Qwest to offer Internet phone service

Qwest Communications International said Tuesday that it intends to sell an Internet-based telephone service in Minnesota, where a federal judge recently ruled that existing state phone regulations don't apply to this lower-cost form of dialing.

The mass market VoIP (voice over Internet Protocol) plans were outlined only briefly by Qwest Chief Executive Richard Notebaert at a technology conference. He didn't mention many details, such as the cost of the service or when it would be offered.

VoIP calls use the Internet rather than the expensive toll roads of a traditional phone network. As a result, VoIP providers such as Vonage, 8x8, VoicePulse

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and others can sell unlimited local and long-distance dialing plans at much lower prices than Qwest and other traditional phone companies.

Qwest, the nation's fourth-largest local phone carrier already sells traditional local phone service in Minnesota, meaning the new VoIP plans will likely eat into its own base of customers, spokesman Bill Myers said. But the company is nonetheless compelled to take advantage of U.S. District Court Judge Michael J. Davis' decision that Minnesota can't treat VoIP providers like regular phone companies or collect regulatory fees. Qwest also wants to challenge VoIP providers already doing business in the state.

"The bottom line is there are already companies out there," Myers said. "The question is, if they are being held to a lesser standard from a regulatory standpoint, do we allow other companies to serve those areas?"

Qwest's decision will surely fuel the debate over whether to regulate VoIP service providers. In a 22-page opinion released Oct. 17, Davis wrote that a VoIP provider is an "information service" rather than a "telecommunications service" and therefore exempt from state regulation.

Qwest's move into VoIP dialing is also a significant expansion from its current focus of just selling businesses Internet Protocol (IP) phones and switches. "In Minnesota, it would be a full-on service that will look and feel like a regular phone service," Myers said.