Three large traditional phone companies will ask the federal cabinet to overturn a key regulatory decision on internet telephone systems.

Bell Canada, SaskTel and Telus on Monday said they will ask the top Liberals to reject a May 12 decision by the Canadian Radio-television and Telecommunications Commission.

The CRTC ruled that established companies like Telus and Bell Canada would not be allowed to sell the new voice over internet protocol (VOiP) service below cost.

This would stop them from stifling competition, the commission said.

The CRTC decision "is just bad public policy, is bad for consumers and is bad for competition," Mirko Babic, Bell's chief of regulatory affairs, told CBC News Online.

The commission failed to recognize the technical revolution represented by internet telephone systems, it made a decision that "hamstrings one set of competitors" and it will put Canada at an international disadvantage in terms of innovation and productivity by constraining the adoption new technology, he said.

Court case, too

The three phone companies are also trying to launch a court case on one aspect of the CRTC ruling, a section that said the established companies could not try to win back customers who moved to other service providers, such as internet companies, for a year after they left.

The companies said they will seek leave to appeal that decision to the Federal Court of Appeal because it denied their freedom of speech by limiting their contact with former customers.

The three companies, former regional monopolies which have seen their market share shrink through new technology and CRTC policies favouring competition by protecting new companies, said the commission's "winback rule" violates the free speech provisions in the Canadian Charter of Rights and Freedoms.

"The CRTC has gone too far," Janet Yale, executive vice-president of corporate affairs for Telus, said in a statement from the three companies. "There is absolutely no justification for applying the winback rule in an increasingly competitive communications market that includes established cable companies and many other players, such as foreign resellers."

In its May ruling, the CRTC said "it considered winback rules to be necessary and appropriate to prevent anti-competitive behaviour."

The prohibition on marketing to former customers for a year will give new companies time "to demonstrate the reliability and quality" of their services.

But the three companies said the rule prevents them from even trying to sell non-regulated services to former customers.

Bell had already asked the CRTC to reconsider that aspect of its ruling, but wants to bring the charter question before a court, Bibic said.