A start-up company is launching a new service called The Pudding that will offer free international phone calls to people willing to have targeted advertisements embedded in them.

The start-up, Pudding Media, was cofounded by Israeli entrepeneur Ariel Maislos, who recently sold a broadband company, Passave, to PMC-Sierra for US$300 million.

The service works in a similar way to Skype, offering free phone calls over the Internet. But while Internet-based services charge a fee for calls made to fixed-line telephones, Pudding users will pay for those calls by watching commercials that will be displayed on their computer screens.

Voice-recognition software listens to the users' conversations and plays advertisements related to the things they talk about. If the name of a new movie comes up, for example, the service will play an advertisement related to that movie.

"Our product will enable smart placement of advertisements for various audio services," Maislos said. "We are already capable of analysing conversations in English and we can place the relevant commercials. Soon we will be able to offer our services to Asian and other non-English speaking markets as well."

Maislos founded Pudding Media with brother Reuven and Eran Arbel, who previously handled North American sales for Amdocs. BRM and Opus are among the venture capitalists that invested in the company, together with some private Israeli investors. In charge of business development is Eyal Keren, formerly business development manager at A9, the search project by Amazon.com.

According to Maislos, Pudding plans to serve the global communication market. "There are billions of phone calls being made every minute, so we are building ourselves to be a very big company," he said. "We hope to be the ones supplying the infrastructure once the entire world shifts to an advertisement-based model [for phone calls]."

The development manager at the company's R&D center in Kfar-Saba, Israel, is Israel Ziv, who was development manager of Shopping.com. Under his management, Pudding was able to put together an extraordinary group of speech recognition specialists.

"Pudding already has 25 developers," says Maislos. "Three of them even come from an elite high-tech army unit."

Pudding plans to allow users who register for a beta program to test the service. The service will be available initially to English speakers only.