<A> Lucent Seen Raising Data Networking, Internet Phone Status
By Shawn Young
NEW YORK (Dow Jones)--Lucent Technologies Inc. (LU) will soon start selling new technology that will help phone companies take advantage of Internet technology and help Internet companies offer phone service, the company said Wednesday.
The technology will make it possible for telecommunications companies to offer new top-of-the-line data and voice services while potentially cutting network maintenance and some other costs by as much as 40%, the company said.
The new products represent another advance in the Murray Hill, N.J., telecommunications equipment maker's high-profile attack on the data networking market dominated by such companies as Cisco Systems Inc. (CSCO), Bay Networks Inc. (BAY) and Ascend Communications Inc. (ASND), and also advance Lucent's competition with traditional rivals such as Northern Telecom Ltd. (NT).
Lucent has stormed into the data networking field, which it says it will dominate, with a string of high-profile acquisitions. The new products, developed internally, move the battle into Lucent's telephone-network stronghold, analysts said.
"It's a frontal assault on Cisco and Ascend, and it's being done from their strong position," said Brendan Hannigan, director of network strategies at Forrester Research, a Cambridge, Mass., consulting firm. "They're moving the battle onto their own turf with their telecommunications expertise."
The new products further blur the increasingly fluid line between voice and data networks. Analysts said the products add up to the most comprehensive bag of tricks yet for using Internet technology to offer integrated voice and data services.
They include a switch that will soon be tested by MCI Communcations Corp. (MCIC) and a server that will allow a caller to take make lower-cost calls over an Internet-style network without dialing extra numbers.
The server could allow an Internet service provider to add phone service fairly simply, said Bill O'Shea, president of data networking systems at Lucent. The service would include amenities such as call-forwarding, 911 access and directory assistance that have not been available from Internet companies, O'Shea said. The server could also appeal to local companies seeking to compete with entrenched carriers.
The switch will allow carriers to offer finely tuned grades of service at a range of prices with guarantees to customers that if they pay top dollar for Rolls-Royce service, they will not get stuck in traffic.
Being able to differentiate grades of service could allow carriers to increase revenue by concentrating on the grades that are most profitable for them, Lucent said.
The products could help older phone companies compete with upstarts such as Qwest Communicatons International Inc. (QWST) and IXC Communications Inc. (IIXC) that can offer low-cost service over brand new high-capacity networks based on Internet technology.
"I think these products will be attactive, based on the company's claims for them," said Nikos Theodosopolous, analyst at UBS Securities Inc.
Lucent said interest in the products has been extensive and intense. It estimated the size of the total market for such products at $20 billion by 2001.
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