The biggest revolution in phones since 1876

I HAVE seen the future of telecommunications, and today I called London on it. From my home in France, and using just my computer, a microphone and some free software, I was able to speak at length to a colleague without being bothered about the expense.

For, apart from the price of my local internet connection, the call cost me nothing.

Many believe it is one of the biggest revolutions in voice communications since Alexander Graham Bell phoned his assistant in the next room in March 1876 and declared: 'Mr Watson, come here, I want to see you.'

The name of this new form of voice communication is Internet Telephony or, if you prefer, VoIP - Voice over Internet Protocol.

At this point, having heard those jargon-rich names, most people's eyes understandably start to glaze over. But the interesting bit about this growing technology is not its name or how it works but the fact that it can save businesses and individuals a great deal of money on their telephone calls.

Some observers believe the inescapable logic of the technology is that all voice calls will be free one day. Household names such as Abbey National, House of Fraser and Diageo have started to install variants of IP telephony in their businesses and it is certain that many more British firms will follow suit. House of Fraser reckons it can save about £30,000 per store per year with the technology.

Internet telephony works by reducing our voice communications to 'packets' of information that can be transmitted via the network we already use for sending data. For technical reasons, this is a lot cheaper than making calls on the conventional telephone system. Companies save money because they use their existing data networks to make Internet Telephony calls between their offices. In effect, these voice calls are free once a company has an always-on broadband internet connection.

THERE is another saving. Using IP Telephony to make calls on the existing data network means that a firm does not have to run a separate network just to make telephone calls. Think of the current situation as like having to run two separate road systems for vehicles, one for blue cars and one for all other colours. It is obviously much simpler and cheaper just to maintain one system for all cars.

It is little wonder that some experts see VoIP, or variants of it, changing the face of telecommunications. It also explains why existing telecom players such as BT are busily installing new VoIP exchanges for British companies as well as starting to offer residential VoIP packages.

Tim Mason, chief executive officer of London-based telecoms company Maintel, says: 'It is a huge leap. VoIP is the most exciting technological advance in the communication of the human voice.'

His company already employs the technology for its homeworkers, who use existing broadband internet connections to speak directly to head office. 'For homeworkers it will revolutionise the way they work,' Mason says.

VoIP has been slow to take hold among individual users, apart from a few dedicated 'early adopters' around the world. There are two basic ways it works. One is to speak computer-to-computer in which the calls are free, except for the cost of the internet connection. The snag is that the person you are calling has to use the same software system as you.

The other, adopted by companies such as Net2Phone, is to use your computer to make voice calls into the existing telephone system. This does cost money but prices can be as low as 3p a minute between the UK and the US, and it does allow you to speak to anyone with a conventional telephone.

Both systems have until now been dogged by complex software, unreliable connections and variable sound quality. All that may be about to change, however. An aggressive new London-based company called Skype, whose founders created the hugely popular but controversial KaZaA file-sharing software, is threatening to take the world of VoIP by storm.

Using new technologies, Skype have massively improved the reliability of PC-to-PC calls and the sound quality - which can now be as good if not better than conventional telephones. The company has attracted seven million downloads of its software for its free phone service In a matter of months, and that figure is rising massively. It will offer a paid-for service connecting computer calls to the telephone network later this year.

Skype chief executive Niklas Zennstrom believes that all voice calls will be free one day. 'It's obvious. Ten years ago, there were discussions within the telecoms industry about charging for emails,' he says. 'That did not really work out, and people do not pay for emails. The same thing is going to happen with telephony.'

He believes that telephony will in effect become part of the added value that broadband internet can offer. 'I'm sure that companies such as BT will try to continue to charge for voice calls,' he says. 'But it's up to the consumers, they have a choice, whether they want to make free calls or if they want to pay for them.'

For some of us, it is not a difficult choice to make.