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Last Updated: Wednesday, 18 June 2008, 10:48 GMT 11:48 UK
Skype testing full-screen video
By Jim Reed
Newsbeat technology reporter

Screengrab of Skype

Internet phone company Skype is testing a new version of its cheap call service that supports high quality video conferencing for the first time.

Skype 4.0 beta can stream full screen, high resolution video calls over a standard broadband connection.

In the current version of the software, video chat is limited to a postage-stamp sized box in the corner of the screen.

Video calls already account for a quarter of all traffic on Skype.

The company's product development manager Mike Bartlett said: "There's now a video call button for every one of your contacts. We've tried to make it easier to get up and running.

"We've made the picture a lot bigger and you can now resize the image plus you can run an instant message conversation along side it really easily."

New interface

But users must first connect to a friend and then hunt around for a tiny camera icon after the audio link has already been established.

The new software, which Skype calls a "major" update, treats video, text and audio conversations equally.

Mike Bartlett
Skype's Mike Bartlett says new functions should make it easier

Other 4.0 features include a brand new user interface, automatic detection of hardware settings and simpler record-keeping functions.

It is designed to work with software from other manufacturers, allowing users to import contacts from services like Microsoft Outlook, Hotmail and Yahoo! Mail for the first time.

Tighter integration with the PayPal money transfer service should make it easier to send cash to friends, contacts and shops over the Skype network.

Making money

Skype, which is owned by the auction giant eBay, works over the standard internet instead of traditional phone lines, letting users make calls between computers for free.

Calls to other landlines and some mobile phones are charged at between 2 pence and 14 pence a minute.

Skype claims to have 309m registered members and 12m users at the busiest times of the day. But although it is the largest company of its type in the world, it has struggled to make money.

EBay recently said the business is worth $1.4bn less than the $2.6bn it paid for it in 2005.

According to some reports, it is thinking of selling Skype before the end of the year if it cannot find a way to integrate the technology into its main auction site.

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