Reuters reports: “Deutsche Telekom AG said on Monday the company is backing Web telephone-calling start-up Jajah, embracing a technology that undercuts rates for the German telecommunication giant’s established long-distance and mobile phone businesses.”

“Jajah’s service allows consumers to make long-distance calls for the cost of a local call. Calls between any two registered Jajah users are free. Because such services are entirely software-based, Jajah can blend Web, computer and phone features in ways that conventional phones cannot do.”

“Now Deutsche Telekom said it has begun embedding Jajah into its T-Online Web properties and that it expects to offer calling services to consumers and businesses in the future.”

“Jajah has signed up more than 2 million users and expects well over 5 million users by year-end, Healy said. Germany is one of Jajah’s five biggest markets after the United States and Britain. Other top markets are China and India, he said.”

“Deutsche Telekom, which operates big fixed-line, mobile phone (T-Mobile) and broadband services (T-Online) in Europe and the United States, sees working with Jajah as a way to meet the threat of cannibalization to its existing businesses.”