Around 80 million minutes worth of calls are made via VoIP every month (legally), according to Telecom Regulatory Authority of India.

VoIP is simply the transmission of voice traffic over IP-based networks. It has become popular largely because of the cost advantages to consumers over traditional telephone networks.

For instance, Worldphone Internet Services - a category "A" Internet services provider - recently launched its premium Internet telephony unlimited plans in Mumbai whereby international calls to the US, the UK, Australia and Canada will be available at Rs 1,500 per month (around 3,000 minutes) onwards - effectively bringing the price down to about 50 paise per minute.

Mumbai is the second city after Delhi where people can access these cheap call services. The company plans to introduce the services across class A and B cities in a month's time.

Delhi-based Net4 India is perhaps the earliest player in this segment. The company earlier this year had introduced its One World services, wherein users could call 44 countries for Re 1 per minute.

"While we have been focused on the medium and the enterprise segment, Net4 India also caters to the retail segment through 3,000 public phone centres under the brand name of Phonewala," says Jasjit Sawhney, CEO Net4 India. Sify offers similar services. "For the home user, we offer these calls at Re 1 whereas through retail outlets the charges are Rs 2, but the retailer can pass on the discount to the customer," says Naresh Ajwani, executive VP, Sify.

He believes that the ratio of outbound calls to inbound calls has improved drastically in the past few years and cost has been the key factor. The company is also planning to slash its prices further and introduce value-added services.

One can make these calls through a PC by downloading software from the service provider or make use of an IP phone. Players such as Sify also provide for an analog terminal adopter (ATA) priced at Rs 700-800, which needs to be connected to the telephone.

However, there's a flourishing grey market too where VoIP calls are made illegally. Alok Shende, Head IT and Telecom, Ovum India, says that one of the reason is the acceptance of these services among the low-cost call centres.

Despite this, he notes, that some VoIP players have grown phenomenally over the last couple of years. Aditya Ahluwalia, chairman, World Phone Internet Services Private, says: "The prime reason to cut cost was to combat grey marketers."