Thousands of Europeans used to paying some of the world's highest phone bills could soon get relief as new phone companies start offering free calls. But, like the proverbial free lunch, there will still be a price to pay in the form of advertising spots that callers must listen to before and at regular intervals during their calls in exchange for the service.
The latest free call project was announced in Germany yesterday, but there are also services in Italy and Sweden, where Gratistelefon - or Free Telephone - has attracted thousands of people since its launch last year.
The novelty of free calls is likely to be just a small taste of things to come when European telecommunications markets are thrown open to full competition in January and consumers are given choice of service for the first time.
"There are lots of ideas that could be tested and we are eagerly awaiting the response to them," said Mr Ulf Bohla, chairman of the German phone company O.Tel.O, at a news conference in Berlin to unveil its free phone project.O.Tel.O, the joint venture of Germany's two largest utilities, Veba and RWE, will begin offering free calls to 5,000 people in Berlin in October.
"We want to find out whether people will accept advertising breaks over the phone if they are able to make free calls in exchange," said Mr Bohla.
When placing a call, a short advertising spot is broadcast before the call is connected and at regular intervals during the call - every two to three minutes in most cases.
In Italy, Promotion System Phone (PSP) service run by Tuscan entrepreneur, Mr Paolo Balestri was offering free phone trials in three northern Italian towns.
"We're amazed with the success. People didn't know what to make of it at first but then word got around and now we're inundated with requests," he told the Corriere della Sera daily newspaper.
PSP users hear three advertisements, lasting three to five seconds each, before their call is put through. Their conversation is then interrupted every 100 seconds by another spot ad.
In return, they are allowed 15 minutes of free phone time for local calls - the line cuts off after that time - and a 30 per cent discount on the cost of phoning other cities.
Swedish Gratistelefon Svenska AB has offered free phone calls coupled with advertising since 1995 and has licensed its patented system to Australia and the Philippines. It is currently operating a service in Sweden with 30,000 subscribers who can call anyone they like, thus letting their friends listen to the commercials, and expects to have more than 100,000 subscribers by the end of the year. But its spokesman would not disclose how many calls a day the company sees or how advertising is doing.
The main threat to Europe's incumbent phone companies is not likely to come from novelties like free phone service, however, but from lower prices for traditional services and entrenched customer dissatisfaction after years of monopoly indifference.
