What's the deal with internet phone calls?

We moan about high phone charges, but we really only have ourselves to blame when there is a world of free and dirt-cheap phone calls available to anyone with broadband access and a computer.

Despite the fact that the internet offers simple ways to circumvent the sometimes ridiculous costs imposed by telecommunications companies for line rental, calls to mobiles and long-distance calls, a majority of Irish consumers continue to turn their backs on the money-saving technology.

While internet telephony has been heralded in some circles as a bright new dawn for consumers, the hype about Skype and its rivals seems to have passed most people by.

Accurate figures on usage of Skype in this country are almost impossible to come by - when contacted by PriceWatch, the company was unable to provide any data at all - but a recent trends survey carried out by Amárach Consulting for the Commission for Communications Regulation (ComReg) shows that less than half of those polled had even heard of Voice over Internet Protocol (VoIP), never mind used it.

In a survey taken at the end of last year, just 17 per cent of those polled had used Skype or a similar internet telephony service, and when asked whether they would consider using the internet in the future to make voice calls, a remarkable 52 per cent said no.

This reluctance is surprising given the ease with which the internet can be used to make calls. VoIP works along the same principles as e-mail, and all users need is a software programme that creates a virtual phone-dial panel on a computer. This panel can then be used to dial other computers that have the same software - which can be installed for free - and landlines and mobiles anywhere in the world at a very small cost.

THE PROCESS IS simple, even for the most chronic technophobe, and can be set up in minutes. When the software is installed you just log in and start dialling.

It's free to call Skype to Skype, but if you want to call a landline or mobile phone from your computer, then you need to buy call credit, which can be done at the Skype website. Calls to regular landlines are currently 2 cent a minute to Australia, the US and Britain - while calls made to mobiles, in Australia for example, cost in the region of 1.5 cent a minute.

The low cost and ease of use has turned Skype into a global phenomenon. Its user base has increased from 40 million to nearly 200 million since eBay paid $2.6 billion for it in September 2005.

That does not mean that number of people are actually using the service to make calls, however, as Skype includes everyone who has ever downloaded its software in its user figures, including those who have never actually used it. The number of people regularly using the service to make calls is considerably smaller, although it is hard to know for certain, as the company is reluctant to part with that information.

The numbers are impressive, nonetheless. There are 9.5 million active users of Skype at any one time. It added 25 million users worldwide in the first three months of this year and 200,000- 300,000 people download the software every day. It handled 7.7 billion minutes of Skype-to-Skype calling in the first quarter of 2007, a number that accounts for 4.4 per cent of all global long distance calling, while 1.5 billion minutes of paid calls were made last year.

Tim Redfern has been using the internet to make calls for the last two years so could be considered something of an early adapter. While Skype was the first internet telephony software he used, he has recently just bought himself a WiFi mobile that supports VoIP and is considering switching to another provider.

Redfern still has a landline in his house and only uses VoIP for computer-to-computer calls or international calls. "I have only put €30 into Skype credit in two years and have used it for a few important calls." He says there is a half-second lag when making calls. "Skype is not a replacement for a regular telephone and can't be relied on for emergency calls." Clodagh Mulvey is a relative novice, having only been using the internet to make calls for less than six months. She says that setting it up was easy.

She uses speakers with an in-built mike and standard headphones, so she doesn't have to bother with a fancy headset. "I don't have a landline. I decided to use Skype for my home phone after returning to Ireland six months ago and attempting to get a landline installed by Eircom. Despite the fact that there was already a phone line into my house, installed by previous occupants, Eircom said it had to treat me as a new customer and insisted they would have to install a new line at a cost of about €111, plus the phone rental, line rental and call charges. All in all, I decided free calls using Skype was the better option.

She says it is saving her money: "I have been phoning friends in the UK for 2 cents per minute." She can't rely entirely on the connection, as it can drop suddenly, "and you're tied to your computer". She also warns that you need to keep an eye on your credit because if you run out mid-conversation you'll get cut off, as you would using a pre-paid mobile phone.

INTERNET TELEPHONY HAS more serious disadvantages than the occasional disconnected call, however. Spammers and scammers are eager to target the sector in the same way that they pollute e-mail communication, and security experts are certain that the problem will grow as more VoIP systems come on line. There are also question marks over how reliable it will be in an emergency - for a start, it can prove immensely difficult to trace a call made using Skype, and in a power cut VoIP networks go down, unlike regular phone networks.