BellSouth, Sprint Team on MPLS

(NYSE: BLS) has signed a deal to use 's (NYSE: FON) MPLS network to provide long-distance MPLS-based services to its business customers.

The deal is believed to have been completed last Friday. Terms and conditions are not being made public, says BellSouth spokesman Jeff Battcher.

By striking a commercial agreement with Sprint, BellSouth is adopting an approach that differs from its RBOC peers, (NYSE: SBC) and (NYSE: VZ), each of which flexed its M&A muscle in the long-distance services market. (See Verizon Wins Tussle for MCI and SBC to Buy AT&T for $16B.)

The deal is unlikely to raise many eyebrows, especially as it was mooted as a sensible option for both firms in February this year. (See BellSouth at a Crossroads.) BellSouth and Sprint have similar views on the enterprise services market based on an ongoing shift away from ATM and Frame Relay services and towards Layer 2 VPNs (Ethernet), Layer 3 VPNs, and VOIP, a shift upon which Sprint has based its network strategy. (See Sprint Leaves Behind the Legacy .)

BellSouth already offers its business customers long-distance services, but using Sprint's network will allow it to offer a broader range of options, including MPLS-based VPNs.

"We have a very robust MPLS network here in the Southeast, and we wanted to duplicate that outside our home region," says Battcher. He says BellSouth won't comment on whether detailed negotiations were held with any other potential partners.

Now, with BellSouth's strategy firmed up, industry attention will once again turn to (NYSE: Q), which battled hard to buy MCI but lost out to Verizon. (See Qwest Qwits .)

— Ray Le Maistre, International News Editor, Light Reading

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