Israeli startup EIM Telecom will present their new gadget, Skuku, at the Mobile World Congress for GSM3 technology in Barcelona, which is set to bite into cellular company revenues from overseas calls.

The device is a USB that connects to cellular phone SIM cards, and upon connection to a computer, loads a program that emulates a cellular phone, including access to all contacts. Upon connection, calls can be placed through the computer via microphone and earphones at the cost of a local call, from anywhere in the world. Calls can also be received to the normal cellular number, and SMS messages sent and received.

The product is aimed mainly at overseas business travelers who need inexpensive communications with Israel, but the Skuku can be connected to any computer with an internet connection. Customers will save on their cellular service bills: outgoing calls will be billed as a local call, with no charge at all for incoming calls. EIM Telecom monthly service fee will be 4.9 Euro, plus 0.05 Euro per minute for incoming and outgoing calls or SMS message, in addition to the cost of a local call or SMS message.

An outgoing call to Israel that now costs consumers NIS 11 per minute will cost the user NIS 0.65 per minute: 0.05 Euro (about NIS 0.25), to be paid to EIM, plus NIS 0.40 - the cost of an average call in Israel - to be paid to the cellular provider. Savings are even greater for incoming calls. In stead of paying incoming call fees, the caller will be billed for a local call only, and the receiver overseas, with the Skuku, will pay 0.25 Euro per minute to EIM.

Skuku is an independent startup within EIM Telecom. Its launch next week comes after two years of development by a team of 15 employees. About NIS 2 million have been invested in the project to date by the firm's owners, with no assistance from venture capital funds.

One problem facing Skuku is that the product is competing in a market crowded with companies that provide inexpensive calls over the internet - anyone possessing a laptop computer with an internet computer has access to competitors like Skype. In addition, many people dislike using headsets for phone calls.

Skuku are aware of the problem, and future models of the product will include a telephone-like receiver attached to the USB, to enable ease use. Skuku costs 15 Euro, and marketing in Israel is expected to begin over the coming weeks.

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