Free phone calls to anywhere in the world? And no landline phone bills? The future should have been bright for broadband phone services, but it seems that making telephone calls over the internet has remained merely a niche interest.

According to research from Ofcom, the communications regulator, the percentage of adults with broadband phone services dropped to only 14 per cent in the first quarter of 2008, the same level as when Ofcom started to collect data four years ago. The figure peaked in 2006 at 20 per cent.

Internet phone or voice over internet protocol (VoIP) services are marketed as a cheap way to make international calls. To make calls, consumers need only a broadband internet connection and the required software. The service works by breaking voice calls into millions of pieces of data and the pieces are then sent down the line and reassembled by the other caller's computer.

Yet Ofcom said: “While there remains a core group of consumers of VoIP, the majority of broadband users are still choosing not to use it.” And it added: “With flat-rate tariffs ... becoming an increasingly prevalent component of both fixed and mobile tariffs, the incentives to use VoIP services are decreasing.”

While better phone deals may be one reason that consumers have not taken to it, others could have been detered by the poor quality of internet phone calls, Ofcom suggested. Fierce competition from mobile providers could also have subdued take-up of internet call services, it said.

These latest findings confound earlier expectations that broadband phone services would thrive. Several service providers had boasted that they were set to kill off the traditional landline and in 2005 the communications regulator itself said that the internet calls market would make “significant inroads” into Britain.

When Tesco said that it would launch a service in January 2006 — joining Skype in the UK market — VoIP appeared to be going mainstream. A few months later. BT announced an aggressive push into internet phone services.

Yet while the level of awareness about internet phone services has increased — in January 2008, 73 per cent of broadband users said that they were aware such services existed, up from 72 per cent the previous year — usage has not.

The Ofcom research comes amid growing speculation that eBay is preparing to sell Skype, one of the best-known internet calls services. Analysts believe that eBay signalled its intention to sell last month when John Donahue, its chief executive, described Skype as a “great stand-alone business”.

Last month, the European Commission announced an investigation into internet call services amid fears that the technology was being exploited by criminal and terrorist organisations to evade detection by authorities. Calls on such services are much harder to intercept than traditional phone calls.

Two years ago, Sir David Pepper, then the head of GCHQ, the Government's top-secret listening post, told MPs that internet calls were “seriously undermining” the organisation's ability to intercept communications.

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