VOICE traffic over the Internet poses no short-term threat to telephone companies, according to a report from the United States. 'Today's Internet telephone software has exploited a loophole, but that loophole is not infinitely expandable. There is still no free lunch,' says the TeleGeography 1995 Report from TeleGeography, a Washington-based independent research company. Among the Internet telephone packages released this year are VocalTec's Internet Phone, Electric Magic's NetPhone and Camelot's Digiphone. While the cost of these services is far below anything available from the phone companies, the service falls short of International Direct Dial (IDD), according to the report. Internet voice programs use compression algorithms to squeeze conversation through the limits of a 14.4 kbps modem. At best, the result sounds like a speaker phone with background hiss and hiccups. At worst, one hears only garbled static. Delays and gaps can be caused by the need to break down each word into packets, send them across the Internet and re-assemble them. The compression process can strip the expression out of the voice, making it only a marginal improvement over E-mail. According to TeleGeography, software developers see no great imminent improvement in the quality of Internet voice services. Instead, companies marketing the services see their opportunity in international conference calls and long voice calls which would be prohibitively expensive at conventional phone rates. Users need a relatively fast PC, modem, a microphone and speakers or head phones. 'Despite the exponential spread of PCs, it will be a long time before such equipment approaches the ubiquity of the telephone.' Details of voice transmission packages are available on the Internet. VocalTec is at http:// www.vocaltec.com , Electric Magic is at http://www.emagic.com and Camelot is at http://www.plan eteers.com.