The really really good free internet phone - Skype.

Editor's Update: September 10, 2004. Skype releases Pocket PC software: Skype has released its first application for personal digital assistants, making good on an earlier promise to expand the range of devices that can use the company's technology. The software lets users of Microsoft Pocket PC 2003 handhelds make free unlimited Skype calls over Wi-Fi networks, which are typically available in homes, offices, parks, transportation hubs, hotels, shops and restaurants. While only about a third of all Pocket PCs have Wi-Fi connections, Skype's popularity could spur more sales of the pricy handhelds. A test version of the PDA software debuted in April. Until that point, Skype's free software had been available only for personal computers.

Skype, (www.skype.com) a made-up term that rhymes with "tripe," is the most popular and sexiest application of VoIP - Voice Over Internet Protocol. Essentially, it is a way of allowing a computer with a broadband internet connection to serve as a telephone. This new form of conveying voice messages has so many advantages over traditional systems that the whole telecommunications industry is scrambling to see how fast it can shift traffic onto the Internet. AT&T, for example, is no longer recruiting new home customers, but it is offering many new VoIP services. Dozens of other companies - new ones like Vonage and established ones like Verizon - are selling VoIP services, too.

Skype's distinction is that, for now at least, it is the easiest, fastest and cheapest way for individual customers to begin using VoIP. It works this way: First, you download free software from skype.com. While running, Skype sits in a little window, like an instant-messenger program, and lets you to talk with other users in two ways. If the other person has Skype installed, you can talk as long as you want, free, and with sound quality that is startlingly better than that of a normal phone connection. Skype also allows file transfers and instant text messages during these computer-to-computer sessions.

You can also reach people who don't use Skype, through a new service called SkypeOut. This allows you to dial nearly any cellular or land-line telephone number in any country and talk. Though it isn't free, it's really cheap. They average two or three American cents a minute, at any time of day. With a credit card, you buy calling time in units of 10 euros (around Rs 500 or USD $ 12), which are deducted automatically as you talk. I started with 10 euros. After my wife talked to her sister in Italy for a half-hour and I made one quick call to the Philippines and five more within the United States, we still had 9.10 euros left.

Skype says it has about 10 million users in 212 countries, with an average of more than 600,000 logged on at any given time. The company will also sustain its push to sign up new users. Skype's own economics, including its promise that it will never impose a charge for Skype-to-Skype connections, depend on maintaining its rock-bottom cost structure and slowly adding revenue, through services like SkypeOut and future voice-mail and video-call services.

How big a deal will Skype turn out to be? I have no idea whether the company itself, which was founded one year ago, will someday come to epitomize and dominate a particular booming business, the way Google, eBay and Amazon now do. But I feel confident that the service it provides will be attractive to most people who give it a serious look.