OTTAWA — Canada's telecommunications giants finally got their wish Wednesday as federal Industry Minister Maxime Bernier confirmed Ottawa was overruling a CRTC decision to regulate the emerging technology of Internet-based phone service.

The Canadian Radio-television and Telecommunications Commission made the decision in May 2005 to regulate voice-over-Internet-protocol services and put restrictions on Canada's larger telecommunications corporations to allow smaller companies to compete.

But Ottawa disapproves, and is exercising its rarely used power to step in and make changes to some of the CRTC's VoIP regulations, Bernier told a business luncheon in Toronto.

"We think barriers to entry in this market are very low; there is no reason to regulate it,'' he said.

"In a competitive sector, there is no reason to regulate some companies while others can offer the services they want at the prices they want. It is time to have a level playing field from which consumers and small businesses will benefit.''

In its original decision, the CRTC said it was concerned the bigger companies would sell VoIP services as below-cost "loss leaders'' and destroy the competition. The federal government asked the commission to reconsider, but the decision was allowed to stand until now.

CRTC spokesman Denis Carmel said the commission will act on the changes Thursday, and will put up no resistance.

"The government rendered a decision ... and the government has the power to do so,'' Carmel said. "The commission gives effect to it immediately.''

He said the move isn't unprecedented, although it has been about a decade since the government intervened on a CRTC decision, which dealt with the White Pages telephone directory.

Bernier said cutting away some of the regulations would help consumers and the industry, but the Canadian Association of Voice Over IP Providers said the move only will help the big telecommunications conglomerates.

"Letting the telcos exercise their significant market power without regulation means that competition has been dealt a serious blow,'' said CAVP president John Lange.

But Vonage, one of Canada's leaders in VoIP, said the news isn't all bad and may actually help the company's business by promoting the technology to more consumers who are still unaware of how it works.

"It also raises the awareness that (consumers) have a choice, they don't have to just go to their telephone company or their cable company for their home phone service,'' said Joe Parent, Vonage's vice-president of marketing and business development.

Vonage and other smaller companies focused on VoIP will always have the most cutting-edge products and services, which will attract consumers, Parent added.

"Vonage and other independent companies are the ones that are really driving innovation and innovation is not going to come from the telcos. It never has and is unlikely to start.''

  Bell chief corporate officer Lawson Hunter said he's encouraged by the news, especially because Bernier's speech spoke of the larger issue of stripping away more industry regulations to build Canada's competitiveness.

"I think the signal this sends to the commission about how the government wants them to regulate in all kinds of areas (is something) you can't really underestimate,'' an excited Hunter said.

Listening to Bernier's vision for the future made Hunter's "spine tingle,'' he added.

"It's not only, or even primarily, the impact of (Wednesday's) individual decision (that's exciting), it's just the general philosophy and direction (of deregulation) that is so fundamental, in our view, to the economy and also fundamental to the way our business is regulated.''

Telus's executive vice-president of corporate affairs, Janet Yale, said she also viewed Bernier's changes as good news for the industry.

"We're pleased with the minister's announcement towards the kind of deregulation we're looking for in telecommunications markets and we look forward to more to come,'' she said.

"We're anxiously awaiting the next steps on this path.''

Quebecor Inc. CEO Pierre Karl Peladeau said he wants the government to move further in its decision and deregulate other sectors.

"Cable should also be deregulated,'' Peladeau said Wednesday.

Quebecor entered the residential telephone business through its Videotron cable subsidiary, launching its VoIP service in January 2004 on Montreal's south shore. The company now serves 324,000 customers in Quebec with VoIP.

Deregulation will be good news for consumers, Peladeau said.