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A new way of making calls directly between phones, for free, is being trialled by a Swedish company.

It is hoping to dramatically improve communications in the developing world.

Swedish company TerraNet has developed the idea using peer-to-peer technology that enables users to speak on its handsets without the need for a mobile phone base station.

The technology is designed for remote areas of the countryside or desert where base stations are unfeasible.

Projects backed by TerraNet recently launched in Tanzania and Ecuador.

TerraNet founder Anders Carlius told the BBC World Service's Digital Planet programme that the idea for TerraNet came when he was on safari in Tanzania in 2002, and found that poor connectivity meant he could not ring friends riding in another jeep only a few metres away.

"I started thinking, 'couldn't we get phone-to-phone without needing any other equipment, and actually have real voice communication, like a telephone call, between units?'" he said.

Digital identity

The TerraNet technology works using handsets adapted to work as peers that can route data or calls for other phones in the network.

The handsets also serve as nodes between other handsets, extending the reach of the entire system. Each handset has an effective range of about one kilometre.

This collaborative routing of calls means there is no cost to talk between handsets.

When a TerraNet phone is switched on, it begins to look for other phones within range. If it finds them, it starts to connect and extend the radio network.

When a number is dialled a handset checks to see if the person being called is within range. If they are, the call goes through.

While individually the phones only have a maximum range of 1km, any phone in between two others can forward calls, allowing the distance to double. This principle applied many times creates a mini network.

However, Mr Carlius admitted that this has created big problems with having enough available frequencies.

The system can also be used to make calls to other TerraNet mesh networks via a net-connected PC fitted with an inexpensive USB dongle.

"If you look at places like Africa, South America, India, China, we're really for the first time giving people a digital identity," he added.

"People are able to talk to other people using a phone number.

"With our stuff, we are giving the low-end man or woman the chance to talk locally for free."

And TerraNet phones currently only work with a special handset - although Mr Carlius said he hopes that it will eventually be a feature available on all phones, like Bluetooth.

He said that were this to happen, it could potentially spell the end for the current Global System for Mobile (GSM) communications model. About 70% of all mobile phones use this technology.

Mr Carlius said large mobile firms did not like the idea of using a peer-to-peer model to make calls.

"One of the biggest things against us is that the big operators and technology providers are really pushing against us, saying this technology doesn't work and it doesn't have a business model," he said.

"This is fine - just join us in Lund and see how the technology works, and ask our customers how our business model works."

Mr Carlius said that mobile phone manufacturer Ericsson had invested around £3m in TerraNet, and this indicated that the business model for the network is sound.