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Tesco VoIP service flawed, say rivals

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Tesco says the launch of its internet phone service will see the cost of calls "slashed to rock-bottom prices", but according to rivals, the service has too many restrictions and will not necessarily be any cheaper.

The upshot for consumers is yet more confusion as they try to figure out whether it's worth buying into VoIP.

Yesterday, the UK's giant supermarket chain announced that it had teamed up with Australian-based Freshtel to launch a VoIP service in the UK.

The starter pack for the pay-as-you-go service costs £19.97, which includes a handset and £5 of free airtime.

Once up and running, calls to other Tesco VoIP users are free, while landline calls in the UK and some international destinations such as the US, Canada and Australia cost 2p a minute. Calls to mobiles cost 10p a minute.

Speaking yesterday, Andy Dewhurst, chief exec of Tesco Telecoms, said that Tesco's VoIP service will "make a niche product, previously the domain of techies, appealing to a mass market".

He said: "Tesco internet phone is the future for fixed-line calls. It is so easy to use that people will see this as a pay-as-you-go landline. It will become a service rather than a gizmo.

"Our prices speak for themselves. It costs 24p a minute to make a peak-time call to an Australian landline with BT. With Tesco home phone it costs 2p a minute at any time. The simplicity of the product and the great value call costs will mean customers will quickly catch on."

The product might be simple, but trying to work out which tariff is more competitive is a real headache.

BT, which continues to come under pressure from rival phone providers, hit back, describing the offer as a "poor deal for consumers".

John Petter, chief operating officer of BT Retail, said: "Why would anyone want to pay £1.20 for a 60-minute call at the weekend or evenings when the same call would be just 5.5p with BT, which is 21-times cheaper?

"Calls to mobiles at a flat rate of 10p per minute can also work out as expensive. A weekend call to a Vodafone mobile with BT is half that price, at 5p per minute."

Wanadoo, which launched its VoIP service last year and claims to have more than 90,000 users, was also quick to point out the service's shortcoings.

"Despite its promise of simplicity, consumers should be aware of the service's restrictions," said Wanadoo boss, Eric Abensur.

In a dig at Tesco's service, he said: "With our service, consumers don't need to download any software, are not tied to a PC (it doesn't even need to be switched on) and can use an ordinary touch-tone phone to benefit from free evening and weekend calls to all UK landlines."

Earlier this week Tesco announced it has signed up its one millionth punter for its mobile-phone service. ®

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