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Make that call: slash phone bills to next to nothing

From Skype to 'My Faves', Esther Shaw looks at the latest cut-price deals for users of landlines and mobiles

If you dread opening your phone bill when it lands on the doormat, it could be time to make a change: there are ways of paying next to nothing.

Nearly all the big landline providers now offer all-inclusive packages for a monthly bill of around £20, but there is a wide range of options that can cut costs further still.

"With most suppliers you will pay £10.50 line rental. On top of this, Talk Talk's 'anytime' package would cost an extra £7.49 a month, and BT's Option 3 an extra £7.95," says Steve Weller at uSwitch.com, the price-comparison service. "But consumers can make much cheaper calls to anywhere in the world using VoIP [voiceover internet protocol] technology via an online connection."

Rob Barnes of the price-comparison service Moneysupermarket.com, says: "If the people you are contacting also have VoIP, you can have unlimited calls free."

The pioneer was Skype – bought by eBay in 2005 – but companies such as BT, Vonage and Tesco now provide a similar service.

Note that calls made across the internet using a broadband connection are only free if both parties are on the same network. Otherwise it will cost a Skype user, say, up to 1.4p a minute to call a UK landline and 16.6p to ring a UK mobile.

In the past, you had to sit at your computer and use a headset to make VoIP calls, but this is no longer the case. In the latest move, Skype has joined with mobile phone group 3 to launch the first handset tailor-made to allow free calls over the internet while on the move.

The Skypephone, unveiled last Friday, is priced at £49.99 on a pay-as-you-go tariff, or free for 3 contract users. Standard calls on the handset will be billed at 3's normal rates.

Other mobile operators are also coming up with innovative ideas. Mr Weller picks out a plan from T-Mobile, launched last Thursday, called "My Faves". This offers unlimited calls, texts and picture messages to your five most-contacted friends or family members, and starts at £25.

"This can be expensive when you start calling people other than the chosen five, as the inclusive minutes and texts won't go far," adds Mr Weller.

Mr Barnes points out that providers such as Orange, O2 and Vodafone all offer a variation on T-Mobile's My Faves.

And it's not just the big names that have been coming up with cost-cutting ideas. Recently, a new firm called Blyk launched a mobile phone service targeting users aged 16 to 24 – offering 43 free minutes and 217 free texts as reward for receiving six "text adverts" on their mobiles each day.

The next big UK launch, due to hit the shops in less than a week, is the Apple iPhone. This is many gadgets in one – a wide-screen iPod, an internet browser and a mobile phone – but comes with a hefty £269 price tag. You will also need to sign up for an 18-month deal with O2 starting from a minimum of £35 a month for just 200 minutes.

"This is a great initiative with great functionality that will turn the phone market on its head," says Mr Weller. Over a million have been sold in the US since the phone was launched in July.

So does all this sound the death knell for the landline? "There are certain groups who can save money by having a home phone and paying a flat rate for their calls," says Phil Mackinson at telecoms firm Greenwich Consulting. "But a lot of people have not had a landline for a long time, and have stopped paying a home phone bill altogether."

Mobiles, he adds, are widely available and getting cheaper, as well as offering more functions.

"For now, people still need a landline to get broadband – until mobile broadband is more affordable. In the meantime, they should use VoIP to keep costs down."

'It used to cost 20p a minute to ring Brazil. Now it's 3p'

John Espirian, 30, from Newport, South Wales, uses VoIP to cut the cost of contacting family members who live abroad.

John, who works as a software tester, calls his in-laws in Brazil on a Tesco internet phone.

"We used to call on our BT landline but this worked out very expensive," he says. "We then opted for the Tesco phone as we don't have to have the computer on to use it."

John says it is now simple to make cheap calls – using the normal landline, and the new technology.

"Rather than paying 20p a minute to call abroad with BT, it now costs me just 3p a minute."