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Voice calls price war looms

Traditional telcos in competition with voice over IP
Written by Jane Wakefield, Contributor

Voice calls over the Net are the latest threat to traditional telcos according to start-up firm HearMe, Wednesday as analysts predict a price war in voice calls.

HearMe is set to launch voice over IP services in the UK in the autumn allowing users to speak to each other from PC to PC and from PC to fixed line or mobile telephones.

Vice president of sales for HearMe, Mike Hewitt explains the potential. "Last night I called home from my hotel in London to my kids in San Jose -- a long distance phone call for a local charge." He believes voice over IP is set to revolutionise the telecoms industry and render traditional networks obsolete. "Less than 5 percent of voice is currently sent over IP networks but by the end of the decade it will be 100 percent," he says.

Analyst at research firm IDC Richard Moll believes a price war is just around the corner. "Voice over IP is certainly driving down prices and it definitely lowers costs. Traditional operators will also cut prices as they are already feeling the effect of increased competition," he says.

HearMe is currently talking to major UK telcos and ISPs to find partners to deploy its services. As well as allowing Internet phone calls, Hewitt believes there will be a huge market for specialist Web sites. "Voice adds another dimension to a Web site. Web sites will go after the mass market and offer voice services free," he says.

According to Hewitt telcos are being forced to adopt voice over IP technology. "Telcos recognise it could be a threat to them and are looking to be first to market with it so they can still make some money from voice services," he says.

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