Tesco today entered the internet calls market, offering customers the chance to talk to friends and family via their computers for an upfront cost of less than £20.

The supermarket giant claims the move will bring voice over internet protocol (Voip) - calls made over broadband - to a mass market.

Tesco will charge £19.97 for a starter pack including a handset which when plugged into a computer will allow customers to call other users free of charge via the internet.

The start-up pack sold by the retailer will include a £5 airtime voucher which can be put towards the cost of other calls. Customers will pay 2p a minute for calls to UK landlines at all times and 10p a minute to call UK mobiles, whatever the network.

International calls will cost upwards of 2p a minute, unless the call is made via the internet to another Tesco Telecoms customer. On top of these prices customers will also pay their usual broadband charge.

Tesco Telecoms chief executive, Andy Dewhurst, said the supermarket chain's new product would push Voip into the mainstream.

"Consumers have not yet caught on to internet calling but this is now set to change," he said. "Tesco internet phone is the future for fixed line calls. It is so easy to use that people will see this as a pay as you go landline. It will become a service rather than a gizmo," he said.

Subscribers to the service will be able to register online and choose a non-geographic phone number which they can take with them if they move house. They can pick an area code from any part of the UK, regardless of where they live.

Tesco will compete with other internet calls services such as Skype, now owned by online auction site eBay, Freetalk, which is offered by the retailer DSG International plc, and BT's Broadband Voice.

The BT service offers free calls to UK landlines at evenings and weekends, at a cost of £4.99 a month - or £4 for BT Broadband customers. Freetalk offers free UK calls at all times, but customers pay £6.99 a month plus £19.99 for an adaptor to allow them to plug their phone into the computer.

Users of Skype pay nothing for the service and can also sign up to make low cost calls to landlines or mobiles without paying for a contract. They only incur an upfront cost if they decide to buy a handset.

The Tesco internet phones are available in some stores from today and will be rolled out nationally over the coming months. There are also plans to make it available to buy online.

Weighing up the pros and cons for Tesco vs it's competitors

Tesco

Tesco’s service aims to make internet telephony palatable to the mainstream. The service it offers seems designed to supplement the existing landline service, rather than to replace it.

Pros: Customer’s will use a traditional telephone handset, which may be more attractive to many than the microphone or headset often used with the services listed below. It plugs in to the user's PC and routes phone calls over the internet instead of the standard phone network. Many calls, especially international ones, will be cheaper than the standard BT rates. Unlike free instant messenger-based systems (see below), the service allows you to call anyone, not just other Tesco customers.

Cons: The service is not free. Customers will have to pay just under £20 for their handset, and calls to landlines in the UK and many other countries, including the USA and Australia, will cost 2p per minute. Calls to mobile phones will cost 10p per minute. Another drawback is that the service will only work when the user’s PC is switched on and the internet is connected, so unless users are prepared to leave their computers on all the time they may miss incoming calls.

Skype

Nearly 240 million people throughout the world have downloaded Skype’s software. The company was bought by the online auction group eBay for $2.6 billion (£1.4 billlion) in a high-profile deal in September.

Pros: The basic service allows people to talk to other Skype users free of charge, wherever they are in the world, using a headset that plugs into their computer. Users can also call fixed and mobile telephones in other countries at a reduced rate using SkypeOut, a service that routes phone calls through the internet as far as the receiver’s local telephone exchange and then transfers it to the traditional phone network. Calls to Europe, North America, Australia and much of Asia cost just over 1p per minute. Another service, SkypeIn, gives users a landline telephone number that links to their PC, and allows users to pick a geographical code for their number. For example, a Londoner with a lot of American friends could choose a New York number, allowing contacts across the Atlantic to call them without incurring international charges. The call is then routed over the internet to the receiver’s PC. Numbers are sold on a subscription basis for about £20 per year.

Cons: Users can only make and receive calls when their computers are switched on and they are logged in to Skype. Another problem is that the system cannot be used to make 999 calls because the non-geographical nature of the network means that the automated emergency calls system cannot determine which local dispatcher should receive the call.

Vonage

Vonage works on a similar principle to Skype, but has added many features designed to position it as a replacement for the traditional phone system. Other, smaller companies such as the UK-based Gossiptel offer similar services.

Pros: Unlike Skype, Vonage uses standard telephone equipment and does not require a computer to establish the connection. Using an adaptor, the phone is plugged into the broadband socket and the mains and calls are made and received in the usual way. There is a subscription charge of £9.99 per month (similar to BT’s £10.50 monthly line rental, which is no longer needed), which includes unlimited calls to UK landlines and other Vonage users, wherever their location. The price of other international calls varies, but rates for most countries are less than 2p per minute. Vonage can be used to dial 999 – emergency operators will ask for the caller’s location before transferring the call to the appropriate local service. Users can also use their phone adaptor overseas, wherever there is a broadband outlet, and avoid paying international rates for calls back to the UK.

Cons: Vonage cannot be used in a power cut, because unlike the standard telephone network, broadband internet lines do not provide power. Power for the Vonage system comes from the mains.

BT Broadband Voice

BT does provide a home internet telephony package, but it has not promoted it heavily.

Pros: As with Vonage, the BT service does not need a computer: the user plugs the phone into an adaptor and then directly into the broadband socket.

Cons: Although the service allows unlimited calls to UK landlines, users have to pay subscription charges of either £4.99 per month for evenings and weekend calls or £10.99 per month for peak times, on top of the standard BT line rental of £10.50 per month. International calls are not included.

Google Talk

Google Talk is the latest instant messaging service to offer the option of sending speech over the internet, but many other companies, including MSN, AOL, Yahoo! and BT, offer similar services.

Pros: All these services offer the software free of charge and allow unlimited text and voice conversations with anyone who has the same system, wherever they are in the world. Some also offer free video calls.

Cons: Like Skype, messaging services are intended to supplement home phones rather than replace them, as they only work while users have their PCs switched on and logged in to the service. The services are incompatible, so unless everyone opts for the same version users may need several different windows open to speak to all their friends and, unlike with Skype, there is no option to break out of the network and make calls to landlines.

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