Qwest Communications International plans a December debut for an Internet telephone service in Minnesota, chief executive Richard Notebaert told financial analysts Wednesday.
Notebaert also hinted that Qwest will sell Internet phone service to broadband customers in other states. He described Qwest's recently announced network equipment supply deal with Lucent Technologies as supporting "initiatives like (Minnesota) and others we expect to roll out in the first quarter."
Qwest, the nation's fourth-largest local phone carrier, sells traditional local phone service in Minnesota, meaning that its voice over Internet Protocol (VoIP) plans will likely eat into its own base of customers. But Notebaert said Wednesday that the company is nonetheless compelled to take advantage of U.S. District Court Judge Michael Davis' decision that Minnesota can't treat VoIP providers like regular phone companies or collect regulatory fees. Without having to pay regulatory fees, Qwest can cut as much as 30 percent off the monthly charge for VoIP dialing, Notebaert said.
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"The Minnesota ruling allows...VoIP providers to circumvent regulations," he said. "So Qwest is paying attention and learning and is becoming one of them, beginning in Minnesota."
Terms of the three-year equipment deal Qwest announced Wednesday with Lucent Technologies were not disclosed. A Lucent spokesman said Qwest has ordered a "significant" amount of VoIP network equipment, but he wouldn't comment further.
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.
Notebaert's disclosure and Qwest's three-year equipment deal with Lucent signals a further thawing of major phone companies' once icy attitude towards 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 internationally dialed calls "on Net," Notebaert said.
On Monday, Verizon Communications Vice Chairman Lawrence Babbio disclosed his company's plans to begin selling Internet telephony services to broadband customers early next year. SBC Communications is also testing VoIP services, according to a spokesman for the carrier. In October, regional phone company BellSouth announced plans to sell VoIP to small and midsize businesses.