"Rent vs. buy" is a classic business dilemma. Is it cheaper to rent office space or buy a building? Buy copy machines, or lease them? Now there's a new one to add to the list: rather than pay for telephone service by the month, why not buy a little hardware that delivers free phone service for a year or more at a time?

New products from YMAX Communications Corp. and ooma, Inc., do just that -- they let you continue to use your existing telephones, but pay a one-time fee for some digital hardware that uses (VoIP).

Both deliver free local and long-distance calling in the United States and Canada. The difference is that the YMAX MagicJack is cheap and dead easy to use, but limited in its features. The ooma Hub is more expensive and more complicated, but offers more features.

Removing The Nerd Factor From VoIP
Because VoIP works wherever the Internet works, it is driving the cost of phone service (and especially long-distance calling) toward zero, and sprouting new services like visual voicemail. But its success depends on impersonating everything that's familiar about telephone service -- it has to work the way we're used to using telephones, dialtone, trimline handsets, and all.

The two pioneers of VoIP, Vonage and Skype, took differing approaches. Vonage adopted the existing POTS business model hook, line and sinker: You pay for special equipment, and you pay by the month for service. Skype took a different approach: It left the equipment up to you, and charged for service on a minute-by-minute and feature-by-feature basis. Both have had success, but each points up a weakness of the other's approach: Skype makes Vonage look more expensive than VoIP has to be, while Vonage makes Skype's headset-and-microphone approach look nerdy and off-putting.

Both the MagicJack and the ooma Hub are focused on doing a better POTS imitation -- cutting the price of service while reducing the nerdiness of VoIP.