BT cuts prices as VoIP market hots up

BT is undercutting Skype, just as Dixons launches its own Internet telephony product

BT has slashed its VoIP pricing to undercut number one Internet telephony provider Skype.

The offer, which will only last until the end of this year, will see rates to a number of international destinations, including Australia and the US, cut to 0.5p per minute and fees for VoIP users making calls over a BT Openzone hotspot shelved.

Gavin Patterson, managing director of BT's Consumer division, said the price cuts come in an effort to stop Internet telephony providers tempting BT customers away with cheap calls.

VoIP is now shaping up to be a market tech firms are fighting to get into, with a series of companies announcing their intentions towards voice-over-IP this week.

DSG, which owns high street electronics firms including Currys and Dixons, has unveiled a VoIP venture, under the brand FreeTalk. FreeTalk will sell 'adapters' in DSG-owned stores that give users free UK fixed-line calls for a year over VoIP as well as cheap international calls, and then charge a subscription of £6.99 per month for the same deal.

According to Ovum analyst Cesar Bachelet, FreeTalk's VoIP package is nothing new and not even the cheapest available. However, DSG is the first company that will be selling tangible VoIP products on the UK high street.

"This combination of presence and brand is what differentiates DSG from most of its more traditional telco and ISP competitors and has so far been used successfully by Tesco and Carphone Warehouse to develop their telecoms business. It will be interesting to see whether this can be repeated with VoIP," said Bachelet in a research note.

FreeTalk will now face competition from two other new entrants to VoIP, as well as established players such as Skype and Vonage.

Onetel has launched Just Dial, with a £1.99 monthly subscription for free evening and weekend calls or £4.99 for free calls any time. Onetel will also be selling adapters for phone-fond VoIP users.

ISP PlusNet has also launched a VoIP service, PlusTalk, offering a range of calling packages with prices starting at £2.99 for a monthly subscription.

VoIP old-timer and fellow ISP Wanadoo revealed its subscriber numbers today. The France Telecom-parented provider, which launched its Internet calling package in March, has signed up 50,000 users to the service.

Wanadoo said nearly half of its new broadband subscribers are choosing to use VoIP now, with each of its VoIP users making around 150 minutes of calls per month.