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The United States' largest telephone company, Verizon
Communications, has begun work on the final portion
of an effort to convert its traditional, circuit-switch
network into one that relies on the Internet to carry
voice and data.
Verizon plans to spend the next five years changing
the circuitry inside all 5,000 of its central offices,
which can simultaneously connect any number of local
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phone customers to Verizon's nationwide network. According
to a deal announced Wednesday, Nortel Networks will be
Verizon's exclusive supplier of what are known as "soft
switches" for the next 18 months.
Soft switches break calls into bits of data using
the Internet Protocol (IP), the world's most popular
method for electronic devices to communicate. With IP,
thousands of data packets are sent over the Internet
at the same time using any open pathway they can find.
It's much more efficient than the circuit switches Verizon
now uses, which waste network capacity by creating a
constant connection.
Verizon spokesman Mark Marchand called the effort
the "largest ever telecommunications transformation,"
saying that though others have shown interest in and
developed IP-based services, "nobody has moved forward
on this scale."
Verizon's competitor Qwest International Communications
launched a low-cost IP telephone service in Minnesota,
and long-distance provider AT&T intends to use VoIP
technology to enter the local telephone service business.
Major U.S. cable companies are using it to sell telephone
service. Efforts to reach several of Verizon's competitors
were unsuccessful Wednesday.
Verizon began shifting its network toward what's called
VoIP (voice over IP) in 1999, when it started using
the technology to ferry voice calls and Web traffic
many thousands of miles. During the next several years,
the company will "push IP right to the home," Marchand
said.
Sue Spradley, Nortel's wireline networks president,
said that "what Verizon is trying to demonstrate is
that voice over IP is ready in a major way to go into
the market."
For now, however, Verizon's move to the more efficient
IP method is meant mainly to reduce its own operating
expenses. But Marchand said the company is working on
a number of new customer services that take advantage
of the IP transformation, including long-distance and
local Internet telephone plans likely cheaper than what
Verizon offers now. Other new possible services from
Verizon after the IP transformation include cable TV,
movies on demand and other "multimedia" services, Marchand
said.
The push by carriers to get into VoIP has created
a boom for network
equipment suppliers. In North America alone, Nortel
is supplying the soft switches to Sprint Communications,
MCI, Qwest International Communications and cable providers
Cox Communications and Charter Communications.
Financial terms of the deal between Nortel and
Verizon were not disclosed.
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