U.K. Supermarket Tesco, now offering VoIP Service

U.K. Supermarket giant Tesco is now expanding its telecommunications portfolio into the VoIP service provider market, the company announced today. Tesco will target customers with a voice over Internet Protocol, or VoIP, service, which it plans to start offering from more than 350 stores over the next few months. The company says call rates will be "slashed to rock bottom prices compared to existing landline services."

Tesco's VoIP to U.K. landline prices do not compare favorably with Skype VoIP services. Calls to U.K. landlines using Tesco's VoIP service will cost 2 pence (3.5 U.S. cents) per minute, Skype VoIP service users are being charged 2.1 cents per minute when they call U.K. landlines.

Calls to U.K. mobile phones are a different story. Skype VoIP service users are being charged 25.12 cents per minute to all U.K. networks, while Tesco VoIP service users will be charged 17.57 cents. Tesco claims not to be in direct competition with Skype VoIP service but that they are responding to demand from their Tesco customers.

"Our focus is not to compete with Skype VoIP," said Alex Freudmann, the commercial manager for Tesco Telecoms. "We're launching a VoIP
service because our customers have expressed a need in VoIP service.
Our customers wanted a simple pricing structure. Our VoIP service pricing is in whole pennies as the half penny doesn't exist any more and there's one call rate at all times."

"We focused very heavily on giving customers what they asked for, and
kept the installation and the tariff simple, and a good value," Freudmann said. Because Tesco's VoIP traffic will travel over the public Internet, Tesco VoIP services will not be able to guarantee the quality of service. However, Tesco claims that the VoIP service quality will be better than traditional landlines because of the data compression rates it uses.

"Assuming you have a reasonable phone, the VoIP service sound quality
is actually better than a landline. We tested the VoIP service in customer test groups and had favorable results. We minimized the data feed, it's compressed as much as possible. This VoIP service even works very well over narrowband," Freudmann said.

To access Tesco VoIP service, potential users will need to buy a $35.10 pack from a Tesco supermarket which will includes an $8.79 VoIP call voucher and a USB handset. The VoIP service pack also gives the user a phone number at which non-VoIP service users can reach them.

Tesco is currently also investigating using a VoIP service internally.