You won't pay the earth to dial the world

Telephoning friends and relatives abroad need no longer be a luxury. Thanks to technological advances and competition, the cost has fallen significantly and prices are set to fall further.

As well as price cuts by BT, the latest of which come into force on 19 February, there are now other companies offering cheaper calls from your existing BT phone.

Mercury, BT's main competitor, is advertising cheaper international calls for those who sign up to its SmartCall service. You do not change your phone but the service does cost an additional pounds 5.75 a quarter, which needs to be set against its cheaper rates. There are also less well-known companies advertising prices less than half those of BT's, and with no extra charges.

Our table compares BT's prices with those of Mercury and some of the heaviest advertisers among the other price-cutters. Prices may differ from those quoted in advertisements because we include Vat.

Anyone calling abroad on a reasonably regular basis should benefit by switching from BT. In our comparison, Swiftcall comes out cheapest for most destinations, although it can be beaten, particularly for Eire and some other European countries. But you may come across even cheaper deals as the market is changing all the time.

Before signing up for a particular service, you need to compare prices for the countries you are likely to be calling.

Be aware too that the cheapest today might not necessarily remain so.

Swiftcall is one of a number of "reseller" firms, sometimes referred to as ISRs (international simple resellers), which buy excess phone line capacity from, say, BT and then resell it to telephone users. By buying wholesale they can undercut traditional retail call prices, and they do not have the overheads of BT.

"These are low-cost operations that pile it high and sell it cheap," says Stephen Young, principal consultant at Ovum, a telecoms research firm.

However, there are some flies in the ointment. Many resellers require you to have money on account, payable by credit card, before you make a call. Obviously with any service that wants prepayment, it makes sense to satisfy yourself that the company is established and not likely to disappear overnight with your money.

To access a cheap service you will need to prefix your call with special numbers, and this is likely to mean a delay. Some services even become overloaded, giving the engaged signal and preventing you getting through.

With Swiftcall, which claims to have 150,000 customers and has been going for nearly four years, you can open an account over the telephone and then make calls within hours. You will have to pay a minimum of pounds 25 to open an account. Calls are then set against this and subsequent top-ups, which can also be made by credit card over the phone.

You make calls by dialling a special prefix and entering a pin number before keying in the normal international number you want to call. Before you make a call you are told your balance and you can only continue talking if you have money on account. If you are on a call and your money is running out, a voice warns you.

As well as making cheaper calls from your home, you can take advantage of the same rates using other phones, including mobiles and pay phones.

First Telecom's service, which claims more than 50,000 users nationwide, works in a similar way to Swiftcall.

With both ACC and Mercury you are sent bills (as with BT) but it may take a few days to get up and running. Mercury SmartCall looks a best buy for some destinations based purely on call price. But as well as a pounds 5.75 quarterly charge there are a number of other features to take into account when comparing its service. You also get cheaper national calls, as you do with ACC and First Telecom. In addition, with Mercury, you get a further 5 per cent discount on the five numbers you spend most on during any bill period, and a loyalty bonus in the form of a further rebate -amounting to a few per cent - depending on what you spend.

If, however, you do not want the bother of signing up with another phone company or do not like the idea of paying in advance, BT also has cost- saving schemes. Everyone should be signed up to BT's Family & Friends service, for example, because it is free and gives a 10 per cent discount on calls to 10 nominated numbers, one of which can be international. (Call 150 for details). Its PremierLine service, which costs pounds 24 a year, gives a further discount of 15 per cent on all calls. But even with these discounts and the February price cuts, you are still likely to be better off shopping around.

Nor is this the end of the story; new services will continue to come on-line and existing ones will be refined. Swiftcall says it will shortly introduce per second billing; and First Telecom has just introduced easier access for nominated phones. The Internet should eventually allow users to make international phone calls at local rates. As Mr Young says: "The market is exploding." Watch these pages for further updates.

TALK CAN BE CHEAP

Price in pence per minute at weekends/weekday evenings

US, Canada Mainland Europe Eire Australia, NZ India South Africa

Swiftcall 10/10 (US) 16/16 (France, Germany) 16/16 20/20 (Aus) 60/60 60/60

0800 769 0000 16/16 (Can) 28/28 (Italy, Spain) 30/30 (NZ)

BT 27/29 26/30 18/20 45/47 99/127 75/82

BT from 21/22 23/27 (France, Germany) 18/20 40/42 99/114 75/82

19 Feb 26/30 (Italy, Spain)

First Telecom 12/12 (US) 20/21 (France, Germany) 15/15 22/29 (Aus) 67/69 47/49

0800 376 6666 16/18 (Can) 24/24 (Spain), 26/26 (Italy) 34/38 (NZ)

ACC 0800 100 222 21/23 21/24 14/16 36/37 80/100 60/66

Mercury SmartCall* 17/19 16/18 (France, Germany) 13/14 33/35 74/94 59/64

0500 500 366 20/23 (Italy, Spain)

All prices include VAT, rounded to nearest pence. * Additional quarterly service charge of pounds 5.75.