Internet communications company Skype Limited on Wednesday said it would introduce a flat-rate telephone service for the United States and Canada that lets users make unlimited calls for $35 a year.

Skype, whose popular free Voice over Internet Protocol (VoIP) software lets people communicate for free over the internet, also offers a prepaid service that lets individuals call landline and mobile phones from their computers.

"The new calling plan is a response to what we've heard from our community of users, that they would like another plan in Canada and the United States," Don Albert, general manager of Skype North America told CBC News Online.

"A lot of people were accustomed to the subscription-based model."

VoIP service in Canada is regulated in the same way that traditional telephone service is regulated, Denis Carmel of the Canadian Radio-television and Telecommunications Commission told CBC News Online.

The CRTC places limits on former telecom monopolies such Bell and Telus, which are classified as "incumbents."

Newcomers to the Canadian VoIP market have no restrictions placed upon them.

"We want to encourage competition," Carmel said, explaining that incumbent telecoms control more than 90 per cent of the country's communications market.

Telecom analyst Lis Angus of Angus TeleManagement in Ottawa told CBC News Online she doesn't see the announcement as a significant one for the Canadian industry.

"Skype is not a big part of the landscape so I don't think it will have a major impact," she said.

Skype's announcement came just days after the federal government said it was relaxing regulations on local calling rates.

At the end of September, Skype had 136 million registered users around the world, and 11.9 million users in the U.S. and Canada.

Some will benefit

The new flat-rate service, which will cost $29.95 in the U.S., could prove to be a boon to companies that sell electronics aimed at Skype users.

Belkin Corporation of Compton, Calif. is one of several companies that offer a wireless phone that uses Wi-Fi to connect users to Skype. The company, which was apprised of the new plan last week, said it expects the service will help sales of its phone.

"This service continues to provide the most convenient means of making calls in North America," said Chris Andrews, a business unit manager at electronics maker Belkin Corporation.

"This plan in combination with the Belkin Wi-Fi Phone for Skype allows you to buy a phone and pay $29.95 [US] to make unlimited calls for a full year from locations around North America without your PC."