February 9, 2004, 12:55 PM PST
By Ben Charny
Staff Writer, CNET News.com

Covad Communications Group announced plans to introduce a residential and business telephone service, a move that marks the entry of another top-tier broadband provider into the phone business.

The DSL service provider said on Monday it will begin selling unlimited local and long-distance calling to its business broadband customers by the end of the year. After that, it will introduce phone service plans for its residential broadband subscribers. It plans to announce subscription rates and the service introduction schedule by midyear.

Covad's jump into the telephone service business is not a surprise, according to Jon Arnold, an analyst at Frost & Sullivan. Every major U.S. broadband provider now either sells some kind of phone service or has announced plans to do so in the future. Covad's competitors in the cable broadband industry have been the most eager, as they hope to use cheaper dialing plans to woo customers away from local phone companies.

The technology behind these services is voice over Internet Protocol (VoIP), which makes phone calls using the Internet Protocol, a popular method for sending data from one computer to another. After years of overpromising and underdelivering, VoIP is generating significant interest among telecommunications carriers, businesses and consumers, thanks to significant improvements in quality of service.

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