Verizon Spies Daylight Via Voice Over Internet

The Bells' intent, in part, is to show that millions of dollars in fees from phone customers could potentially stop flowing to causes such as the universal service fund, a pool of money used to help pay for broadband in rural and poor communities.

In a presentation to investors Monday, Qwest CEO Dick Notebaert defended his company's plans to offer VoIP service in several Minnesota communities by emphasizing that it can be sold at a 25% to 35% discount because it isn't subject to "government fees."

"They aren't saying VoIP is unfair because it is unregulated -- they are saying VoIP is unfair because we are regulated," says Bank of America analyst Dave Barden.

Analysts call all the planning and maneuvering a snake dance of sorts.

It's no coincidence that when the cable companies started jumping into VoIP, the Bells started partnering with satellite TV broadcasters to offer video, say analysts. Now that other companies such as closely held Vonage have been gaining attention, the Bells are talking about jumping into VoIP to push the regulators to think about their agenda a bit.

"This is the smartest thing I've seen the Bells do in years," said one New York hedge fund manager with no positions in the Bells. "It's absolutely brilliant, and I don't even like the Bells."