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Yahoo! is adding more features to its existing VoIP service in a bid to gain a bigger of the rapidly growing broadband telephony market.

A new version of Yahoo!'s Messenger service is due to be released soon that will enable users to make broadband calls that are reportedly cheaper than those on offer by VoIP giant Skype.

The new offer includes PC-to-phone calling and inbound calling with prices for calls ranging from 1 cent a minute to US destinations and 1.9 cents per minute to 30 other countries. Punters will also be able to choose phone numbers for incoming calls in the US, UK and France for $2.99 per month or $29.90 per year.

According to Jan Dawson, principal analyst at Ovum, Yahoo! is "frustrated" that Skype is "grabbing all the VoIP headlines when Yahoo! has been offering PC to PC calling for five years and webcam-based video calling for several years as well".

"This announcement is an attempt to set the world straight on the current state of both providers' offerings," said Dawson.

Last week Skype - which is being acquired eBay for $2.6bn - announced plans to offer video calls as part of the latest version of its internet telephony software. It claims the beta version of Skype 2.0 has "enhanced features that allow people to stay in touch and express themselves online" enabling Skype's 70m or so users to download software that will enable them to see the person they're calling.

Last month Sony unveiled Instant Video Everywhere (IVE and pronounced "ivy") - a free video and voice service - backed by IP-based video communications service provider GlowPoint. ®

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