Qwest Communications International today unveiled a new approach to pricing its wholesale IP voice terminating service that ties prices more accurately to costs.

The new operating company number-based billing, or OCN, “allows us to price with more precision in a way that is truly reflective of our costs,” said Roland Thornton, executive vice president for wholesale markets at Qwest. In the past, pricing of a specific circuit or other wholesale service would typically be based on an average cost for a broad geographic area, he added. The OCN pricing for IP voice terminating services includes 25,000 OCN-based rates that are directly tied to costs.

The new approach will lower some rates and raise others, Thornton conceded, but it is part of Qwest’s more rational approach to wholesale pricing.

“We were providing some services that were underwater,” he said, referring to those sold below cost. “But we are not arbitrarily raised rates, we are changing them to accurately reflect our costs.”

Customers can now choose Qwest when it is more cost-effective to do so and manage their own costs accordingly, he said.

“This begins to take the wholesale marketplace where it needs to be,” Thornton added. Because wholesale services are sold at the individual element level, and not part of a service bundle, it is important that each element be priced accurately to include a profit, he said.

The wholesale market faces dramatic changes, with the consolidation of major players, the entry of new operators such as cable companies and the arrival of new technology such as wireless, Thornton said.

“We believe that if we provide competitive prices and support the channel with the spirit of service that makes it easier for our customers to do business with us, then we can succeed,” he added.

Qwest’s upcoming initiatives include expanding its self-service options, which today are available for 800-number calling.

“Ideally, they should be able to go online, tell us what they want, get a price and click to order,” he said. “We’re a long way from that today, but that’s where we want to be. We want it to be as easy to do business with us as it is to walk over and get a drink of water from the water fountain.”