Further cannibalising the fixed-line market is the advent of Internet Protocol (IP) telephony. This technology, which enables users to make calls over the Internet, is called Voice over IP (VoIP).

Though VoIP has been around for almost 10 years, it has only recently matured enough to give acceptable call quality. Such calls are generally less expensive, because they avoid traditional telephone networks, which are heavily regulated and taxed.

Spurring VoIP is the fast-growing Internet broadband access in the US, Europe and parts of Asia, which allows users to stay on-line for a fixed monthly fee.

One of the more popular firms offering VoIP is Skype, which has a 7.7 million-subscriber base. Skype offers free calls among it users because it has no infrastructure to maintain - the calls are routed by the computers of Skype users who already pay for their Internet connection.

The company also allows its subscribers to use their PC and Internet connections to call landlines and mobile phones at low rates through its SkypeOut service.

Experts have said that with the fixed-line telephony may be forced to change business models under the pressure from cheap or free calls made through VoIP.

Already the technology's substantial savings is attracting multinational businesses like Volvo Cars or drug maker AstraZeneca who plan to switch to calling over the Internet network they are already paying for. According to consultancy firm Radicati Group, up to 44% of the world's corporate telephone lines may be IP-based by 2008 with falling equipment costs.

Telco operators are aware that Internet telephony may become big in the future but believe that the impact from VoIP was still limited by the hardware which needs to be installed and its price.

However, there are also organizations which are using IP telephony to complement the fixed-line service, using it as an alternative to make cheaper calls to farther destinations. In Malaysia, VoIP is mainly used by multinationals to connect to their offices in other countries.

Fixed-line service providers are also trying to boost the popularity of the conventional telephony system by lowering tariffs and offering value-added services but it is an uphill battle.

But at the end of the day, it is the end-users who will win - through greater choice of services and devices, attractive pricing, and new and compelling service combinations.