BellSouth Corp. (NYSE: BLS) yesterday announced the availability of a “Centrex IP” service throughout the nine southeastern states it serves (see BellSouth Intros IP Centrex Service).

At first glance, this might appear quite a big deal, and quite a coup for Lucent Technologies Inc. (NYSE: LU), which has won a three-year contract to supply its iMerge gateways, upon which the service is based (see Lucent Helps BellSouth With VOIP).

However, first appearances can be deceptive. BellSouth isn’t going whole-hog into VOIP (voice-over-IP) with this project. It’s keeping its Class 5 switches and bolting on some VOIP capabilities with the addition of Lucent’s gateways. And Lucent’s success in winning this contract doesn’t mean that it’ll have an inside track on winning contracts for BellSouth’s eventual softswitch-based VOIP service, judging by developments at another RBOC, SBC Communications Inc. (NYSE: SBC).

“This is an interim step that may get some customers moving over to VOIP,” says Kevin Mitchell, an analyst at Infonetics Research Inc.. “BellSouth will have an announcement probably later this year about their hosted IP communications, something that’s based on a softswitch and application server, and I think that’s what their prime offering will be.”

The service that BellSouth announced yesterday complements the carrier’s three-year-old IP PBX service, which requires installation of equipment on a customer’s premises (see BellSouth Offers VOIP for SMBs). For Centrex IP, BellSouth hosts the equipment in its facility and provides voice service over an IP network.

The supplier agreement with Lucent may have come as a surprise to some BellSouth watchers. After all, the Baby Bell has used equipment from Cisco Systems Inc. (Nasdaq: CSCO) and Nortel Networks Ltd. (NYSE/Toronto: NT) for its IP PBX service since 2001 (see Nortel, BellSouth Team for VOIP). But the choice makes sense considering that BellSouth’s Centrex IP service consists of gateways connected to the carrier’s existing class 5 switches, some of which were made by Lucent.

The service uses Lucent’s iMerge Centrex Feature Gateway, which connects to any Class 5 switch, interfaces between IP packets and time-division multiplex signals, and lets the switch control calls over an IP network. By using a gateway instead of installing softswitches, BellSouth can squeeze more life from its Class 5 switches and gently coax its existing Centrex customers into using VOIP without jumping to an all-new system.

SBC has followed a similar path. Since 2002, the carrier has used Lucent’s iMerge to provide Centrex IP service based on SBC’s circuit-switched Centrex infrastructure. But according to Infonetics' Mitchell, the company recently grandfathered the service and is instead pushing its SBC PremierSERV Hosted IP Communication Service, which uses a softswitch from Siemens Information and Communications Networks Inc. (see SBC Picks Siemens for VOIP Applications).

BellSouth hasn’t yet announced softswitch or application-server vendors for a hosted VOIP service, and the project appears to be running behind schedule. Last July, it was rumored to be on the verge of awarding multiple contracts, worth between $500 million and $1 billion, with a view to launching services in the fall of 2003. At the time, Lucent didn’t figure in the line-up of suppliers; Siemens ICN was expected to win the softswitch contract and BroadSoft Inc. was expected to win the feature server contract (see BellSouth Close to Dishing Deals). Since then, however, Lucent has plowed new resources into softswitch development and has announced a strategic partnership with Broadsoft (see Lucent Performs Softswitch U-Turn, Russo's VOIP Spin Confounds, and Lucent Teams With BroadSoft).

In choosing a supplier for its Centrex IP gateway, BellSouth paid close attention to whether vendors had implemented an open version of the International Telecommunications Union’s H.323 protocol, which transmits audio and video over IP networks. Through using Cisco’s AVVID architecture for its IP PBX service, BellSouth found that Cisco’s proprietary alternative to H.323 -- the Skinny Client Control Protocol -- provides few choices of phones.

“When you implement Cisco AVVID on your customer’s premises, you’re pretty much locked into buying Cisco phones,” says Dylan Reid, product manager for centrex IP at BellSouth. “With Lucent, they’ve done a very open implementation of H.323, and I believe they’ve qualified about 11 different phone vendors.” During its initial introduction of Centrex IP, BellSouth will offer phones from Uniden Corp. and Tone Commander Systems, Inc.

As part of the three-year agreement, Lucent is also supplying BellSouth with its EBS Communication Manager, which provides IP telephony applications through a web browser on a PC. Centrex IP customers can use the web interface to configure the service and integrate telephony with e-mail.

— Justin Hibbard, Senior Editor, Light Reading

For more on IP Centrex services, see "SIP Hosted Services: A Heavy Reading Competitive Analysis," a 56-page report by Margaret Hopkins, costing $3,495. For more details, click here.

For more on IP PBXs, see Light Reading Insider’s latest report, "VOIP: The Enterprise Options." For subscription details click here.