Tesco's free web phone service
TESCO today launched a free internet phone service in a huge threat to traditional BT landlines.
The supermarket giant is to sell packages for less than £20 in what it claims is the simplest 'mass market' version of the technology. It will allow users to make unlimited free phone calls over the internet to someone sitting at their computer anywhere in the world.
Calls to landlines in the UK and 20 foreign destinations including America, Canada and Australia will cost 2p a minute. Calls to UK mobiles will be charged at 10p a minute.
Tesco is the biggest consumer name to launch its own version of the technology, known as Voice over Internet Protocol (VoIP) BT and Dixons already offer a VoIP package, but globally the best known provider is an American company, Skype.
VoIP is seen as the most revolutionary telecoms innovation since the birth of the mobile 20 years ago. It has led to predictions that phone bills will virtually disappear over the next decade as the number of calls made over traditional landlines falls away.
The Tesco pack, which goes on sale this week, includes software on a CD and a handset. Users install the software, register their details and choose a phone number, which is not restricted to the normal area code and can be kept for life.
They then plug their handset into their computer, which must have a broadband connection, and are ready to make calls which are routed along the internet in the same way as emails.
It is possible to use the service abroad or on the move via a laptop. Packs cost £19.97 and include £5 worth of calls. Andy Dewhurst, chief executive of Tesco Telecoms, said: 'Our service will make this technology accessible to millions of households.'
About eight million households in Britain have a broadband internet connection. A BT spokesman said: 'We were the first incumbent phone company in the world to offer VoIP and we are investing in our own 21st-century network.
'But it is not going to be suitable for all calls. To get free calls you have to ring someone who is already on their computer, and the quality of the connection is still not as good as the old copper-wire network.'
BT earns about £ 3.5bn a year in revenue from residential calls.
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