Next They'll Be Paying Us To Phone

By now, many people are familiar with Voice over Internet Protocol (VoIP), a technology which allows radically cheap phone calls to be made via the Internet. Too often, though, VoIP calls require clunky technology or attachments, and so far it has been limited to fixed-line phone use. But this week, the Rebtel service, founded by Swedish entrepreneur Hjalmar Winbladh, who sold a previous start-up to Microsoft, is out to change that. Winbladh is bringing VoIP to mobile phones, and offering users a chance to slash the cost of their international calls.

For a fee of $1 per week, Rebtel users will be given local mobile numbers for each person they want to call abroad. Once connected, the recipient hangs up, redials a local number sent to his or her phone by text message, and is immediately reconnected via a broadband line. "This has definitely got the potential to upset the international-calling model," says Matt Hatton, a London-based analyst with consultants Yankee Group, who thinks the biggest loser could be international calls from fixed-line phones. VoIP is already making big inroads in the world of fixed lines. A report last week by JupiterResearch analyst Ian Fogg even predicted "the end of the home telephone," as consumers increasingly embrace VoIP technology.

Established operators such as BT and Orange are quickly trying to catch up, bundling VoIP in with their other services. The technology isn't yet perfect; in Rebtel's case, users need to sign up first on its website, and remain at the mercy of local mobile networks for the quality of calls, which can be patchy. IDC analyst Paolo Pescatore says he thinks VoIP's potential use with mobile phones "is still a few years away." Still, Winbladh believes the advantages are huge: "it's all about simplicity and honesty for consumers," he says. And, of course, price.