The search company is aiming to undercut international call rates and set up phone boxes in universities and airports for its call product.
Google has added free voice calls over the internet to its free email service Gmail in the US - although some UK users have found they can also use the service to make calls to the US for free. The service, unveiled on Wednesday night, will let users make free calls at least to the end of this year within the US and Canada. That presently undercuts Skype, which charges per minute for calls to landline numbers. It also threatens existing VOIP providers, and the recently introduced MagicTalk service from VocalTec.
But in using internet technology to carry the phone calls, Google is also positioning itself as a dangerous rival to US long-distance carriers, and telecoms companies carrying international voice traffic, which have seen their businesses being eaten into by calls carried over the internet. Many call centres, for instance, use voice-over-internet technology so that international calls can be handled more cheaply than with high-quality voice lines.
While computer-to-computer calling isn't new, computer-to-phone services have been much rarer, with Skype - which in August said it has 8.1m paying customers - being the only one that has managed to crack it convincingly. Vonage, a US company, offers a service in which customers have standard phones but make calls through VOIP - though they still need a landline for the basic telephone connection.
Google hopes to make money from the service by charging for international calls - though those will vary widely, even within the same country. It has a chart of rates. People also will be able to receive calls on their PC if they obtain a free phone number from Google, or already have one through its Google Voice service.
The new arrival poses a threat not just to telecoms companies: Skype is planning a $100m flotation, but is burdened with debt and is also making significant capital investment. However, it dwarfs Google Voice for reach, having a total of 560m users, up 36% from last year, though the number of paying customers only rose 23% in the same time. In its SEC filing it noted that there could be competition from companies like Apple and BSkyB - and Google.
But Skype does make an operating profit, with income of $13m on revenues of $406m in the first half of this year. So far Google Voice - which was until about two months ago an invitation-only service as the company absorbed its acquisition of GrandCentral, the VOIP provider that underlies this function - has more than 1.4m assigned phone numbers. Those can then be used as the destination point for calls made to a home, office or mobile phone - like the 0700 "follow me" numbers used in the UK.
Google is also going to promote the service by setting up red phone booths in US universities and airports, letting them make free calls inside North America, and cheaper ones outside it. The company also wants to make it possible to transfer existing home or mobile numbers to Google Voice to broaden its appeal.
At present only users of the Gmail system inside the US are being offered the service. Business, military and government users of Google's mail and calendar services are not yet being offered the service, but it may be broadened to them: "we're working on making this available more broadly - stay tuned!" said Nick Foster, a Google Voice software engineer, in a blog post. - Gaurdian UK