For a business start-up, the ability to make dirt cheap and/or free phone calls could be the difference between insolvency and another month in business. For me, a freelance journalist with a media consultancy, Skype has dramatically cut down on my single biggest cost of doing business – international phone calls.

It’s not hard to grasp the appeal of cheap VoIP calls. With Telecom Italia, my fixed-line service, I pay about €0.10 per minute to call another fixed line in Italy during peak business hours. With Skype, it’s €0.02 all the time. If I make international calls, which I do every day, multiple times a day, the cost is between €0.18 and a whopping €3.16 (£2.23) per minute during peak hours to another fixed-line phone. On Skype it varies, but across the board it is just a fraction of the rate charged by Telecom Italia. For example, it costs €0.02 per minute to call the United States or Britain with Skype. The most expensive rate I can find as I scan the Skype tariff table is to North Kiribati (€0.71 per minute), Papua New Guinea (€0.75) and Sao Tome and Principe (€1.15). I have no friends, family or clients in these exotic locales at the moment, but now that I know roughly where Kiribati (formerly known as the Gilbert Islands) is, I’m starting to wish I had a contact or two there.

To be sure, there is a price to pay with Skype. The call quality between two Skype users is usually clear, often crystal clear, I find, but whenever I call a landline via Skype it’s a crapshoot. I have had to hang up my dodgy Skype connection and call from my fixed line or mobile on a few occasions, with conspiratorial thoughts of creepy telco line-throttling filling my head. But this is becoming a less frequent occurrence, if only because most of my regular contacts are now on Skype, along with 246 million other people. It heartens me to know there are now enough Skype users worldwide to make the five-year-old start-up one of the largest telecoms providers in the world, certainly bigger than Telecom Italia, BT and Europe’s other former monopolists. The increased price competition should bring fixed-line prices down. The fixed-line incumbents have no choice but to introduce more flexible pricing, as they have already begun to do. If they don’t, the vast majority of their customers will abandon fixed-line calls altogether.

The same spirit of much-needed price competition is now entering the mobile realm with the launch two weeks ago of the 3 Skype phone by Hutchison Whampoa’s 3G operators, 3 Italia and 3 UK. The idea behind the 3 Skype phone is that you can now make free (after your monthly contractual fees) Skype-to-Skype calls over the carrier’s 3G network in your home country, or in another country where 3 operates.

By the end of the year, Hutchison Whampoa is promising launches in Australia, Austria, Denmark, Hong Kong, Ireland, Macau and Sweden. It means that 3 customers will be able to make free or cheap (some 3 operators, but not 3 UK, charge an initial per-call connection fee when using the Skypephone abroad) Skype-to-Skype calls whenever they are in one these nine markets.

Here in Italy, I have been trialling the phone for the past few days. My biggest concern – sound quality – is refreshingly not an issue. I have called contacts in the United States, the UK and Italy without a hitch from all over the city.

Technicians at 3 Italia say the call quality may even be better with Skype mobile handset than when you ring PC-to-PC as the call originates from a dedicated 3 server. That’s because with a computer, a Skype call leaves your PC and disperses across the internet’s varying data lines before being reassembled at the destination. Much of the time we don’t notice. But when the train of data packets carrying your voice aren’t quite getting through in sequence, you can lose syllables, words or whole phrases. It’s not common, but it does happen. Using a dedicated server, 3 takes some of the randomness out of the call. I cannot say if this is any more foolproof, but in my trials, I never lost a word.

The other great feature of the phone is the ease of use. You sign in on the handset with your Skype account details at the outset. This takes less than a minute. Once signed on, you press a single Skype key and the screen shows all your contacts and their status, exactly as you would see on your computer. You can use Skype to chat or call them. Pretty simple.

There are some drawbacks to the service. As of now, you cannot use Skype Out with the handsets, but there is some speculation this could be added in the coming months. Another question hangs over coverage. There are no roaming agreements between Skype and any other carriers other than 3. This means that whenever you lose 3’s 3G signal, you cannot access Skype. So far, this has not been an issue in my trial, but I’ve only been using it around Rome. Still, 3 Italia says it has 85 per cent (and growing) of the country covered so most places you want to make a Skype call, you’ll be able to.

The other big concerns is whether 3’s servers can handle all the data that will be generated by Skype callers. In Italy, this is not really an issue. The carrier’s mobile data traffic has been steadily climbing and the company plans to beef up capacity to meet this need, whether users are using the phone to surf the net, make Skype calls or download video clips. A second issue is availability. Early reports in Britain suggest that it could be difficult to keep the phones on the shelves. Again, 3 officials assure they have enough handsets to meet demand.

You won’t be seeing iPhone-like queues for the Skype phone, but I would bet Skype loyalists will make the handset one of the hot sellers this Christmas period.

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Bernhard Warner, a freelance journalist and media consultant, writes about technology, the internet and media industries. He can be reached at techscribe@gmail.com

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