DIXONS, the electronics chain, is challenging traditional telecoms companies such as BT with Freetalk, a new internet-phone package that offers unlimited free calls to UK landlines for a year, writes Jessica Bown.

Freetalk uses technology that allows you to make voice calls over the internet, as long as you have broadband.

It costs £79.99 to sign up, which includes an adapter to plug into your existing handset to link it to the broadband connection.

All calls to UK landlines are free for the first year, after which you pay £6.99 a month. A voicemail service is also included, but calls to mobiles cost 5p to 15p a minute and international calls between 2p and 12p a minute to most countries.

You may be better off with another internet-phone deal, though. Blair Wadman of Uswitch, a comparison website, said: “There are alternatives, such as Skype, which charges no set-up or monthly fees and offers free calls to other users.”

With Skype, which was recently bought by Ebay, the online auction site, you do not use a traditional handset. You must use either a microphone headset or the external speakers and microphones that are supplied with most modern personal computers.

Again, it is best to have broadband — although you can use the service without it.

Skype claims that the sound quality is at least as good as a normal phone call, especially if you use a headset, but some users complain of echoes and delays.

While all calls to Skype users are free, those to other landlines cost 1.3p a minute, and those to mobiles cost 16p.

Also, you will be uncontactable if you go offline or switch off your computer.

This is not a problem with Freetalk — you can call even if the computer is switched off. Another advantage is that your phone number is transportable. You can take your adapter anywhere with a broadband connection and make calls as if you were at home.

Vonage works in the same way as Freetalk. You simply plug your existing phone, or a second handset, into the specially adapted router and make calls in the usual way.

It is more expensive at £9.99 a month, but all calls to other Vonage users are free. The service also offers free local and national calls to landlines.

The Wanadoo Wireless and Talk service might also be a good option if you want to sign up to broadband and get a phone package in one go.

It includes a two-megabits-a-second broadband connection and a “livebox” into which you can plug an ordinary phone. It costs £17.99 a month for the first six months, then £21.99.

Calls cost 2½p a minute to UK landlines between 8am and 6pm and are free in the evenings and at weekends, while calls to other Wireless and Talk users are free any time. Calls to most other countries cost 4p a minute and those to mobiles cost 10p.

BT’s internet calls package works like the company’s Option 2, which includes free evening and weekend calls to UK landlines for a monthly fee of £4.99. At other times, they cost 3p a minute. There are no free calls to other users.

Most internet-phone packages do not permit calls to emergency services.

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