Sonic.net's transformation into a full-fledged telecommunication company continues to evolve, with the company announcing a new residential Internet service at an even lower price.

The Santa Rosa company now offers a bundled service that includes Internet access up to 20 megabits per second with a traditional phone line that includes unlimited local and long distance calling within the United States for $39.95.

John Vallelunga, an Agilent engineer who lives in Santa Rosa, switched to the service and said he saved about $55 a month.

"The cost of my Sonic Internet went down, and I got to get rid of AT&T phone service and Sprint long distance," Vallelunga said. "It was a no brainer."

The new "Fusion" service is the result of Sonic.net's effort to transform itself into a telecommunication company. It has spent the last two years building a next-generation DSL network across the Bay Area.

"If they can deliver up to 20 megabits per second, that would be an excellent price," said Lee Ratliff, a senior broadband analyst with iSuppli, a market research firm. "It would be fairly disruptive in the areas they serve."

After completing regulatory hurdles in 2008, Sonic.net became an approved public utility company. That allowed it to develop and deliver its own services, which now reach about 1 million Bay Area homes. It provides its own phone service and ultra-fast broadband, plus free services such as unlimited long distance calling, voicemail, caller ID and call waiting.

Previously the company purchased wholesale DSL services from AT&T, and than re-branded the products and provided its own customer service.

The company's co-founder and chief executive, Dane Jasper, decided to forgo the common industry practice of limiting a customer's Internet speed based on pricing tiers. Instead customers get the fastest Internet speed Sonic.net can deliver to their home.

The actual connection speed depends on factors that include the home's distance from Sonic.net's network equipment and the thickness and quality of the copper lines running to the home.

The company does not offer its new service to homes more than three miles from its equipment, Jasper said.

The company relies on copper wires originally designed to deliver traditional phone service. The quality of the Internet connection degrades over distance, meaning the farther from the central office the slower the Internet speed.

"Santa Rosa is one of the worst for coverage because there are only two service offices here, and the city is spread out over a relatively large area," Jasper said.

The service centers were established long ago by the incumbent phone companies as end points for the miles of copper wires that run out to people's homes.

San Francisco has nine central offices, which allows Sonic.net to provide its next-generation service nearly citywide.

Customers who sign up for the new service can either get a new phone number or keep their existing one.

Sonic.net offers traditional telephone service, known in the industry as POTS. It relies on the copper wire phone technology that has been used for years. That means the phone service still works when the power goes out, and 911 service is automatically available. It also means customers will have to pay applicable city, state and federal taxes. That adds about $8 in Santa Rosa and about $11 in San Francisco to the total cost.