David Pogue just wrote a great review in the NY Times for a new app for your iPod Touch, that turns your new iPod Touch into a iPhone (when in a wi-fi zone like your home) complete with a local phone number, unlimited US and Canadian phone calling, along with unlimited US and Canadian text messaging all for $9.99 US ($14.99 CDN). The app is called Line2, and from my perspective up here in Canada, the great news is that it works just as well here as it does in the US, complete with your choice of local Canadian phone numbers (are you listening Google?  When will you offer Google Voice in Canada?). For my Canadian friends, here is the Canadian Line2 web page.

As David Pogue points out, this might be just what the doctor ordered for your tween, who wants a cell phone, but you’re not interested in signing a 2 or 3 year contract.

Another option in Canada is Koodo Mobility. Two of our teenage kids have no contract cell phones through Koodo, and the $20 monthly fee they each pay gives them unlimited texting and 50 talk minutes per month (we had to build our own plan to get the monthly fee down to $20).  Given that they almost exclusively text, this works just fine for them.

If I did not have a year left on my cell phone contract what I would personally do is buy an unlocked iPhone from the Apple Store for $660 (yes we can buy unlocked iPhone in Canada). Get the smallest Data and Voice Plan I can find from a local carrier (about $25 per month with Koodo including 100MB of data), and then use a service like Line2 for $15 per month.  My Monthly phone bill would drop to $40.  For 500MB of data the cost would rise to about $55 per month.  Lower cost, and unlimited voice in North America.

My first preference would be to use Google Voice, but as I mentioned it is not yet available in Canada yet. In any case this sort of competition should benefit all cell phone users as it will put pressure on them to lower their costs or risk loosing customers as their contracts expire.