A guide to cheap online phone calls

Handsets and softphones
There are two main types of internet telephony services: those that require software to be installed on a computer, and those that require additional hardware devices to be connected to an existing broadband modem or router (dial-up users can use internet telephony in instant messaging programs, but most of the services we're going to talk about require a connection of at least 256Kbit/s).

As we mentioned earlier, while instant messaging software provides free calls, you will need a headset (a pair of headphones with a integrated microphone, which can be bought for about £10). The other person has to be online, and making a call involves clicking on their username to begin a chat session and then instigating a voice call by clicking the green call button.

However, the software is now more sophisticated, and enables callers to dial telephone numbers using a softphone, a graphical 'handset' that appears on the PC screen. Tap in the phone number you want to call on the computer's keyboard and the software just dials straight through.

The software will also provide an address book so that you can store your most commonly used phone numbers for one-click dialling.

The most well-known internet telephony software is probably Skype, followed by BT/Yahoo Communicator and the lesser-known Callserve. Skype started life as an ordinary instant messaging program used to chat with other PC users on the internet, but it now offers an additional premium option called 'SkypeOut' that allows you to make low-cost calls to ordinary phone lines as well.

BT Communicator is also an extension of an existing chat program. BT and Yahoo have an agreement to collaborate on a number of internet services, and this has allowed BT to add an internet telephony option to Yahoo's popular Messenger program.

As with Skype, you can use the software for free internet chat with other computer users or to send a call to an ordinary telephone line.

Callserve's Telephone software is less sophisticated. It has no internet chat features, and simply concentrates on the process of making calls from the computer to a telephone.

Skype and Callserve operate on a pay-as-you-go basis. You use a credit card to pay for calls in advance (the minimum amount is £10 on Callserve and €10 with Skype). There's no monthly subscription fee, nor any need to sign a contract. This means you can try the service for a while without having to make a long-term financial commitment.

BT Communicator is even more straightforward, but only if you already have a BT telephone line. If this is the case then the cost of any calls you make using BT Communicator is simply added to your normal quarterly phone bill.

But if you're signed up with a telephone company other than BT, such as NTL, Telewest or Kingston, then you can't use BT Communicator at all.

Call routing
The other way of using internet telephony services is to try what's known as a digital telephone adapter. This is a small device that can be connected to an existing broadband modem or router. You can then plug an ordinary telephone handset into the digital telephone adapter and make calls using the phone handset rather than the computer.

The advantage of this approach is that it's very easy to set up and convenient to use. There's no software to install or configure, just the little phone adapter and a telephone handset. It also means that you can make calls while your computer is turned off, or while someone else is using the computer.

There's one big potential fly in the ointment, though, which is that these adapters need to be connected to a modem or router that has a network socket, often referred to as Ethernet. Many modems only have a USB port, which means that digital telephone adapters can't be connected.

That's not a problem if you opt for BT's Broadband Voice service, as BT thoughtfully provides you with an all-in-one router and telephone adapter, with both USB and network interfaces, at no extra cost.

However, BT's main rivals, Vonage and Freetalk (which is part of the Dixons group) both use adapters that require an Ethernet connection. It is possible to plug the Freetalk handset into a PC network socket, but that means the PC would need to be switched on in order to use the service and a raft of settings need to be changed.

In short, people with USB modems will need to buy an Ethernet-enabled modem before they can take full advantage of Freetalk or Vonage.

This also means that an Ethernet interface needs to be installed in your computer as well. Most PCs - and all Macs - have Ethernet already built in, but those with older PCs will need to buy an Ethernet interface card for their PCs. The combined cost of buying this additional Ethernet card and a modem should be no more than £100.