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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: Z268 who wrote (2755)	5/24/1999 7:37:00 AM
From: Kenneth E. Phillipps	Read Replies (1) \| Respond to of 14638

Article from The Ottawa Citizen on the IP Network being built in Spain. The comments of the analysts sound like "sour grapes". Ken ottawacitizen.com:80/business/990519/2618342.html Karyn Standen The Ottawa Citizen Nortel Networks Corp. stock was up nearly three per cent yesterday after the Brampton-based company said British Telecommunications Plc. will use Nortel equipment to build a telephone network based on Internet technology in Spain. The network will use Nortel's Internet protocol (IP) technology and will carry more customers -- 90,000 lines -- than any existing national IP network in the world, Nortel said. Nortel's shares gained $3.20 in Toronto, to close at $110.10. Terms of Nortel's five-year contract with British Telecom's Spanish subsidiary weren't released. However, a Nortel spokesman said Nortel will begin deploying equipment in its third quarter, and most gear will be installed in the next 24 months. The high-speed network will be linked to about 75 CVX 1800 access switches from Nortel. BT said it will spend at least $970 million in the next decade expanding communications networks in Spain, in part to challenge Telefonica SA. The Spanish carrier enjoyed monopoly status before Spain's telephone market was opened to competition late last year. "This is the first network equivalent to public switched telephone networks that's based entirely on Internet technology," said Dan Mangelsdorf, director of Nortel's Internet telephony marketing. "You can now offer services that are the same to those you'd enjoy with public switched telephone networks. (This deal) firmly establishes Nortel as the leader in this new market space." Mr. Mangelsdorf said the new network will let BT provide residential and business customers with advanced services, such as multimedia applications, while cutting BT's costs, including equipment purchases and network operation, by 50 per cent. BT's Spanish customers will have access to long-distance calling over the new network later this year, while local service and initial multimedia applications will begin in the next two years. The contract is the latest step in Nortel's so-called Succession strategy, announced earlier this year, to help service providers move from circuit-switched networks to packet networks that support the use of new IP services. Mr. Mangelsdorf said Nortel is talking to "early adopters who are building IP networks around the world" about building more networks similar to the one planned for BT's Spanish subsidiary. Mr. Mangelsdorf wouldn't name names, but companies building IP-based networks include Qwest Communications International, Inc. and Level 3 Communications, Inc., both of the United States. Internet protocol (IP) technology is a set of protocols that define how data are put into packet format, a high-speed network communication technology. Unlike circuit switching, used by telephone companies to carry voice traffic, packet technology does not need a constant connection between points. Each packet has its own destination address, meaning packets making up a single message don't have to travel along the same pathway. Instead, they can be sent along a network as routes become available and are re-assembled when they reach their destination. While analysts applaud Nortel's deal with BT, they say the Canadian networking communications giant is reaching when it describes the proposed project as an "Internet telephony network." "This is a coup for Nortel to get this big contract with BT. But Nortel is just trying to make the deal sound a little bigger than it really is," said Jeff Dahlberg, an analyst with Housatonic, Massachusetts-based Gilder Technology Group. "Nortel is saying that telephony is anything that can be sent over a telecommunications network, and that's not how telephony is customarily defined." Tom Nolle, president of the CIMI Group Corp. of Voorhees, New Jersey, agreed: "Nortel uses the term 'Internet telephony' to mean the same thing as voice over IP. What they're really doing is an IP-based telephony network. But it's not really part of the Internet. "Everybody thinks that the Internet and public IP are the same thing. They're not. The Internet is an example, but only one, of a public IP network. So what BT is doing is using Nortel products to build a self-contained IP network in Spain. This network may connect to the Internet for data applications, but it's independent from the Internet." Mr. Nolle said Nortel's technology will be used to convert voice calls into IP packets, sending the packets over the proposed IP network instead of transmitting them as digital voice calls over a long-distance network. "There's nothing really ground-breaking about this. (The proposed network) is the largest now in terms of service points and customers. But this is not greatly different than what Qwest or Level 3 have already done in the U.S."