Eight cent phone calls challenge Telstra's 'milk cow'

Comindico has announced the roll out of a nationwide internet telephony service offering eight cent local calls, six cent per minute national calls and 23.3 cent per minute mobile calls. The service is targeted at business customers, with a home residential service scheduled for mid 2004.

The Cisco-based eCall network allows calls to be made from a normal handset to any mobile or landline phone number. Additionally, customers can use a packaged service from Comindico or their existing ISP.

Comindico CEO John Stuckey said the $400m service is the "culmination of four years of hard work" for the IP carrier and its partner Cisco.

Stuckey notes that the eCall service will not suffer the poor signal quality and reliability problems of previous voice-over-IP (VoIP) offerings.

"This is a quality service, it's a carrier grade service."

Being a fully registered telephone carrier, the company believes that it will satisfactorily meet security requirements.

The network runs off 66 nodes nationwide which, according to Stuckey, services 99.76 percent of the population. The company also predicts that the current percentage of international phone calls made over the internet will increase from twenty to one hundred percent within 10 years.

Telecommunications analyst Paul Budde believes this will create competition in the voice communications market, bringing prices down for customers. He notes that while other competitive sectors of industry, like broadband, are starting to offer low cost plans, the voice industry continues to increase prices.

"Voice is Telstra's milk cow," says Budde, who estimated that 80 percent of Telstra's profits come from its voice service. "[Telstra is keeping] the charges as high as possible."

VoIP uptake will "take a while" to get started. Its market penetration is also co-dependent on the uptake of broadband internet among businesses and consumers. When it does take off, however, Budde believes it is "really going to threaten the existing market."

In response Telstra public affairs manager, Graeme Salt, told iTnews that Telstra's "network is wholly open to competitors". While voice is a "big part" of the revenue, the company is looking into other internet-based applications. The telco also launched its own VoIP service in late 2003.

From Monday, 1 March, Comindico will be offering a service to business customers to assess whether their existing phone usage will benefit from the eCall service.