SEVEN Network's $28 million purchase of Australian internet...

SEVEN Network's $28 million purchase of Australian internet telephony company Engin has not disturbed Freshtel, the other major local contender.
The move was potentially good for expanding use of voice over internet protocol (VoIP) in Australia but "our business model is quite different", said Freshtel commercial director Peter Warner. The technology is beginning to boom.

Freshtel's Voicedot Network, similar in many respects to Skype's peer-to-peer model, has 352,000 subscribers - 70,000 of them in Australia, 60,000 in the US and the rest in Britain, Europe and Asia.

While most of these users continue to use the free peer-to-peer computer-based service, 88 per cent had become paying subscribers in the past quarter, using the service to reach conventional telephone lines.

Engin, with about 40,000 subscribers, leads the Australian market for a VoIP system that uses a conventional-style handset rather than a computer.

In that area, Freshtel has now partnered with Tesco, the largest British supermarket chain and the world's second-largest retailer after WalMart. "Tesco has a huge customer base - 12 million loyalty card holders," Mr Warner said yesterday.

Freshtel delivers a "white label" product under the Tesco brand, which is trusted by British shoppers. Tesco did the marketing "and we provide them with the technology", Mr Warner said.

Tesco subscriber numbers grew by 47,000 in the June quarter, about 90 per cent of that growth occurring in the final six weeks of the quarter, Mr Warner said. "Tesco's multimillion-pound mass marketing of the product did not begin until July."

Engin's subscriber base of nearly 40,000 took about 18 months to build, although the company says the rate of uptake is now increasing rapidly.

Mr Warner says the greatest promise of VoIP lies in developing global networks with credibility and technical ability. "Unlike traditional telephony, this technology is borderless," he said.

Skype had millions of subscribers and a pre-paid model for connection to traditional telephone lines, but it did not offer the billing, connectivity and other functions that the Voicedot network had, Mr Warner said.

Freshtel founder and chief executive Mike Carew is overseas talking with potential partners. "We have been talking to half a dozen companies in Europe and a couple in Australia," Mr Warner said.

Freshtel has not identified those companies, but they are thought to include WalMart in the US, and Carrefour, the largest French supermarket chain.