Qwest's Bold VOIP Push

If you can't beat 'em, join 'em. That's Qwest's new outlook on voice over Internet protocol competitors.

Beginning in early December, the Baby Bell will test the service in Minnesota, where a judge effectively exempted VOIP providers from taxes levied on telecoms and ultimately passed along to consumers.

"We are becoming one of them," Qwest CEO Dick Notebaert said during a conference call this morning. "Entry into VOIP might be the opportunity to break up the massive regulatory logjam and provide a service customers want."

Denver-based Qwest believes residential and small business subscribers could cut their local and long-distance bills between 20 and 30 percent by routing their calls over a DSL or T-1 connection onto the Internet. The tradeoff, at least for now, is reliability. "It's not five-nines," Notebaert said, referring to the quality standard of 99.999 percent.

To make the transition, Qwest signed a deal with Lucent to replace older technology, consolidate end-office and prepare its infrastructure for VOIP. Terms of the three-year contract, which includes switches, gateways, software and services, are private.

Qwest will integrate Lucent's technology into its existing local network. Following lab and field trials, Qwest plans to deploy the new intelligent media gateway that will eventually connect existing customers to VOIP networks.

Besides Murray Hill, N.J.-based Lucent, Cisco and other large equipment vendors are making a push to manufacture and market VOIP gear.

Unregulated VOIP has the potential to change the communications landscape and carriers are weighing its costs and benefits, especially after the Minnesota decision.

And it's not just telecoms. Cable companies Time Warner and Comcast are currently in trials for VOIP, looking for an edge.

Also, independent players including Vonage and Net2Phone are battling with state regulators in California and elsewhere to ensure that VOIP remains unregulated. Earlier this week, Net2Phone announced a tentative deal to provide Cebridge Connections, a St. Louis-based cable operator, with cable voice services.