Sometimes the best things in life are free -- such as Skype 2, the latest version of eBay's newly acquired VoIP service.

Now in beta, Skype 2 tacks on free video calling between Skype users and other neat additions to its long list of cool features, which include conference calling and an IM client. You can also add low-cost inbound/outbound calling, voicemail, and call forwarding to analog phones. The Skype dashboard thankfully remains free of advertisements, and the quality of Skype-to-Skype calls is still high. Though the quality of landline calls hasn't improved, Skype 2 continues to be an overall excellent option for anyone seeking to make free phone calls.

Installation and set up
Installing Skype 2 is beyond easy: download and run an executable file, follow the few steps in the setup wizard, and you're done. The first time you launch the program -- which pops up in an IM-like, dashboard window -- a handy Getting Started wizard appears, taking you through a test call and helping you import contacts from address books it detects on your system. You'll be able to hear and see your callers using the audio or video devices (microphone/speakers, USB headset, Webcam) that you've already connected to your computer.

Features
All access to and adjustment of Skype 2's features happens through the dashboard window. The window is segmented into three main tabs: Contacts, Dial, and History. To place a free call to another Skype user, just click the name in your contacts list. If you've purchased credit to SkypeOut, which begins at 10 euros (currently about AU$16.25) and includes low rates for international locations, you can reach landline phone numbers by either clicking a number you've saved to your contacts list or by using the electronic keypad in the Dial tab. To redial a name or number that you've already called, click it in the History tab. The dashboard window is also where you can initiate other features, such as conference calling for up to five people; IMing with other Skype users; call forwarding for up to three numbers (if you have SkypeOut); and voicemail retrieval (if you bought a voicemail plan, which starts at 3 months for 5 euros).

One of the major new features in beta version 2 is Skype Video, free video calling between Skype users. Skype has partnered with a number of hardware companies, including Logitech and Motorola, to bring Skype-certified accessories to the market, including Webcams and Bluetooth headsets. Other new features include avatars, sounds, and ring tones (available for purchase from Skype's Web site); contact groups; and toolbars. The browser toolbar works with Internet Explorer and Firefox: Skype recognises phone numbers and Skype names on search results pages, allowing one-click calling from the results page via Skype. The Outlook toolbar consolidates your Outlook and Skype contacts, allowing you place Skype calls to Skype users who have e-mailed you or call non-Skype users via SkypeOut.

Performance
Our anecdotal tests of Skype 2-to-Skype 2 audio calls yielded conversations that sounded almost exactly like those between two analog phones. Voices on both the calling and receiving ends came through quite clearly, and latency was barely evident. Using the video-calling function was an equally easy experience, as the program automatically detects whether the Skype user you're calling also has video capability and allows you to accept or decline the video feed.

Unfortunately, the same cannot be said for Skype 2-to-landline calls (and vice versa). On a SkypeOut call to one of CNET Labs' analogue phone lines, audio was relatively clear on the Skype end of the call, though the analogue caller experienced some static and random chirp reminiscent of old Doctor Who episodes. Voice quality took another hit when we uploaded and downloaded data during calls, with the audio occasionally cutting out altogether on both sides of the call. After purchasing a SkypeIn subscription (starting at 3 months for 10 euros) and choosing a regular phone number to associate with our account, we made a series of analog calls to our Skype number -- and experienced more of the same inferior call quality on both sides. Skype's performance problems when calling analogue phones were worse than the problems that plague most VoIP services. For good call quality with Skype, your best bet is to persuade those you want to reach to install the program themselves; in addition to higher voice quality, your calls will always be free.

Free software is generally not well supported by the maker, but Skype makes a decent effort. The Skype Web site offers a user forum, downloadable user guides, a searchable knowledge base, and a troubleshooter tool that walks you through a series of questions to help you solve basic problems. Users can also submit a support request through an online form and check the status of the request.

Skype 2 (beta)
Company: Skype
Price: Free