Last week’s newspapers left Ben Verwaayen, BT’s chief executive, shaking his head in bewilderment. As he surveyed the acres of press coverage devoted to Google Talk, the new telephony service from Britain’s favourite internet search engine, he struggled to make sense of the extent of the interest. The level of hype was ridiculous, he thought.

Here was Google introducing a service that was already available from many other providers — not just from BT, but Vonage, Yahoo, AOL and Microsoft’s MSN. Okay, so Google Talk was free, but it had fewer features and, initially at least, was available only to a limited audience — users of Google’s Gmail e-mail service. What was all the fuss about? Verwaayen declined to be interviewed. But another senior BT executive said: “This is a pretty flimsy offer of something that other people have been offering for an awfully long time. “The [level of interest] seems a bit staggering.”

Vonage, a US company that began operating in the UK earlier this year, also felt miffed, since it has a much greater claim than Google to be a pioneer of internet telephony. Kerry Ritz, UK managing director, said: “The PR and noise level on this is far greater than the actual product. I don’t think Google Talk adds a lot if you compare it with Yahoo or MSN Messenger.”

Nevertheless, the launch of Google Talk was a splash story for the Financial Times and London’s Evening Standard, and was extensively covered just about everywhere else. By Friday evening, Google News was listing nearly 700 stories on Google Talk.

Of course, there is no great mystery here. Google is a 21st century phenomenon, a company that in seven short years has turned itself into the world’s biggest media business, with an $80 billion (£44.4 billion) market cap and advertising revenues that are doubling year on year.

It is liked and trusted by tens of millions of internet users, and (mostly) admired for its apparently friendly corporate culture — its founders Sergey Brin and Larry Page try to run their business by the motto: “Don’t be evil.”

Five years ago, nobody could really understand how Brin and Page were going to make money from their elegantly simple search engine. They do now. And the extent of Google’s success has made it a feared competitor in the many other markets it is seeking to move into — news, e-mail, shopping, local listings, digital-photo management, maps, digital books, blogging ... the list grows and grows.

So Google’s arrival in the telephony business created a shudder of anticipation. Traditional telecoms companies like BT have billions of pounds of annual revenues that are ripe for pillaging.

Moving voice calls onto the internet — so-called voice over internet protocol (VoIP) — is going to devastate that business. Paying for phone calls by the minute — whether to the other side of town or to the other side of the world — is set to become a thing of the past. Using the internet to carry voice calls reduces costs dramatically. At best, phone companies will be able to charge a flat-rate fee for service; at worst they will have to give voice calls away.

This is already well understood by BT and other leading telcos. But, so far, small companies such as Vonage have only chipped into the giants’ dominance. For many customers, relying on an internet- telephony firm involves too many compromises and uncertainties.

Google has the brand power, and the resources, to overcome some of these concerns. It has a reputation for delivering technology that is simple and works. At the very least, its entry into this market demonstrates that the internet telephony revolution is for real.

Eric Abensur, chief executive of Wanadoo UK, the internet service provider that is promoting its own telephony package, said: “Having players like Google going into this market is very good. It helps to make the service of making voice calls over the internet much better known.”

As launched, Google Talk is limited. It is not possible to call conventional telephone numbers, let alone the emergency services. You can only call other Gmail users — and Gmail is still undergoing “beta” testing and not openly available in the same way as MSN Hotmail and Yahoo Mail. You need to be invited to open a Gmail account by an existing Gmail user. It doesn’t support conference calls, nor does it allow users to decorate their instant messages with “smileys”.