Plans to launch a cut-price international phone service in Hong Kong using the Internet have put the operator on a collision course with the government telecoms regulator. USA Global Link says it plans to begin offering the service within three months, claiming it will cost only $1.60-$2.40 per minute for a call anywhere in the world. The service will not require the caller or recipient to have a computer. Customers dial a specific number which routes the call over the Internet to the requested international destination. Acting director-general at the Office of the Telecommunications Authority (Ofta) Tony Wong, said using the Internet for computer-to-computer non-realtime communication was fine, but linking in a phone-to-phone fashion was clearly different. 'I would have a problem with that,' he said. USA Global Link president Larry Chroman said the company had not had contact with Ofta about its plans but had taken legal advice and was happy it could proceed. A second problem area could crop up if the Internet happens to be near capacity and a call could not be placed confidently. Mr Chroman said if that happened - as it does fairly often in some parts of the world - the call would automatically be routed to an international leased-line network. In Hong Kong, it remains illegal to buy leased-line capacity and resell calls over it - a procedure termed international simple resale (ISR). USA Global's plans appear to fall clearly into that category. Ofta has indicated it will allow ISR of data by the end of this year but ruled out extending that to voice traffic for the time being. Voice ISR would clearly sidestep Hongkong Telecom's (HKT) monopoly over long distance traffic. The only way to make an international call now without using HKT, is to use call-back operators. However, the returning part of the call still has to be routed through Telecom's international gateway. 'We don't want to break the law. We will abide by the rules. However, we will figure out ways to get round them,' Mr Chroman said. The company calls its service Global Internetwork, and is looking for partners in Hong Kong to help market and operate the venture. The process requires calls to be transformed from analogue to a digital signal for the Internet, and then back to voice format for the phone. Mr Chroman said the quality of calls would be better than those offered using call-back but not as good as traditional International direct dial. Initially, the company would target international business and residential voice calls, rather than the data transfer market. Analysts are sceptical about the ability of Internet telephony to grab a large share of the market, saying that as more people are attracted to it by cheaper prices, the infrastructure will become clogged, quality will suffer and placing calls will become harder. Another factor is that international call tariffs are beginning to fall as global accounting rates - which the big telecoms companies pay each other - also drop. It may be that Internet telephony - if it is ever allowed in Hong Kong - may only have a short-term life.