The UK's telephony industry faces even more competition today following the launch of a new Internet-based voice service that promises free and cheap phone calls.

The folk behind the Gossiptel service reckon Voice over Broadband (VoB) is set to "rocket" over the next 18 months as more and more people hook up to broadband in the UK.

But the service also enables users to call fixed-line and mobile telephone numbers at reduced rates. For instance, calls from the UK to North America, Australia and New Zealand are just 2.5p a minute.

Although there are no upfront or monthly charges, punters can buy an adaptor for £94 which will enable them to use their existing handset to make VoB calls. Gossiptel is also offering a handset for £117.49.

Said co-founder Kim Thesiger: "It really wasn't that long ago that a minority of us had email, but now almost everyone has an email address.

"Given that BT have stated that they will make broadband available to exchanges serving 99.6 per cent of UK homes and businesses by the Summer of 2005, I believe the uptake of broadband telephony will rocket in the next 18 months with people signing up purely to take advantage of free and cheap telephone calls."

According to Juniper Research, Internet telephony will make up 12 per cent of all telephony revenues in five years time as the VoB market generates contributes $32bn, out of a total telephony market worth approximately $260bn, by 2009.

Bootnote

Nick Ogden, founder of online retailer BarclaySquare and payments system WorldPay, has set up On Instant to target the small and medium business Internet telephony market, writes John Oates.

WorldPay, which has been trialling services with 6,700 chambers of commerce, offers calls for £15 a month but this falls to £4 a month for businesses with more than 500 users. It is launching a consumer service later this year. ®

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