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Last Updated: Friday, 11 August 2006, 15:08 GMT 16:08 UK
Talk is cheap and getting cheaper
BBC Click's Dan Simmons
By Dan Simmons
Reporter, BBC Click Online

Woman using Skype
Skype launched in 2003

Everybody likes to get something for nothing and for many net phone call technology has been a great way of saving money when keeping in touch with friends and family.

For a long time Skype has been the trailblazer for net phone calls. It has won millions of fans because the service is free if you call another Skype user.

But Skype is facing challenges as more firms muscle in - some of whom let you make calls without special software or even a PC.

The innovators include Jajah, Babble, Voipcheap and Project Gizmo. Jajah launched earlier this summer and claims to offer free global calling with a twist as it allows you to connect two phones via its website.

Users tap in the number they want to call from, and the one they want to reach. Jajah calls both parties, connects them and lets them chat via the net.

By connecting telephones, rather than computers, the call uses both the internet and the fixed phone network.

"What we give away is the last mile, so not the part from the UK to New York for example (as this part of the call is over the internet) but the part of the call from the termination server in New York to the phone you're calling in New York (the part that travels over the local telephone network)," said Roman Scharf, co-founder of Jajah.

"These local connections are getting cheaper, and eventually they will drop to zero. We're just making it real today."

Jajah claims to offer free global calls, even to mobiles in some countries. But its claims bear some scrutiny.

Call limits

"If calls are from one internet person to another person on the internet they are free because it doesn't use the normal telephone," said Ian Fogg, senior analyst at Jupiter Research.

Video phone call on Skype
Skype has added video to its net calls

"If the calls are to a normal phone number and they are being marketed as free that's because it's a promotional activity - because those companies want to acquire customers, or they want to sell other services like voicemail, ring tones, or other features," said Mr Fogg.

Just as with Skype, calls through Jajah to people who are not registered incur a cost.

There are also limits on the number of free calls users can make. The policies of both Babble and Jajah allow for around 30 minutes of free calls per day. There are further conditions as for some services users must be an "active user" - this means they must make calls a few times each month.

It is also worth remembering that "free" in this sense relies on users paying a regular bill to have a broadband connection to the net.

Small world

Jajah's claims that it offers "free global calling" are worth investigating too.

"It's free global calling because when you look at the list of the countries that are included in the programme it gives quite a global feeling," said Mr Scharf.

However, there are 132 territories around the world that Jajah users must pay to call.

Excluded from the free call list are countries in Africa plus most countries in Asia South America.

Despite the success of Skype, the actual numbers of people using the net phone services are pretty low.

Research by industry analysts IDC in America in 2005 suggests only 10% of households with broadband use it to make calls over the internet.

Jajah hopes to increase take-up by making internet calling feel more natural, using phones rather than computers.

And because Jajah does not use your own internet connection to deliver the call it is much more attractive to people without hi-speed broadband.

While Jajah and other new entrants to the net phone market hope to become a serious competitor to the likes of Skype, they too are feeling competition from established telecommunication firms slashing call prices worldwide. The pressure is on the start-ups to keep innovating.

One of the first gadgets to come from this relentless competition is a handset that uses Skype but connects via wi-fi. The first models of the phone should be available later in 2006.

The handsets seek out wi-fi hotspots so users can make internet calls while out and about.

Some hotspots charge for access, but if users can find ones that are free they can place calls to other Skype users for nothing.


It is not just voice calls that are getting cheaper. Some are turning to the net to make it cheaper to text. This could prove popular as text messaging is very widely practised. During the first quarter of 2006 more than 300 billion text messages were sent across mobile networks - 40% more than in the same period in 2005.

Start-up Hotxt lets UK mobile phone owners with a data connection send as many texts as they want to other Hotxt users for only 1 a week. Up to 35 messages can be sent to non-Hotxt users.

Old-fashioned phone, Eyewire
Traditional phone firms are not about to become antiques just yet

One other caveat is that the sender also pays for the data transfer costs involved but this works out to be a fraction of a penny.

Hotxt has competition from Tex2 which claims its services work worldwide. To use Tex2 users must download software to a compatible phone.

This means that costs fall and means more characters per message. Tex2 allows 256 letters per text rather than the usual 160.

So far the cheap texts are limited to other Tex2 users and there are other limitations.

"Tex2 isn't a straight replacement for SMS. It can't do short codes or premium texts yet, we are working on that," said Stuart McWilliam, co-founder of Tex2.

"What it does do is the peer-to-peer texting and it does that extremely well."

In the UK these services may save users a few pence and more if texts are being sent to friends overseas. Users must remember that to send Tex2 texts while abroad might mean incurring roaming charges.

Tex2 hopes users will buy audio and video services in the future. It may also start showing adverts.

A test by Click revealed that Tex2 was awkward to use as when a message is received the phone rings as if a friend were calling. The interface also seemed tricky to use.

"If these new ways of sending messages are less reliable but very cheap then they are great for idle chat, but they are not very good for arranging a meeting at a bar or a restaurant that evening because they may not get through in time," said Mr Fogg.

"So there's a clarity and a reliability issue. It doesn't necessarily need to be reliable, but consumers need to know how quickly the message will get through, and whether that is reliable or not," he added.

Net phone services falling short
13 Jul 06 |  Technology
Hanging on the internet telephone
06 Mar 06 |  Technology

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