read, Ooma doesn’t officially support alarm systems. They recommend people keep a basic landline service for home alarms. However, I have read that some people are able to get it to work. Your mileage may vary. My recommendation is to do a little more research and see if it works for you. You might also try some of the other VoIP options out there to see if they work with your alarm system, and can save you enough money to make the switch worth it!

      • Lena @ WhatMommyDoes says

        Thanks – I’ll come back here and post my findings if/when I figure out something with the alarm setup.

  3. krantcents says

    We gave up our landline 4-5 years ago. There are times that I wish I still had it. Particularly when I exceed my minutes. Can you make international calls as well for the same fee?

    • Ryan Guina says

      The international calls aren’t free unless they are made to another Ooma user. Otherwise, there is a small fee, which varies depending on which country you call. Here are the international rates: http://ooma.com/products/international-rates

      Skype is a good way to make international calls over the computer, but there is a cost if you want to make an international call to a landline or mobile phone when you use Skype.

      If you regularly exceed your cell phone minutes, then I would recommend looking into another option. Landlines don’t have to be very expensive when using some of the many VoIP options.

  4. Peter says

    We’re probably going to be dumping out phone service for Ooma shortly here, we just have to work out the contingencies with whether we can have DSL service without our landline phone (I believe we can, but have gotten conflicting answers). Thanks for the step by step walkthrough, should be helpful when we do finally sign up.

    Do you know anything about whether there are referral codes available for Ooma?

    • Ryan Guina says

      Peter, I’m not sure about the ability to have DSL without a landline phone; we have cable internet. Best I can say is to ask the phone company. I hope the tutorial works if you get an Ooma. Overall the service has been very good. Not quite as good as a traditional landline, but very acceptable.

      Ooma runs promo codes from time to time, but it looks like the latest one just expired. I’ll let you know if anything changes.

  5. Jynx says

    Problem with magicjack plus is the dropped call during call, it is not unlimited, it can disconect your call after 90min or so to provide quality of service and prevent abandon call they say, check the condition on site before buying it is not a full conected circuit. Ooma is unlimited just like a landline.

    • Ryan Guina says

      Ooma actually isn’t unlimited – they have set limits, but they are extremely high. Basically, Ooma wants to ensure people aren’t using the service for home based businesses like call centers or similar intensive uses. Most people won’t come remotely close to the limits.

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