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Qwest taps into Net telephony

The company begins selling Internet phone service to some customers in Minnesota, claiming it's the first major telecommunications provider to offer VoIP calling to U.S. homes.

Qwest Communications International on Monday began selling Internet telephone service to a few hundred of its broadband customers in Minnesota.

Qwest is selecting initial customers, then providing them with either Internet phones or an adapter for their existing home phones, a company representative said. For competitive reasons, the carrier wouldn't disclose the price of monthly local and long-distance dialing plans or the equipment each subscriber needs.

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The telephone company said it's the first major telecommunications service provider to offer what is known as voice over Internet Protocol (VoIP) service to U.S. homes. "The future of voice communications will be based on the Internet, and Qwest is excited to lead the way for customers," Qwest CEO Richard Notebaert said in a statement.

VoIP is a cheaper alternative to traditional telephone dialing, because the calls use the Internet and avoid telephone company access fees. About 10 percent of all telephone calls now rely at some point on VoIP, and that percentage is expected to rise dramatically during the next decade.

Qwest's intentions signal a further thawing of the once icy attitude among major phone companies' toward a mass-market VoIP service. Like most traditional phone companies, Qwest already uses VoIP to reduce the cost of its own operations, saving an estimated $15 million a month by completing long-distance and international calls "on Net." Qwest, the nation's fourth-largest local phone carrier, sells traditional local phone service in Minnesota, meaning that its VoIP plans will likely eat into its own base of customers.

Verizon Communications plans to begin selling Internet telephony services to broadband customers early next year. SBC Communications also is testing Net telephony services, according to a company representative. In October, regional phone company BellSouth announced plans to sell VoIP to small and midsize businesses.

The Bells are reacting to cable companies, which are selling less-expensive Internet phone service to their broadband customers. Time Warner Cable and Cablevision are both using VoIP technology.

But major cable providers Cox Communications and Comcast are hesitant to dabble in VoIP. Instead, they are content to sell phone services to a combined 2.1 million people using an earlier generation of telephone switches, which hog more bandwidth and are more expensive to operate than VoIP. Some Cox and Comcast executives believe VoIP as a technology is still not ready for widespread adoption.