Small Hong Kong firms not keen on paying higher call rates to and from the mainland are eyeing a range of Internet-based communications alternatives. Industry experts said voice services over the Web and Internet protocol virtual private network (IP-VPN) would help companies cope with China Telecom's decision last week to raise the cost of mainland international direct dial (IDD) calls. IP device-maker Synergy's chief technology officer Francis Fong said Internet-based technologies involving connection with routers and switches were definitely cheaper as the traffic went on an IP network. Networking gear-maker Cisco Systems, which supplies most of the routers that help transmit data over the public Internet, said IP-based communications had been a tested and proven solution for many companies worldwide. Cisco Hong Kong channel development support manager Sunny Chan Sing-lai said: 'A company that already has a leased line for file transfer with its offices in the mainland can also set up a router connection over that system, allowing its offices to talk to each other.' This set-up can interconnect with the outside telephone networks licensed by local telecommunication carriers. 'The quality of service depends on the distance and the availability of bandwidth,' Mr Chan said. 'This solution is ideal for small and medium-sized enterprises since they can also prioritise calls, ensuring voice calls get in ahead of data transfers.' The increased mainland IDD rates are seen by industry experts as a development that could prompt more companies to make the switch from their old voice-only private branch exchange systems (PBX) that route an organisation's calls to the data-flexible IP PBX systems. This IP telephony set-up is a market that such companies as Cisco and Nortel Networks have long been trying to build. The typical infrastructure includes a mix of software and hardware used as call managers and for routers, IP phones and local area network switches connected to a company's computers. Hong Kong-based Internet services firm Diyixian, which has been providing IP-VPN systems to a number of local and multinational customers, sees increased interest because of the higher mainland IDD charges. Chief executive Lap Ming said companies could expect very reasonable set-up costs: from HK$3,000 monthly on top of the initial installation charge of HK$8,000 that included all networking devices for offices in the SAR and in the mainland. MSN Hong Kong, a Microsoft operation, saw growing interest for its messenger services. The service allows users to communicate between their personal computers or PC-to-phone. 'Voice-over IP [VoIP] technology has improved from two years ago,' MSN Hong Kong director Celina Chan Yuk-Shau said. 'With Internet service providers in Hong Kong providing stable connectivity, there is not much actual echo delay over voice transmission.' Market analysts, however, are sceptical if this rush to IP-based quick fixes to higher IDD rates is a sustainable trend. Merrill Lynch telecoms analyst Agnes Ho said: 'In terms of reliability, IDD tends to provide a more dedicated service. Companies in the security and banking sectors would not deploy it VoIP as they cannot afford even a second of disconnection.' Gartner telecoms analyst for the Asia-Pacific, Andrew Chetham, said IP-based solutions were popular in the United States but remained a niche market for Hong Kong vendors. He expected the volume of IDD calls to China would fall and prices come down.