Vonage offer a wireless Wi Fi phone that can make calls over the internet at homes, or at public Wi-Fi hot spots. Belkin also offer a wi-fi phone that is directed at people who use Skype.

Several smaller companies have introduced Wi-Fi phones in the USA at prices ranging from $130 to $750. But Vonage's move would mark the first mass-market rollout of the device at a lower price, probably around $100.

The service poses at least some threat to wireless carriers because Wi-Fi calls are effectively free, says TeleChoice analyst Daniel Briere. cell phone calls, by contrast, eat up a monthly bucket of minutes.

Vonage will offer the phones to its 400,000 subscribers, who typically pay $24.99 a month for unlimited local and long-distance calls. Those customers plug a regular phone into an adapter linked to a broadband Internet line. Vonage turns the calls into data that zip across the Internet before being converted back to voice at the other end.

Now, Vonage wants to take the service a step further with Wi-Fi networks that let people surf the Internet wirelessly. With a Wi Fi phone, they could make Internet calls from home without the need to run wires to the broadband line. Customers could use the phone number of their existing Vonage service or a new one for no extra fee.