Primus Canada said Thursday it has launched the first high-speed internet residential phone service in the country.

Using a high-speed internet link and an additional connection box hooked up to a phone, customers will be able to make local and long-distance calls.

Primus said basic phone service will start at $19.95 per month, with extra charges for features such as call-answer and call-waiting. The cost of high-speed internet service is also extra.

Primus estimated its internet-based phone service would save the average customer 25 per cent over regular phone service.

The new service is not without some limitations. 911 or 411 service may not be available and phone service would then depend on the reliability on the internet service provider.

Primus' move to offer calling using voice-over internet protocol is a challenge to the companies that offer local service, such as Bell Canada and Telus.

Already active in the Canadian long distance phone market with over 900,000 customers, Primus Canada is a subsidiary of Primus Telecommications of McLean, Virginia.

Other Canadian phone companies are working on launching their own versions of internet-based phone service.