Review: Ooma Telo is great Internet phone device

NEW YORK -- I've tried many gadgets that send my home phone calls over the Internet, but only one has really done a good job of it: the Ooma. Although it has been around for a couple of years, it recently trotted out an upgrade that promises even better call quality, plus some other bells and whistles.

That intrigued me enough to take a look at the latest model. My verdict: For most home users, Ooma may not have gotten much better, but it's still the best one I know of.

When the first Ooma device, the Hub, came out in 2007, its core proposition was this: Pay $250 for a box that's the size of an answering machine, hook it up to your broadband line and home phone, and get unlimited domestic calls for free -- for life.

That was a good deal, especially since the Ooma had stellar audio quality and reliability, something the other Internet phone services lacked. Being a techno-optimist, I had dragged home a succession of other phone devices over the years, only to have them all nixed by my wife, who uses the home line more than I do. "Horrible" was her judgment on Internet telephony.

The Hub passed the wife test, and I have been using it at home for more than a year, feeling confident enough to ditch my traditional phone line. There were two service outages early on, but since then, it's worked great, and it's already paid for itself.

Late last year, Ooma launched a new model, the Telo, which is the basis for all the new features. However, it also started to look as if Ooma's original offer was too good - at least for the company. The service is no longer free for life: Buy a new Telo, and you'll have to pay $11.95 per year after the first year. Unlimited calling is also gone; the limit is now 5,000 minutes per month. (As before, international calls cost extra, but the rates are low.)

That's still very good value, especially considering the Telo costs the same as the Hub: $250. But watch out -- Ooma is really, really interested in getting you hooked on its $10-per-month Premier membership. After two free months, Ooma will automatically start charging you for it, unless you cancel. The company warns you, but this is still pretty heavy-handed marketing.

The basic Ooma service includes voice mail, and both the Telo and the Hub double as answering machines. You can keep your landline phone number, but Ooma charges $40 to move it over. You can call 911.

That should be enough for a lot of people, but here's a rundown of some of the whiz-bang new features:

Cordless handsets -- These cost $50 each. It's neat that you don't need a base station for them. The Telo takes that role, but the handsets themselves aren't a big step up from regular cordless ones, feature-wise. Most importantly, sound quality was poor, with a buzzing in the background on calls. Ooma tells me this may be due to some extra noise added to make calls sound more like regular phone calls and let people know the line is live. In any case, I'd probably stay away from the handsets.

PureVoice -- I didn't notice any improvement in call quality due to the new transmission technology. Ooma says it will be particularly helpful on poor Internet connections, so it might improve things if you're on cellular broadband or WiMax.

Bluetooth integration -- Premier members can buy a Bluetooth chip from Ooma for $30 and plug it into the Telo. Set your cell phone to connect to the chip. When someone calls your cell, the Telo and any phones connected to it will ring. This means you can leave your cell phone in the charger, or where it has the best reception (as long as it's close to the Telo) and use your regular home handsets to answer the call. This worked well in my test. You could also connect a Bluetooth headset to the Telo, but this will only work well if the Telo is close to where you'll be talking, such as at your desk, given Bluetooth's limited range.

Google Voice integration -- If you have a Google Voice number, you can set it to forward to your Telo, which will read out the name of the caller from its speaker, and let you listen in on voice mails as they are being left. It's the ultimate screening solution. This is also for Premier members only.

Voice mail transcription -- If you're a Premier member and you're willing to pay an additional $10 per month, Ooma will transcribe 40 voice mails and e-mail the text to you. After that, voice mails cost 25 cents each.

Google Voice will transcribe an unlimited number of voice mails for you for free, but you get what you pay for: Ooma employs people to listen to the voice mails (but splits each one up among several listeners to preserve privacy), while Google Voice relies on voice-recognition software. In my test, Ooma's transcriptions were accurate, while Google Voice had howling errors in every one.

Obviously, the new features will appeal mainly to power users, particularly small businesses and those who work from home. I can't really imagine paying $10 and possibly more for transcribed voice mails, but a real-estate broker might find that well worth it.

There's a contradiction here, though: Ooma specifies that the basic service is only for residential use and says it will charge $40 per month extra for non-residential use. I sense the company wants to avoid someone buying an Ooma to run a call center, racking up tens of thousands of minutes per month. It probably won't apply the extra fee if you're a one-person business, and indeed, it probably won't know that you use the service for work. There's no guarantee of that, however.

The Telo is a powerful machine, and Ooma is likely to give it even more interesting capabilities in the future. But if you don't need a "smart phone for the home" and mostly use the landline as a backup for your cell phone, here's a tip: You can still find the old "Ooma Core" package online. If you buy that, you don't have to pay the new $11.95-per-year fee.