It may not be the end of the world for the "we're the only guys in town - so pay us a lot of money" telecommunications companies. But they can certainly see it from here.

Calgary residential phone users, once prisoners of the Alberta Government Telephones monopoly, suddenly have the luxury of choice. Lots of it. And what's happening in Calgary will quickly propagate to just about everywhere.

Shaw ("we're not just cable guys any more") Communications Inc. has entered the local phone service market in Calgary, piggybacking on its existing infrastructure. It already connects to 330,000 Calgary homes, with more than half of them taking high-speed Internet.

Shaw is now promising telephone quality that's as good as your existing service, plus unlimited Canada/U.S long distance, for a flat $55 monthly fee to its existing customers.

Photo courtesy of Shaw Communications
Shaw president Peter Bissonnette says the company's new telephone service is 'digital phone,' not VoIP.

Telus Corp., long the beneficiary of local phone service revenue, and also most people's long-distance bills, has the most to lose from this development, which is driven by Internet-style techniques for carrying phone calls.

It's easy to imagine really chatty people being lured by the "unlimited long distance" offer from Shaw, something Telus doesn't match. The company has countered by securing CRTC approval for a national video-on-demand network to bring movies into the home, in direct competition with Shaw's traditional breadbasket.

Primus Telecommunications Canada Inc. just dropped the ante for a basic phone line in Calgary to as low as $11.95 per month if you buy the gateway and already have high-speed Internet service.

That's a price that hasn't been seen for a long, long time. A quick check with the Telephone Historical Centre in Edmonton turned up monthly line charges of between $3 and $4 in the early 1960s. In today's dollars, that's around $25. So there are bargains to be had.

People are suddenly realizing that "bits is bits" and that anybody who can move them can be in the telephone, Internet service, fax, television, video surveillance or whatever business. Everybody is trying to eat out of everybody else's bowl, and the consumer should be the winner. Perhaps.

Used properly, Voice over Internet Protocol (VoIP) telephony can save you money and bring wondrous new features. Do it wrong and you might wind up paying by the minute for local calls, or even turning your local phone into a long-distance one. Your neighbour might call to borrow the lawnmower and get a bill for long distance to Gander, Nfld. It all depends how you choose your area code and which company you deal with. Sometimes, too much choice is a dangerous thing.

VoIP reliability has also been a problem. Using the Primus TalkBroadband service, I've had calls cut off abruptly in the middle of a conversation, received false busy signals and had times when there's just no dial tone. In a worst-case scenario, a call about your dream job or winning a radio station contest might not get through. A desperate call to 911 might get lost in some wonky corner of cyberspace.

Many people feel VoIP is interesting but "not quite ready for prime time.”

They keep it like a pet, a second line for the kids to chat on and to soften the cost of heavy long-distance use.

Shaw Communications was careful to call its new service digital phone. "We are not VoIP," insists president Peter Bissonnette. "Our calls travel on our own network, which we control, so we can guarantee quality of service."

Of course, Shaw's network goes only so far, but they have contracts with providers such as Bell, which runs the public switched telephone network.

"Unlike other companies like Vonage and Primus, with Shaw, your calls never get mixed in with traffic on the public Internet," says Bissonnette. He also notes the availability of familiar services such as 411 and 911, and says their service works with alarm systems and medical monitors. About the only thing you can't do for now is use it for business purposes such as bulk faxing or running a call centre. Bissonnette says the margins in the business telephony market are razor-thin and that's not where Shaw wants to focus at this time.

Bissonnette has listened in on calls to his company's call centre and says that people seems to like the simplicity of the service and the fact that it can be up and running by the next day. He hopes to reach a 20-per-cent share of the local phone market in four or five years, and notes that Shaw has invested $50 million to prepare for the first 100,000 customers, and that the next 100,000 can be accommodated for $35 million.

He also points to a poll conducted by a Calgary TV station after the Shaw announcement, showing that 48 per cent of respondents planned to change their provider and 32 per cent would consider doing so. Less than 20 per cent liked their status quo.

When told that Primus has a website that allows you to see the calls you've made, phone people back and even hear voicemails on your computer, Bissonnette replies, "We'll be announcing that soon.”

And in response to the observation that the $55 price seems too high, he laughs and says, "it's easier to go down than to go up."

Bissonnette adds that he's meeting with people such as Vonage Canada president Bill Rainey because Shaw is interested in providing "quality of service guarantees" to customers of VoIP companies. As for session initiation protocol (SIP) phones, which work directly on the Internet, he says he has one on his desk and the possibilities for videoconferencing intrigue him.

But for now, he says, "aside from some early adopters, there isn't a lot of interest in SIP phones.”

He might have added "yet" since a few years ago only the technoweenies were using VoIP.

KEENAN'S CONTINUUM OF PHONE SERVICES In increasing order of cost and decreasing order of complexity and craziness:

* You can download a free program such as Skype and talk to your grandmother for zero cents a minute provided she's willing to sit at her computer with a headset.

* You can brave the technical forest of SIP phones, create your own virtual phone number, and have pretty good service for very little cost. But don't expect anyone to answer if you dial 911.

* You can ride the Primus, Vonage, etc. cut-rate VoIP wagon as they try to make their services better while still making a buck.

* You can let one of the big guys (Telus, Bell and now Shaw) handle your calls, sleep well at night, but perhaps be leaving money on the table every month.

Web watch:
www.shaw.ca
www.primus.ca
www.telus.ca

(Tom Keenan is a professor at the University of Calgary and an expert on technology and its social implications. He can be reached at keenan@businessedge.ca)