Telecom companies expected to spend $15 Billion moving to VoIP over next four years
Monday October 2, 9:31 am Eastern Time
C&W to use Internet technology on all calls
(UPDATE: Adds background, updates shares)
By Richard Baum
LONDON, Oct 2 (Reuters) - Britain's Cable and Wireless Plc said on Monday it was embarking on the
world's most ambitious project to route telecommunications traffic using Internet technologies instead of
conventional switches.
The corporate telecoms company said it signed a 950 million pound ($1.4 billion) deal with Nortel Networks Corp. (Toronto:NT.TO - news)
(NYSE:NT - news) of Canada to change its global network to voice-over-Internet protocol (VoIP), which routes telecoms traffic at a quarter of
the cost of electronic switches.
The move is a further step in C&W's strategy to focus on global Internet business, which has seen it dispose of its UK cable and C&W Hong
Kong Telecom interests and minority stakes in several other companies.
C&W shares were up 1.6 percent at 980 pence by 1320 GMT.
Both companies said it was the most aggressive move by any company into VoIP, which is forecast to handle 900 billion minutes of phone calls
by 2006 compared with 675 million minutes last year.
VoIP allows telecoms companies to replace much of their bulky switching equipment with Internet servers, using software for work currently
done by hardware. The standard is also better at integrating voice and data.
NORTEL FORECASTS MASSIVE VOIP GROWTH
Clarence Chandran, Nortel's chief operating officer, told Reuters he expected telecoms companies to spend $15 billion moving to VoIP over the
next four years. The company was also providing the technology to British Telecommunications Plc (quote from Yahoo! UK & Ireland: BT.L)
and
France Telecom .
``This is a landmark agreement, not just for ourselves and Cable & Wireless, but for the industry as a whole,'' he said in a statement.
Nortel, the world's number two network equipment supplier, will manage C&W's VoIP network for 10 years under the contract.
C&W said it was developing new products to take advantage of VoIP, including desktop video conferencing and advanced call redirection
services.
It is already investing $3.5 billion in an Internet network that it says will be more international and reliable than any other.
Corporate Internet business now lies at the heart of C&W after the sale earlier this year of its stake in C&W HKT to Hong Kong's Pacific
Century CyberWorks and its UK consumer cable business to NTL (NasdaqNM:NTLI - news).
Earlier it shed holdings in several other firms, including in UK mobile phone operator One2One -- now owned by Deutsche Telekom -- and in
French operator Bouygues Telecom .
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