The Kenyan government is set to issue licences for companies to offer phone calls over the internet, officials say.
First Kenyans must get computers
Voice Over Internet Protocol (VOIP) would bring down prices, Communication Commission of Kenya spokesman Mutua Muthusi told the BBC.
He said the price differences would be biggest for long-distance and international calls.
Until recently, Kenyans could face waits of up to 10 years to have land-lines installed.
Correspondents say the situation has improved since the monopoly of state-owned corporation Telkom was ended.
Telkom has also come under pressure with the advent of mobile phones.
"We want to create value in the communication industry and the voice over internet is a technology that is going to create immense value by enabling more people to get into the industry at a cheaper rate and good services," Mr Muthusi said.
He said international calls could become as cheap as local calls - 10 shillings a minute (13 US cents).