Posted on: Thursday, December 11, 2003

Qwest offers residential Internet phone service

By Karren Mills
Associated Press

MINNEAPOLIS — Qwest Communications International Inc. is becoming the first Baby Bell to offer residential Internet phone service, embracing a technology that could undermine the traditional phone business.

Denver-based Qwest said yesterday it has begun offering Internet phone service to some customers in the Minneapolis-St. Paul area and would expand the service to other parts of its 14-state area in the first half of next year.

Several smaller companies already offer consumers Internet phone service, sometimes with unlimited calling plans at prices $20 and more below the competition, not including the cost of high-speed Internet service.

Qwest would not give pricing details, but an advantage of the technology is that it can cut costs by eliminating some network-access charges paid to regional carriers. Long-distance carriers and big companies increasingly are using it to route calls.

The technology, known as voice over Internet protocol, or voice over IP, lets users make calls as normal, using a special phone or a regular phone connected to an adaptor device. The phone or adaptor is connected to a DSL or cable modem at the customer's home.

In a traditional phone call, calls are converted to electronic signals that traverse an elaborate network of switches. Regional carriers get paid for calls that pass through their switches.

Internet protocol converts a call into small packets of data — about 50 packets for every second of conversation — scatters them across the Internet, and reassembles them into sound on the other end of a call.

While the calls can be cheaper, perhaps the biggest reason the technology threatens the Baby Bells is that cable TV companies are beginning to use it to offer phone service, enlarging the "bundles" they can sell to customers. Time Warner Cable announced such a plan Monday in conjunction with Sprint and MCI to fuel phone service in 31 markets.