The increasingly crowded internet telephony market just got a little more squished after Microsoft announced it is hooking up with MCI to offer PC-to-phone calling.

The new service - MCI Web Calling - is to be part of Windows Live Messenger, which is due to succeed Microsoft's MSN Messenger service.

MCI and Microsoft are currently testing the service in the US with calls to more than 220 international destinations starting from 2.3 cents a minute, although final pricing details are expected to be made when execs cut the ribbon on the service next year.

Punters looking to use the service will need to pay for calls in advance in blocks of $5, $10 or $25.

MSN bigwig Blake Irving said the VoIP service would "provide the bridge between PCs and phones with high-quality voice services that enable people to communicate more easily, conveniently and inexpensively".

"Our customers are going to love this," he said.

Last week Yahoo! announced it was adding more features to its existing VoIP service in a bid to gain a bigger slice of the rapidly growing broadband telephony market. A new version of Yahoo!'s Messenger service is due to be released soon that will enable users to make broadband calls that are reportedly cheaper than those on offer by VoIP giant Skype.

Talking of Skype - which is being acquired by eBay for $2.6bn - the VoIP provider recently announced plans to offer video calls as part of the latest version of its internet telephony software.

Last month, Sony unveiled Instant Video Everywhere (IVE and pronounced "ivy") - a free video and voice service - backed by IP-based video communications service provider GlowPoint.

And in the UK BT plans to spend millions plugging its broadband telephony service next year as it looks to ramp up its investment in VoIP. The UK's dominant fixed line telco is looking to merge its two existing VoIP products under a single brand to make it easier for consumers to understand. ®

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