For good reason:
....For three months they worked in a nondescript building with blacked-out
windows in a suburb near its headquarters in a Kansas City, Kan., suburb.
Mr. Brauer's team tapped the company's telecom suppliers, Northern
Telecom Ltd. and Lucent Technologies Inc., for feedback. "We asked the
suppliers 'Are we ahead of our time?' and they came back with, 'Gosh, this
is big. It will take a lot of time,' " Mr. Brauer recalls, adding that some
Sprint veterans didn't welcome the move, either.
Cisco Systems Inc. plugged in quickly. The kingpin of Internet networking,
Cisco told Sprint, "That's the way the world is going," Mr. Brauer says.
"That was a very positive experience for us. It galvanized us."
Sprint's project is certain to rattle the $250 billion telecom equipment and
software industry. In choosing Cisco as the primary supplier and design
coordinator of the network, Sprint has pushed aside traditional telecom
suppliers. For software to keep the system running with top reliability,
Sprint is turning to the independent R&D powerhouse Bellcore.
Sprint, meanwhile, has canceled an order for new multimillion-dollar Nortel
digital circuit switches. Instead, the company seeks to build a network
based on high-powered ATM (asynchronous transfer mode) switches from
Nortel and others. These machines can accept massive streams of bits from
all kinds of networks and send each bit to its proper destination as a phone
call, Internet message or video signal.
Those big switches link to Cisco routers and software, which direct digital
traffic. Potent "wave-division multiplexing" systems enable Sprint to transmit
bits on individual colors of the light spectrum, boosting carrying capacity to
34 million simultaneous phone conversations from two million today, and
expanding the capacity of Sprint's fiber backbone and its 169 fiber-optic
rings that encircle many of the country's largest cities.
At the local level, Sprint hopes to bypass the phone companies-and their
access fees-by leasing space in the phone companies' switching centers and
installing its own connecting frame. (It isn't yet clear how much Sprint will
have to pay for each customer line.) This would let Sprint directly connect
to a subscriber's copper wire, setting up a link between its own network
and the meter at home or in the office.
That approach will require the cooperation of the Bells, which must provide
Sprint with access to their customers. Mr. Esrey has been nailing down
agreements with local carriers to connect customer lines directly to Sprint's
system, and he plans to announce the roster of providers shortly.
The new service will be sold in stages: to large corporations by later this
year, general availability to businesses by mid1999, and to consumers by
late 1999. The cost of the service hasn't been determined. But heavy users
are the primary targets"the kind of consumer who now spends, say $30 to
$40 a month on long-distance or $100 to $125 a month for everything
including voice calls and Internet access," says a senior Sprint executive.
Radio Shack, which sells Sprint wireless services, will market ION through
its 7,000 stores. Those who spend a few bucks a month on long distance
will still get their traditional service from Sprint, the executive says.
Several major business customers have signed up for ION, say Sprint
executives. These include Coastal States Management; Ernst & Young
LLP; Hallmark; Silicon Graphics; Sysco Corp.; and Tandy Corp. (which is
Radio Shack's parent). "This will allow us to combine all of our traffic --
voice, data and video -- into one path," says Larry Hardin, Sysco's director
of operations & communications. The giant Houston food distributor deals
with other major carriers, he says, but none "have approached me with
something this revolutionary."
Compared to Sprint's "pin drop" campaign, this network will be a "bomb
drop," says Gartner Group analyst Kenneth McGee, one of the few
outsiders who has seen the plan and tried the service. "This is the most
profound change in networking that I've seen in more than a decade."
Sprint executives say FastBreak is critical if the company is to become a
truly global carrier. Despite a strengthening core business that generated
$15 billion in revenue last year, Sprint is widely regarded as raider bait.
Bigger phone companies are combining, and GTE Corp. or one of the big
Bells could buy Sprint to aid their expansions. While the French and
German national phone companies each own 10% of Sprint, Mr. Esrey
says the rest of the company isn't for sale. Still, he has fueled such talk,
perhaps inadvertently, by complaining publicly that the stock price, at nearly
$72, is undervalued by at least $25 a share.
Let others rush into megamergers, says Mr. Esrey with a dismissive wave of
his right hand. "This is the most important move our company has ever
made. FastBreak sets us apart."
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