The CRTC has opened hearings that will determine whether Internet-based phone service should be regulated just like traditional phone service, or whether it should be regulated at all.

More than 30 companies and interest groups are scheduled to give their views on the issue over three days.

The CRTC has already waded into the debate with its early views. In April, it said it saw little difference between new Internet-based telephony and regular phone service. The broadcast regulator said its preliminary view was that its existing regulatory framework should apply to VoIP (Voice-Over- Internet Protocol) services.

Some intervenors say the CRTC should play a hands-off role and let the marketplace decide the issue. "Let the customer choose," said Vonage Holdings' Brook Schulz.

But some of Tuesday's intervenors said they agree with the CRTC. "Primus believes that the current legislative and regulatory framework can be used to regulate VoIP services," Primus Telecommunications Canada's Jonathon Holmes said.

Canada's biggest phone and cable companies want to offer their customers local phone service over the Internet. But Bell argues that VoIP is not like traditional phone service. Bell said all companies should be allowed to compete on a level playing field.

"So we're saying let the market decide the outcomes here and don't try to manage them," said Bell Canada's Lawson Hunter.

Bell doesn't want the CRTC to get into the business of setting prices for VoIP.

"Our fundamental belief is that the regulatory framework for VoIP must be built on principles that allow open, dynamic competition to continue to flourish," Hunter said.

Telus, the number two phone company in Canada, urged all providers of VoIP to be treated the same.

"We're simply asking for all competitors to be allowed to develop the innovative potential of VoIP and to offer competitive access-independent services on an equal footing," said Janet Yale, a Telus vice president.

But some smaller long-distance providers that already provide VoIP service, fear they'll be swamped by the big established phone and cable companies, so they want them regulated.

"We fear that the large players, like the cable companies that are going to get into it, and more importantly the phone companies who today own higher than 97 perent of the market, will squash us," said Yuval Barzakay, the president of Comwave, a long-distance provider that offers customers Internet-based long-distance service for $15 a month.

The CRTC isn't expected to decide on the VoIP regulation issue until early 2005.