FOCUS-Sprint unveils advanced network that slashes rates
Reuters Story - June 02, 1998 19:13
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(Adds details, analysts' comments, byline)
By Jessica Hall
NEW YORK, June 2 (Reuters) - Sprint Corp. on
Tuesday unveiled plans to allow customers to make phone calls,
send and receive faxes and cruise the Internet at the same time
over a single phone line as part of a radical plan that could
transform the economics of the phone industry.
A product of a secret, five-year, $2 billion development
program code-named Project FastBreak, Sprint's new Integrated
On-Demand Network, or ION, also promises to cut the cost to
deliver a typical voice telephone call by more than 70 percent,
Sprint said.
Sprint is abandoning the traditional voice-transmission
network of the past for a new system able to carry a virtually
unlimited amount of voice, video and data communications based
on the more powerful technology of the Internet age.
The plan would fundamentally alter telecommunication
economics, as customers will be charged for the amount of data
delivered, rather than measuring the number of minutes spent on
a line.
For example, the integrated network promises to cut the
cost of delivering a futuristic full-motion video conference
call between family, friends or business associates to less
than what it now costs for a typical long-distance phone call.
"If they do what they say they are going to do, this is a
big deal. It's a completely new way to run a phone company,"
Christine Heckart, a vice president with consultancy
TeleChoice, said.
Sprint, the No. 3 U.S. long-distance phone company, said in
a statement that its ION network would become available to
business customers by mid-1999 and to consumers by the end of
that year.
The plan requires customers to invest $200 in a new piece
of metering equipment installed in the home or business that
would allow phones, faxes, computers and other equipment to
operate simultaneously over a single phone line.
Behind the scenes, the new network would take advantage of
massive investments in new fiber optic data transmission
capacity and high-speed data delivery equipment Sprint has
already begun installing.
Sprint will partner with Cisco Systems Inc. , the
primary contractor for the new network, Tandy Corp.'s
RadioShack, which will sell the $200 customer hook-up device,
and Bellcore, supplier of the central software framework.
"Every major telecom network in America has been designed
for the old marketplace. In order to survive and thrive, they
have to reinvent their networks for the data marketplace,"
agreed Jeffrey Kagan of consultancy Kagan Telecom Associates.
"The phone network of tommorrow looks nothing like today,
which is the product of 100 years of incremental improvements,"
Kagan said.
The investments required will dilute Sprint earnings
results 20 cents to 25 cents a share in 1998 and by 60 cents in
both 1999 and 2000, the company's executives said at a press
conference in New York Tuesday.
Consumers and businesses now will be able to choose Sprint
as an "everything company" offering local phone service,
high-speed Internet access and long-distance services.
"This is not aimed at consumers who want their local
service from the Baby Bell, their long-distance from Sprint and
Internet access from someone else. This positions Sprint as
your all-or-nothing company," Kagan said.
"Among the major providers, Sprint is the first one to
really show they are using a single network," Tom Jenkins, a
consultant with Telechoice, said of the company's move to
integrate its voice and data networks.
But Sprint's plans are hardly unique, Kagan cautioned,
noting that rivals AT&T Corp., WorldCom Inc. and the Baby Bell
local phone companies have all declared their intentions to
build such integrated networks.
Sprint will still have to rely on the local Baby Bell phone
network to carry calls over the so-called "last mile" from
Sprint's integrated network into homes and offices, analysts
said, which will require unprecedented cooperation.
Although Tuesday's announcement moves Sprint ahead
technologically, the company still must expand its local phone
strategy, increase its wireless phone presence and move more
aggressively internationally, analysts said.
Shares of Sprint gained $1 to $72.94. on the New York Stock
Exchange. Cisco gained $3.25 to $76.75 in Nasdaq trading. |
